At a recent ICIC event, Paving a Path to Growth," New York Times Editor Loren Feldman interviewed Marlin Steel Wire. Here is the transcript.
Paving a Path to Growth in 2014
Loren Feldman:
I’m Loren Feldman, I’m the small business editor of the New York Times. As a journalist we are not supposed to be fans, but I love doing anything with the ICIC. The inner-city 100 conference is my favorite event of the year. There is no place I go to where I meet more interesting people, get better ideas so I’m thrilled to be here today.
I edit all the small business stuff at the times, I started the blog You are the Boss which is largely written by business owners telling their own story. If you are looking for it, it’s at newyork.com/boss.
And what we do is, we look less for stories about rock stars although they can be nice, we look for people who can really tell us what it’s like in the trenches, and we have a couple of people who can do that today.
This is Drew Greenblatt from Marlin Steel Wire Products, and since we don’t have a lot of time, let’s just get right to it. What kind of steel wire products do you make today?
Drew Greenblatt:
We make material handling baskets and sheet metal fabrications for medical companies like Medtronic, Pfizer, Roche, Novartis, Merck, Boston Scientific, Amgen, and Sanofi. We also do automotive material handling baskets for companies like Toyota, Caterpillar and Boeing.
Loren Feldman:
How big are you?
Loren Feldman:
We are small, we are 24-25 employees. Like Rohit Patel from Intelect, we have won the ICIC's Inner City 100 two years in a row.
[applause]
We won the INC 5000 for two years in a row.
They thing I am most proud about is our safety record. We have gone 1800+ days without a safety incident. It was not like that when I bought the company back in 1998.
Loren Feldman:
Well let’s talk about that. Those weren’t the products you were making back then when you bought the company. What were you looking for? How did you end up buying the company?
Drew Greenblatt:
I had a list of 800 brokers, lawyers, accountants. I was calling them over and over again looking for a company to buy. We found a little company in Brooklyn New York, 72-year-old owner. He was making commodity bagel baskets for the bagel shops all throughout the nation.
Loren Feldman:
That was the only product he was making?
Drew Greenblatt:
That was the only product. He had a nice business, ever bend was done by hand. Every weld was done by hand. It was a little 5000 square foot facility, it was not very safe. Two of the guys had lost an eye, a few of the guys had lost fingers. It was about a 1920’s acquisition.
Loren Feldman:
What was it that made you interested in this company? What were you thinking at the time?
Drew Greenblatt:
With no marketing and this atrocious safety record, no engineering, no automation, the newest piece of equipment was from the 1950’s, he was still making a profit. So I said to myself, if you can have all of these handicaps, no investment, minimum wage employees, think what you could do if you properly managed the company.
Loren Feldman:
And did it work out that way right away?
Drew Greenblatt:
So initially, things went well. We started doing some nice improvements but soon thereafter, we got in big trouble. Two terrible things occurred; I did not see this coming.
The first one was the Atkins diet, you are not allowed to eat carbs. The worst offender of the Atkins diet, is a bagel. So there was a fad which was when I bought the company, to eat bagels. So it was becoming a nationwide fad, but what had happened was, that all fell apart. The new fad was to stop eating bagels. So all my clients, these bagel shops, started dying. . They obviously have no reason to buy more bagel baskets from me.
The second problem was China. They started bringing in bagel baskets cheaper than I could buy the steel and it was devastating. So forget about welding, forget about trying to buy health insurance, or an advertising campaign, we were already under water before we welded or versa welded.
So these two things were devastating for the company and we were spiraling downwards.
Loren Feldman:
That must have been such an incredible disaster, of all things you would not expect to come out of China, bagel baskets might be at the top of the list. Do you have any idea how your product got on their radar?
Drew Greenblatt:
Well again, it is a commodity product. My clients, bagel owners, did not own tape measure. So if I was a half-inch or an inch off, they would not of known. This is the perfect world for a commodity Chinese exporter because they had no quality controls required, clients could care a less. They just wanted cheap.
Loren Feldman:
So, there must have been a morning when you woke up and realized you were hit by these two things and you had no idea what you were going to do then.
Drew Greenblatt:
It was devastating, we were hemorrhaging cash, and we were in big trouble. It was horrific. This downward spiral was not just one day, it was a tremendous pain because all of my best clients stopped buying from me and they started buying from China. Everybody’s orders were smaller because their clients were not eating bagels anymore. So this was a very steep erosion, it was very challenging and it was a very terrible time.
