When Bill Welsh was a second lieutenant in the U.S. Army in Vietnam, he learned that switching to a survival mindset was sometimes the only way to get out of a crisis.
Once, when his squadron was preparing to leave for a mission, he discovered that two tanks were inoperative. One had a bad engine, the other a bad transmission. As the leader of his squadron, Welsh made the decision to order his men to spend the night moving the operative parts into one tank so that the troop would have an operating vehicle.
The next morning, when the commanding officer offered his congratulations on a job well done, Welsh gave the credit to his men who had spent the night working on the tanks. The commander looked squarely at Welsh and told him if the tank had not been operating by morning, it would have been Welsh alone who would have paid the price.
As a management consultant, Welsh built a career on making strategic 11th-hour decisions, taking credit for success and responsibility for failure. In 1989, he was doing consulting work for Steel Products, an aging steel manufacturer in Stow. He had been working with the company’s owner, Bill McCracken, on a desperately needed turnaround plan when McCracken offered to sell Welsh part ownership in the company as compensation for his work.
Welsh accepted the offer and soon decided the only way to push the company back into the black was to go through a complete restructuring. He made the tough decision to focus exclusively on machining; prior to that, Steel Products had provided fabrication, machining and assembly services to its customers.
“In 1992, I determined the company was not a viable long-term structure,” he recalls. “I had to make a decision, shut it down or redirect the business.”
Welsh had plenty of research to back his decision. When he was brought in as a consultant, he commissioned a marketing study from an outside firm, using comments from previous, existing and prospective customers.
“When I got the results, it was a revelation,” he says.
The company received high marks on its machinery services, but “below par” in other areas, such as overall customer service, fabrication and assembly processes.
“We realized that we had machinery expertise … and said, ‘We can’t do 14 things well, so we’ll do one thing well.’ We started to focus on service, quality and to guarantee the work.”
But the redirection did not come without casualties. When the company’s equipment was trimmed from 30 machines to 10, the work force was cut from 165 to 28. As expected, sales dropped from $8 million to $2.5 million, but within a year, the company started to turn a profit and gain a reputation with larger corporations, including Rockwell International and Fairbanks Morse, for its ability to help out in a crunch with excess work.
For the next five years, Steel Products’ cash flow remained good, but sales have been relatively flat, Welsh admits.
“It’s difficult to anticipate a problem when you don’t have a problem,” he says.
Welsh, who came on as the full-time president and CEO this year, is again leading the company into a new, critical stage.
“One of my biggest mistakes in the past was thinking that if we were servicing customers and delivering the product, business wouldn’t go away,” he says.
Welsh recently implemented a new marketing plan in attempt to spark new business. He no longer assumes today’s customers will be there tomorrow.
The company’s management is building relationships with existing customers by offering product consultation and referrals on services Steel Products no longer provides, and it’s using hit lists to prospect for new customers — something that was never even thought of before.
Vice President and General Manager Lew Nelson has made it a regular part of his job to visit existing and prospective customers’ plants to determine where Steel Products’ services could fit in with their machinery needs.
By simply talking with customers, peers and consultants, Welsh found that customers actually wanted a broader relationship from the company.
“We’re not trying to be just a machining shop,” Welsh says, “we’re trying to be a partner.
“It’s not scientific. It’s figuring out what you do well and going after it.” How to reach: Steel Products, (330) 688-6633
Connie Swenson ([email protected]) is editor of SBN Magazine.