[Jeff]
Today's, uh, panel, we have a incredible set of, uh, stakeholders here in the AnchorBay journey. At the end here, we have, uh, Andy Storm with Six Axis Capital. AnchorBay, uh, CEO Rob Thomas. And then we have, uh, Lisa from Hart Industries, who's a, a longtime customer of, of AnchorBay. Uh, so we thought we could really hit the AnchorBay story from every kind of conceivable angle, and, and walk through, even including AnchorBay's customers. Um, I know that's something that shops are always wondering is, is how, how are they treating the customers, and what do customers want from, uh, job shops and contract manufacturers. And then of course, Lindsay from AnchorBay, uh, as well, uh, running HR. We wanna get through the, the whole kind of story here, so we'll just dive right in. Um, starting with Rob. So, uh, Rob, you know, we, we kind of touched on the, on the growth there. Um, uh, Sam, Sam gave a nice little o- overview. I think he said from e- 11 folks to, to almost 80 over, over 11 years. And even over the last three years is, you know, 30 to, to 70. And, and I, I remember when we visited Rob three years ago, they were in a smaller building. It's like, "Yeah, we're gonna buy that bigger building and then we're gonna close down this one." And then, you know, it was like months later, like, "We're not closing on anything. We need, we need both spaces, and we're, we're looking at building permits a- as well." So, uh, Rob, it'd be incredible if you could take us back to the beginning. Uh, the whole story, how did AnchorBay get started and, and, uh, where is the company focused on, and, and kind of what's the, what's the growth plan?
[Rob]
Yeah. So we started as a auto body shop in 1984. My dad started that. Ran along like that just fine for years. My dad decided that he wanted to try something different that didn't involve insurance companies and the general public as much. So we, uh, moved into trying powder coat small scale. Put in a little, uh, upstairs mezzanine above our main floor and did the two side by side for, you know, probably 20 years. So fast-forward to 2008, economy's going bad. We were in bad shape, so I kinda went and told my parents that either I had to take over and try to build it into something more, or I was gonna have to move on to
[Rob]
something else. So they reluctantly agreed that I should, I should give it a shot. And I already knew right out of the gate I wanted to go more into the powder coating industry. So I took over officially in the end of '09 and just really started talking to customers and making some connections and getting more work. So, bought another oven, set up another line. And then by November of 2011, we had shut our auto body shop down altogether. And then that's when we, we really started to pick up steam. Got all the auto body equipment out, put in more ovens, more lines. Hired more good people, got more customers. And then kind of fast-forward again to what Sa- Sam already talked about with the, um, you know, buying the other building. We were supposed to move there and just got so much busier over COVID that we ended up keeping both buildings and pretty much have both at full capacity today.
[Jeff]
That's, uh, it speaks volumes of, of Rob Thomas, and that's really ... If you had to introduce Rob in 20 seconds, you'd just tell that middle part of the story where, uh, things weren't going so well, right? And the recession, and, and backs against the wall. And, and instead of sitting down and crying, Rob says, you know, he grabs whatever's in front of him and he runs as hard as he can through whatever wall he thinks is the right wall to run through. So that's, uh, incredible, and that really kind of tells the whole story. Uh, Lisa, you know, um, wondering if you could give a quick introduction of, of Hart Industries. How long have y'all been in business? What, what are your guys' core offerings, and then, you know, what's it like being, being an AnchorBay customer? Um, and, and, you know, keep in mind, there's a lot of ... There's about ... There's over 40 shops here today that, that have folks like yourself as a customer, so feel free to get your shots on that as far as like-
[Jeff]
"Hey, you know, everyone always says I want my suppliers to be A, B, C." You know? So feel free to give it to them. Like, what, what do you want a great supplier to be? And then, you know, give your, your perspective on AnchorBay as well.