Loren Feldman:
What did you do?
Drew Greenblatt:
Well around this time, we had gotten a phone call from an engineer at Boeing and he had asked us to make a custom basket, not a big quantity, he just needed a handful. And you know, I was usually selling bagel baskets for about twelve bucks, the steel cost seven bucks, and China was bringing them in for six and I was selling them for twelve. So when the Boeing engineer just needed a handful, I said twenty-four bucks each. He was like “yeah whatever, twenty-four bucks.” And that was the epiphany. We had to focus on a market where they cared about quality, they cared about engineering, they cared about customization. They needed it quick but they are not price sensitive. That’s where you can grow, that’s where you can thrive. You have to leave the hellish land of commodity and go where people appreciate you for quality for engineering for shipping on time. Those attributes are a place where you can thrive and you can hire better people and put better safety systems in place, that’s how you can pay the bills.
Loren Feldman:
All of that makes sense, except you were not geared up to do any of that. What did it take to get to the point where you could deliver all of that?
Drew Greenblatt:
Well it was a lot of trial and error, it was very challenging. We had to upgrade a lot of our workforce, we had to have a lot of training, we had to buy a lot of automation, a lot of robotics. This was a tremendous investment back into the company, we have never taken a dividend. And the idea has been how do we make that Boeing engineer, or that Toyota engineer enchanted with our product. What are the techniques that will move the needle in his world? You cannot think about the commodity players anymore, that volume world is just not tenable You have to focus on what really moves the client.
Loren Feldman:
At what point did you move the company?
Drew Greenblatt:
Soon after. I’m a Maryland boy, so I was flying up every Monday and flying home every Friday from Brooklyn. So we moved the company in early 1999 and we have been here ever since.
Loren Feldman:
In what stage of transition was the company in?
Drew Greenblatt:
We were still heavy bagel baskets. This all started happening in the early 2000’s, this is the tumble.
Loren Feldman:
I see. And what was it like for the workforce? Were you able to keep people or did you have to turn over the entire staff?
Drew Greenblatt:
We did have some stay; two are still 4 miles from where you sit right now, hammering away and doing wonderful work for us. A lot of the employees had to grow in order to learn how to read a blueprint and understand what a diameter is, a tangent, a radii, and quality checks. A Merck inspection engineer is very different than the guy at a bagel shop. So we had to really upgrade our training, our machines and our equipment so we could adhere to their very tight tolerances.
Loren Feldman:
Did you have a background that prepared you to lead this company through this transition?
Drew Greenblatt:
No. My talent is that I’m good at listening to what the client really needs, hiring great people, and getting out of their way. I’m not an engineer. However, I’ve hired wonderful engineers, 20% of our employees are degreed mechanical engineers because it is not something I am capable of. I have a wonderful staple of rock stars as you describe it. These engineers are so smart and they come up with these really innovative ideas. That’s the secret sauce now, that is what differentiates us. That is how we are going to thrive and prosper in the future. It is not going to be by these long commodity runs, it is going to be by satisfying very challenging engineering problems that these factories are presenting.
Loren Feldman:
How has the employment market been? How has it been finding these rock stars and retaining them?
Drew Greenblatt:
There are basically three-types of workers at Marlin. We have mechanical engineers, who we have been hiring out of the University of Maryland, which is a tremendous school and we have been thrilled with the caliber of the people coming from there. The second bucket are basically people who are taking pieces as they come off of the robotic equipment and put them in boxes. That level of employee is easy to fill and there is not a lot of skill involved in that role and they are very plentiful. The middle bracket, that is very challenging. Those are the skilled laborers. Those are the guys that can read the blueprint, and also set up a laser. They are the ones that can use a micrometer or a calibrator to 1/128” but also set up a punch, or a wire form machine and do not mind getting their hands dirty changing dies. That middle level is very challenging to find. Finding a super-smart engineer or a person to fill a box, those are easy for us. It is the middle person that is challenging.
Loren Feldman:
Have you found a technique that is most effective?
Drew Greenblatt:
We are hiring people who have graduated from CNC machining programs. There a couple of them locally, one of them just unfortunately closed a couple months ago, I was at the final graduation ceremony.
Loren Feldman:
So basically training them yourself?
Drew Greenblatt:
Absolutely. This middle level of blue collared skilled laborer is very challenging and they are the lynch pin to our success.
Loren Feldman:
How about the sales side when you made the transition from selling to bagel stores, and obviously had some luck with the Boeing situation, what did you do to find other people who you could make projects for?
Drew Greenblatt:
So when we got the Boeing order, they were .001 percent of our sales and unfortunately I realized that 99% were in the wrong market. I had to really shift not only our equipment, our team, our training, we also had to find the right markets. So we did trade shows, and a lot of flying around to visit key people in order to work with them and move in the right direction.
Loren Feldman:
And how do you find likely candidates? Likely clients?
Drew Greenblatt:
The factories that are growing and investing back into their plants are our sweet spot. You know, decaying factory that has no investment needs, that is declining; they are not in our sweet spot. It is company that is reinvesting back into their plant, they want to have cleaner parts, the newest parts, parts that don’t scratch—the most delicate parts, those are our sweet spot clients.
Loren Feldman:
Do you mostly make standard products or do you customize for everybody?
Drew Greenblatt:
About 70% of our orders are custom and that keeps its interesting. We are not making the same thing every day of the week. That makes it more challenging too because it is a lot easier to manage a business if you are making the same thing every day. But that is one of the reasons we have this thick moat against Chinese importers. As a matter of fact, we are so good at this that now we export, 25% of our sales are exports. I am thrilled to say that we export to 36 countries. My favorite is that we export from Baltimore, it is a Chicago robot, Baltimore engineered, Baltimore team, using USA steel, we ship to China.
Loren Feldman:
How did you go about getting that business? Did you find it on your own or government organizations that help set it up?
Drew Greenblatt:
The Chinese client, we shipped containers to, I met them on a delegation when the governor of Maryland flew to China on a trade mission and I was fortunate enough to be a part of that in my own way. I did a number of sales calls. The United States government has a neat commercial service called the Golden Key services and we took advantage of that. They provide the driver; I can’t speak Chinese because I cannot drive on Chinese highways or read directions on a Chinese map. I paid for all of this, but we got to go on sales calls to China, Korea and Vietnam so we can sell from Baltimore over there. This is something that small businesses should pursue, very few American businesses export. This is something that we overlook and it is a huge opportunity. Ninety-five percent of the world’s consumers are overseas and they are very much impressed with American value, American quality. They know when they open up a box of American products, it is going to be the right size, the right color, it will not fall apart. Outside of America, people have been greatly impressed with our quality. So it is a unique sales technique that I would really consider for growing your companies.
Loren Feldman:
I think for a lot of small businesses, this is just a daunting idea, the notion of branching out around the world. Is there an easy first step if someone wants to go in this direction? Where do you go first?
Drew Greenblatt:
Canada. That is pretty easy. They speak our language, they are close, they are in NAFTA and they have similar kinds of wealth. Crossing the border is not a big deal, so I think Canada is our number one client.
Loren Feldman:
So at what point, when the client calls you up and says I need whatever and you have to figure out whatever it is that they are looking for, how does that work when you know you have to make a profit on it. Can you walk us through that process?
Drew Greenblatt:
Sure. So that’s our challenge, that’s why we have a viable business model. Our clients come to us, they are very good at making automotive parts, they are good at making medical parts, however they are not necessarily good at making a wire basket that is going to go down their conveyor belt. So we have these engineers that ask probing questions to really get our arms around their engineering challenge. We send them prints with their part in it, their part part rolling down the conveyor belt; it is all simulated for them in AutoCAD, a very expensive program. It is very comforting to these engineers because they know what they are getting. Because of that, they are more inclined to work with us because they know they got that project done, and they can move onto the next project. We provide that full scale service, and that is very comforting to them.
Loren Feldman:
Do you have a lot of competitors who do the same?
Drew Greenblatt:
Well our niche is Quality, Engineered, Quick. We literally registered “Quality, Engineered, Quick” with the U.S. Trademark office because we are focused like a laser beam to focus on that kind of clientele. We do have competitors but we have more engineers than the rest of the industry. We throw really smart people at these problems so we will prevail because smart people will come up with elegant solutions and it makes sense to go with us for that reason.
Loren Feldman:
I’d like to open it up to anybody here who might have a question for Drew.