[Lisa]
Sure. Um, I am Lisa, Hart Industries' president. Um, we have been in business for just over seven years. Uh, we are a Mis- Michigan-based, uh, CNC precision machining and manufacturing company. Originally, we started out as program management and outsourcing solutions, um, until one day my husband came home, uh, with a very, um, big vision and told me he had purchased his first CNC machine and we were going into business. Uh, that's how Hart Industries started. Over the years, we have gained our, um, ISO 9001:2015 certification. We are also a certified woman-owned business with the National Council. We are a registered ITAR, JCP, and we are currently working through our CMMC Level 2, as well as the AS 9100 certifications. So that's soon to come. As far as what we offer, we do, um, CNC milling and turning, uh, multi-access. We also do, um, Swiss machining, 3D printing, um, laser part marking, and, um, assemblies. That's kind of our, um, wheelhouse. Uh, we work in automotive, consumer packaging, aerospace, um, and heavily in defense with ground systems. And that's where we're looking to grow at the current moment as well, and, um, also looking to ... into space X. So, uh, we have a very strong team. Uh, we, um, focus on three metrics. Um, on-time delivery, customer satisfaction, and quality. And we'd be able to hold a 99% with that on all categories, and that's very important to us. Um, recently, we have moved into a new building that's going to support our growth. Um, and we still, you know, run as the family-owned machine shop. That's one of our major things. We are very proud of our team and the team that we've built, and also with the partnerships that we have come to grow over the years. Working with AnchorBay, I think at first when we went there, we were not their ideal customer [laughs]. We were doing job shop work, but small production runs, prototyping. Uh, we didn't need any certifications. Um, it was-Just regular paint [laughs]. But over the years, like I said, we now have a large defense contract in, um, land systems which do require the certifications, the attention to detail, um, understanding of requirements. Um, sometimes I reach out to Rob and I'm like, "Hey, not sure what this is. Do you do this?" Um, and he's able to help, answer the questions. Um, he'll even, you know, go into, "Hey, it's in this paragraph of this document, under this, and this is what it means." So it's been, um, a learning experience for myself and my coworkers. Um, but working with them has really been great. Uh, customer service, yeah, we've really grown more as a partnership than just being a customer. I never feel like a number. We know their team. So, yeah.
[Jeff]
That's incredible. Uh, thank you, Lisa. And just to restate, I think, what you said, is it's, uh, the power of- of, you know, the relationship with AnchorBay is not that it's just a transactional customer, like I- I send a quote, and then the next day you send it down the street just 'cause it's a dollar cheaper. It's like, hey, you call Rob and say, like, "Well, what is this? Do you guys do this?" And knowing Rob, he probably says, "Let me- let me get back to you," and then he's doing it the next week.
[Jeff]
Um, so like, but them growing with you, 'cause now you have his entire reliable, uh, company. Um, the, uh... Uh, Lindsay, I'd- I'd love to- to switch over to you. Um, you're new to AnchorBay, focus on the HR side. Obviously, as you grow, once you have more than, you know, 11 people, it's difficult to do human resources just from the hip on the fly. So what- what's it like taking a business that's had informal HR policies for- for a while, right? And- and- and- and- and kind of taking it and positioning it for- for growth? So what's that transition been like? And what are you working on, um, the rest of this week after you go home?
[Lynnsie]
Yeah. So, uh, HR for me, every day is different. There's not one day that is the same. Um, so right now I'm really focused on building strong HR foundations that not only support our employees, but also support the business as well. So that's building strong onboarding processes, streamlining just policies and procedures, and developing the training, um, and creating programs that are going to be sustainable and scalable for growth, which is what our intent is.
[Jeff]
Very nice. Andy, your team rac- recently made a pretty big investment in- in AnchorBay, and you guys have been leaning in, uh, aggressively. Uh, what excited you most, uh, about AnchorBay?
[Andy]
Well, I think number one is, a- and anyone in the audience that works in the trenches knows that you really need a good partner. And the partnership that you develop n- needs to be a partnership of trust. And when I first met Rob, I realized very quickly that he was grounded in reality. Um, he wasn't aloof. Um, he didn't have ambitions that were- were crazy. He- he was truly focused on how he can improve his business and- and ultimately help improve how the business serves customers, and was very open and honest about the areas where he needed help and where he needed support and resources. And through our conversation, um, Rob helped me understand and- and the team understand just how diverse his business was. And I'm sure many of you in the audience, um, in a job shop-based environment, you're very familiar with the velocity of purchase orders that come inbound, and- and the short amount of time from when you complete a new, you know, a job and get new inbound purchase orders. There's not a lot of runway in front of you as far as visibility to forecast labor, um, and to ultimately manage your direct materials spend. And to Jeff's introductory comment about systems and processes and all the work that Lindsay's doing, when you start small and- and the business starts to grow, at times, the processes and the systems can- can kind of fall behind because you're just trying to survive. And through our dialogue and discussions with Rob, it became very apparent that, one, he was a great partner, would be a great partner, he was someone who valued trust-based relationships, and acknowledged that we had a need for bringing talent like Lindsay into our organization to ultimately help us build a team, build processes and systems that would help us better serve our customers. And so we're very early on in our journey, but, um, we're all working really, really hard to make the business better and ultimately help improve how we serve, um, customers like Hart Industries.
[Jeff]
Thank you, Andy. Uh, switching over to, uh, kind of the digital transformation, uh, topic for a bit here. Uh, Rob, you know, once you started picking up the steam and the powder coating after we got past the, uh, past the recession there, and- and you know, you started seeing that growth there, how'd you decide to, uh, leverage technology? Uh, when did you decide to start implementing those changes, and, uh, what are some of the challenges you had to overcome, and- and what does it enable? Like why... What's the so what?
[Rob]
So we were strictly pen and paper when I took over. I mean, accounting, everything. There was no QuickBooks. There was none of that. It was my mom, pen and paper, everything.
[Rob]
So after watching her do that for 25 years, I was like, "Yeah, we're not doing that. We're gonna do something a little different." Solely just a baby step into- into something as simple as QuickBooks. Got that kind of figured out. And then, you know, still running processes in the shop, pen and paper. Thought, "Hmm, there should be something that we can do kind of QuickBooks-wise in the shop." But not big enough. We weren't big enough to support a full ERP system or anything like that. So I end up finding out if you bumped up a notch on QuickBooks, you could do a sales order, a work order through QuickBooks. So I was like, "You know, that seems like a good step." So we did that. That worked. Now, we started getting into military, and you need to, you know, have your processes more tracked than you would with just day-to-day commercial stuff. And then, again, when we went for ISO, same thing. You have to have your processes very well-tracked. And we're like, "Well, we don't have a way to do that." So we were then built a... Sam actually built a nice little paper traveler. And then ISO guy comes in. "Okay. Well, how do you know if they completed it? Okay. We're gonna mark this one off in this color and that one in that color. Okay. Well, how are we gonna do this? We're gonna get a little stamper and we're gonna stamp it." And next thing you know, it's like, "Wow, this thing is... We got a lot of things going on in this little piece of paper here," you know? So it probably was a couple years that-... you know, I was like, "Man, we really are getting to the point where we do need some sort of a actual purpose-built ERP system." And it's like, where do you start, right? Where do you even start looking for this system that's gonna work for us? So I probably, over those two years, maybe six or seven times sat down at my computer and started on Google, "Okay, where am I gonna find this, the system that I want?" Just never really found the right one. And then actually got a email out of the blue from Steelhead, "Eh, delete."
[Rob]
Right? I get another one, and I'm like, "I don't know. Maybe this might make sense."
[Rob]
So that, that was kinda what started it. And then Jeff and Aaron came in for a meeting, and really liked what they had to say.
[Rob]
And I thought, "Man, this really, really can, can help us get our stuff under control here." And, and it, it really did. It de- it enabled us to get rid of that, all that pen and paper, and just have a digital trail of everything we're doing, and never looked back since.
[Jeff]
Fantastic, and, uh, Lisa, from, from your perspective, one of your suppliers, one of your partners, AnchorBay, kind of levels up their game in, in many different ways from, from HR to equipment, which, you know, maybe we'll circle back to, to the auto line story. Um, but the, like, what does that mean to, to you as, as a, as a customer to AnchorBay, right? I mean, as long as the parts are here and the parts are done right, like, that's all it matters? Or, like, is there some, like, what does that mean to you to know that, that AnchorBay is, is making those investments, and what impact does it have to you?