Audience:
It seems that since 1998 you have been very adaptable and been able to change with the market. How, or do you have a plan in place, do you plan to get to that next level, what is that goal for you?
Drew Greenblatt:
That’s a great question. So, in 2010 we used to only be wire, from the founding of the company in 1968 to 2010. So to pursue what you just described, we moved to sheet metal and we invested from 2010 to 2011 over $1 million in the highest quality sheet metal equipment, all made in Connecticut, these robots also made in Connecticut. Now we can offer our client’s sheet metal, not just wire solutions. We also added machining in 2011, so we are adding new devices and media to satisfy the client. In the past we were like the carpenter, if every project has a hammer and a nail, and you hand him a screw, he is still going to use the hammer. That’s what we were like with wire. Now, we can offer many different things. So that’s the kind of additions we are making. We are also getting more into robotics, we have multiple robots working with each other. When I first bought the company, we would have an employee do bending, by hand, 300 bends an hour to make that bagel basket. There are 4 bends in the top frame of that bagel basket, he would do 300 bends in an hour. Now we have 1 guy who works five quarter million dollar machines, each one is doing 5000 parts an hour. He was doing +/- ¼” , now they are each doing +/- 1/64” so the level of productivity and the amount of work we are putting out is tremendous, that is how we can meet the speed requirements. We just got an order from a large Japanese auto maker located in Ohio, they needed 1500 baskets to be shipped in less than 3 weeks. We never made these baskets before. Everyone else would consider that unreasonable, custom baskets, this big, stainless steel, and we are going to pull it off. We shipped it today. So that is the kind of nimbleness and adaptability we have to have by using a little bit of sheet metal, a little bit of wire we can meet all people needs. Did I answer your question?
Audience:
Yes thank you.
Audience:
I am curious though, you mentioned blue-collar skilled laborers being difficult to find in the workforce, can you please elaborate on that?
Drew Greenblatt:
Sure. They are the most important people in our factory because they are the ones that get those robots humming and really get them going 180 mph. We’ve prepared a number of unique bonus programs for our team to really get them engaged and motivated. We actually have this company wide. If they hit their target of X number of dollars in a two weeks, we give them a cash bonus. We have 26 times a year they are eligible for a cash bonus, and that gets them very engaged, very motivated to participate and we don’t have to watch people to see how often they go to the bathroom, or talk about the Ravens game or the Orioles game. Most companies have that mid level management that walks around and does this, that is their job. They have a clip board maybe but they usually do this. We are the opposite. We got rid of that whole level of management; they do not exist in our company. Instead we are using these bonuses to keep them engaged. What has happened is that because these bonuses are so large, they are entrepreneurs. In my company, I am not the only entrepreneur. We have twenty-something entrepreneurs. Everybody is killing it, why? Because they get a big bonus at the end of two weeks. Like we were talking about, some of the guys moved down from Brooklyn and are still with me. They are eligible for $600.00 on top of their wages, on top of their health insurance. $600 in cash if they hit their bonus target of $20,000 baskets in a 2-week period of time. So we don’t walk around and say ‘hey you went to the bathroom 3 times today and you should of gone twice.” We can treat people like professionals and we let them mind their own store, their mini-shop and that gets people really fired up. That is part of the reason why we are smaller than our competition. Most of our competition would need twice as many employees to accomplish what we do.
Audience:
You have a very compelling story, and I applaud you. You spoke about Canada in making you successful. Do you find that the Canadians push against the Americans when doing business in Canada? Have you experienced that initially?
Drew Greenblatt:
Well, let me clarify. We make everything 100% in the USA, Baltimore, here. So we do not make anything in Canada, we sell to Canada; they are a client of mine. Canadians are welcoming; I do not think they have a problem buying from Americans, at least in my experience. They just want high-quality.
Audience:
The reason that I ask, is because we have a Canadian office and this tech company has been useful to us as well. But I find that Canadians do not work with high-tech companies or to expand our business into Canada. However, they like to come here all the time. They like to send their resources here. I found that very very frustrating. I am not sure what your formula is but it’s been tough trying to do high-tech business in Canada.
Drew Greenblatt:
Our experience is Canadians are wonderful clients and very easy to work with and great business partners.
Loren Feldman:
Do you still make bagel baskets?
About 1% of our business, old clients that we can’t turn away and we still embrace. However, our future is high-tech highly engineered model because they appreciate our quality and they appreciate our engineering.
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