[Lisa]
Um, it's huge. Uh, we were there when Rob was doing the paper trail. Um, following up, the amount of phone calls we were making, like, "Hey, um, you know, when's this part gonna be ready? Did you receive our purchase order? Can we get a confirmation on that?" Um, the similar struggles I'm sure a lot of you go through [laughs] on a daily. Um, implementing Steelhead has been huge for us. Uh, we received an email. We logged online. We're able to see where our orders are in progress. We're able to see the purchase orders that we've sent. Um, they can also upload quoting in there so we can see our quote history, um, when something's shipping, if they're updating target dates. There's full transparency and communication there. It also goes as far as to house your certifications. So, um, again, we do a lot of defense work, so that's huge for traceability, is our certifications to be able to ship our parts. Before, you know, we'd be calling or emailing, like, "Hey, do you have this one? We wanna ship out our parts today, but we don't have the cert yet. We gotta get, you know, it audited," whatever. Um, certs are now uploaded. They're there. They're traceable. They're trackable. It's truly been huge. And I think in a world where we are all so used to Amazon, you know, you place your Amazon order. You can track it from when you place it, to when it's shipped, to when it's in transit, to when it's been delivered. Um, that's the world we've become accustomed to, and that's kind of how Steelhead works. You can have full visibility of where your parts are and when you can expect to have them.
[Jeff]
So the quality, on time delivery, the reliability, all that, and then just easy to work with, easy to do business with. Makes, makes life easier. [laughs] Yeah, very easy to do business with. And again, the full transparency, I'm able to update my customers if something isn't gonna be on time. Um, they're also very flexible to be able to rework the schedule if needed, if there's a hot item or... So yeah, very easy to work with. Okay. And maybe when we open it up to, to questions through the audience, and just a reminder, we'll have plenty of time for questions. So jot down a question you have for anyone on, on the stage. But, uh, Lisa, it's one of the things that we hear from, from some shops when they are evaluating opening up their, you know, a little bit there, opening the, lifting the shades on the window in real time, is, is they're pretty nervous about that.
[Jeff]
They, they like to keep their customers a little bit in the dark. Make them phone call, make them email, 'cause now you got time to maneuver, right, in the hours or days that pass when you're getting an answer back. So, um, that's, that's excellent to hear your, your perspective on that. Um, Lynnsie, the, you know, coatings business is fundamentally a people business, right? I mean, paint, uh, you know, natural gas, things like that. But a lot... Uh, labor is a huge, huge percentage of everything. Uh, but when we're using a system where we're going digital, we're recording logging time. We're tracking profitability, uh, communicating with customers, uh, strong... This all hinges on IT systems and, um, and also compliance. Like, you know, if folks are just, uh, willy-nilly and, and just doing things outside of systems, it, it can... The whole machine kind of breaks. So, uh, how do you handle that from an HR perspective, um, to, to, to get the entire, uh, staff to, to play their role in the, in the system?
[Lynnsie]
Yeah, so implementation starts with communication, teaching them not just the what but also the why. Um, it's been exciting to bring, uh, a lot of our new hires in and show them as we continue to grow, the development with Steelhead. Um, we've had a lot of success recently with green hires. Um, so people who are not familiar to... who are new to manufacturing, bringing them in and being able to, uh, take more ownership of their work and then help them with the confidence in their work as well. Um, and then as far as sustainability, um, having leadership support and then continuously training is not just go- is gonna help with just it not being just a one-time roll-out, but helping that implementation stick as well.
[Jeff]
And, and Lynnsie, one of the things that, you know, we see out there with shops that are working on any transformation, it's not specifically digital, but, uh, ag- again, it's kind of around the, the, the team getting with the program a little bit. Uh, sometimes you have folks that have been there for 30 years-
[Jeff]
... and they, they have their ways.
[Jeff]
So how do you navigate that, right? If you have someone, uh, whether it's an IT system or, or any system, how do you, h- h- how do you handle an employee from an HR perspective that's e- quite stuck in their multi-decade, you know, trench there?
[Lynnsie]
Yeah. For that, I think it's always looking at the big picture. Like, this might be cumbersome at first, but this is what it's gonna do. X is gonna do this. Y is gonna do this. And it's, at the end of the day, it's just gonna make your job easier. And then the reporting capabilities are unlimited as well to, uh, be able to show us, um, you know, who's doing what, when, where, wh- and why. And then holding, we're able to hold a- uh, employees accountable for that as well. So, um, I think just having a positive outlook on everything, and then the open and honest communication about it. Um, and not just from the beginning, throughout the whole entire process, is super helpful.
[Jeff]
Awesome.
[Jeff]
And then, uh, A- Andy, for the... You know, when folks are looking at, you know, implementing systems or, uh, upgrading their businesses, I mean, sometimes they look at lead time or, or profit or internal metrics. What's, like, what's in it for me? Like, you're not just gonna do this for fun. But, uh, one of the things that, that also is a component of it, and Dan has a, a session later today that touches on just this, is, uh, how do you prepare a shop for, for external investment? Um, so it'd be really interesting to hear your perspective when you're evaluating, uh, AnchorBay. You mentioned the, the people and the culture and, and the growth of the business and the, and the customers. Uh, but how about the systems? Like, how do the systems play in from, um, from your perspective coming, coming outside? Now you're, now you're on the team, but when you're looking at a business from the outside, um, how do the systems play in to, to the conversation?
[Andy]
Yeah, I mean, the systems are obviously extremely critical. And, and one of the important items that I think a lot of small business owners maybe lose sight of is, you feel so overwhelmed when you're, when you're a single, you know, private business owner trying to grow your business. You're onboarding employees. You typically don't see in small businesses a, a breadth of functional resources around an owner. Typically, you have a, a model similar to Rob, where it's Rob and his wife Sarah. And as the business is growing, right, they're typically putting all the excess capital that they have back into the business versus starting to ultimately invest in, in what we all refer to as overhead, right? Where you're, you're trying really hard as the business owner to keep your overhead low and investing any excess capital you have into equipment, systems and processes such as Steelhead. But in a small business, that can come at the expense of functional resources. Like Lynnsie, we have a, a, a b- finance accounting leader, Ashley, and others, um, sales leadership. And so that's a challenge. But I think what some people, especially private small business owners don't realize is that when they look to exit their business, most buyers are looking for the processes and systems that give them confidence that the business they're acquiring has a firm foundation from which to grow with external capital and external investment. And it's the systems like Steelhead that allow us to ultimately look at and assess all the work-in-process inventory, all the historic customer relationships, pricing, margin, labor cost, material as a percent of revenue, labor as a percent of revenue. And then to Lisa's comment, do you have processes and systems that may be in their infancy and may not necessarily be used at all levels of the organization, but is there a system in place that with the right coaching, with the right mentorship, with the right resources, we can improve how we're currently serving customers? I think Rob will be the first to tell you that in the early innings of adopting Steelhead, there's a plethora of challenges, right? You're trying to connect your QuickBook system or whatever accounting system you're using to literal- the, the jobs that are flowing through your business. You're trying to get employees at all levels, but particularly direct labor out on the manufacturing floor to use the system, to clock on and clock off of jobs. The employees on the floor are, are very suspect or, or paranoid about now being told to clock on and off of jobs because they think Big Brother is now spying on them and monitoring every single movement, every action that they have on their floor. When in reality, what we're trying to do is the same thing that Rob and I did early on in our relationship, and that is exercise transparency, build relationships of trust, help the people on the factory floor understand the Steelhead system that we've adopted and put in place is to actually help them improve how they do their job. And also improve... Boy, this thing won't stay in my lap. And also improve how we serve our customers, because if our customers are not happy and our lead times are deteriorating and not getting better, then our, the longevity of our business is at risk. Because Lisa, no matter how nice we are to her, no matter how frequently we bring her Dunkin' Donuts, if we don't deliver product on time at a market competitive price, she will most certainly take her business elsewhere. And so that's a reality that everyone kind of wakes up to, and then you realize, "Wow, I need Steelhead or I need a system to manage my business, to operate it daily and serve my customers." And as a private business owner, if I'm thinking of exiting my business down the road, if I can get one or two clicks of EBITDA or earnings more at exit by having a system that a buyer has confidence in, wow, the return on investment seems much more significant in that environment than if I'm plugging and chugging using a paper-based system with healthy margins and a profitable business. But anyone coming in from the outside can't really operate my business and run my business because everything is literally run on a piece of paper, which a lot of small businesses are.
[Jeff]
Yeah. Fantastic. And I, I think that's a good, uh, lead-up to, to kind of, uh, pivoting into the, the acquisition and, and future plans. And you know, anytime you're making an investment into your business, whether it's a new piece of machinery, hiring a new leader, implementing new systems, it's, it's the ROI. Like what does this actually accomplish for our business? And, um, you know, in the case of AnchorBay, it's been a really exciting outcome where they've grown revenue, they've grown profit, and then a- attracted investments. So really meaningful, uh, hard outcomes, uh, for the business. And I know it's, it's a topic that's a little bit, uh, mystical, uh, for, for folks and, and, and a little bit distant. So wanted to kind of use this opportunity with, with the panel we have to kind of pull back the curtain a little bit, uh, just to, for folks that are thinking it might be on the horizon some years out in the future. Um, even if you're not looking to, to exit to a professional investor or sell or partner, whatever the case may be, it's still really interesting to understand like how...... do the folks a- in the conversation think because that, they're, they're being very logical and that applies to folks, even if you're planning to hand it down to the next generation, uh, or whatever. The, the same basic, uh, economic co-, uh, uh, concepts apply. Um, but anyways, like, I would love to dig in a little bit onto the, the process itself. So, uh, Rob, after 20 years, you know, you, you decided, hey, th- you know, I actually... Remember the, the phone call you made and is something along the lines of like, "Hey, the bank's, the bank's not going to give me money." Uh, [laughs] and I got all these plans. And I, I, I, you know, an- and, and, and, you know, and then you, you started talking with Andy, and then you decide to move forward. Like, what, um, what, what, what drove that decision? Like, w- why not just keep doing what you were doing for the last 20 years?
[Rob]
Well, I found the bigger you grow, the harder it gets to grow on your own, you know. So I thought, man, you know, I had business partners in the past, but they really didn't help me out in any way. So I thought, "Man, what would it be like to have partners with the same vision that I have, the same goals that I have, to help me?" I can focus on what I'm good at. I'm not this super crazy business owner guy that just does the best at every single thing there is, right? I have my strengths. So I thought, "Man, if I could have other people with me that had different strengths than mine," which very much Dan and Andy do, I thought, "Man, that would be great." But how would you go about finding this person that you can trust, right? This is a family thing for me. As Sam said, every one of my employees is a family member. My actual family's in the business. So it's like, "How would I even go about this?" You know? And then once I talked to Andy, it just got more comfortable. You know, realized we kinda had some things in common, and thought, "Hmm, this might actually be something I would be interested in." And prior to the conversation, I really wasn't that interested in it, to be honest with you. It was just more chasing down that lead. You gave me the lead. I said, "Ah, what the heck, I'll look into it," because of that fact that I just wasn't confident in it, that it would be
[Rob]
something that would work out well, you know? And then, as soon as I talked to him, like, "Wow, this isn't some corporate greed, like, come and take my company over thing." And that, that was initially my take, is that was how that whole process would unravel, right? They're just gonna come in and take everything over and change everything around. It's gonna be this, this crazy thing, you know? And, you know, after, uh, quite a few conversations we had, I was super comfortable that, no, we definitely have the same, you know, the same end goal in mind. So it, it just made it a lot easier.
[Jeff]
I know now there's a lot more definition on, like, where are we going? What's our goals? What's our plan? Which is, you know, it gets harder to grow when you're, when you're larger. But, you know, having a plan and a goal helps. You know, like a year ago, pre-talking to, to Andy at all, like, if someone walked up to you, Rob, and you said, like, "What's the goal?" Like, "What's the plan for Anchor Bay?" Like, what, what would have been the response then, and, and what would be the response now?
[Rob]
Yeah. Well, we were... I think the, the goal is still similar. It's just the goal before, I was
[Rob]
having trouble figuring out how to get there, right? I knew we were going pretty heavy into military. We wanted to go into more in military. We're already, with adding the second location, getting kind of cramped for room a little bit. So it's like, "Well, if I'm gonna go way heavier after these bigger military contracts, I'm gonna need more room again." And I just got the loan and did all that for the, the second location. I'm like, "Well, I'm not doing that again. I'm not putting any more, any more debt on my shoulders." The only other way I could really do it was, was by bringing these guys on. So the, the goal really didn't change. Still going heavy after the, the military and aerospace industries. You know, still gonna, uh, grow it the best way we can. It's just now I have resources behind me where I don't have to think, "How am I gonna do this? How much risk am I gonna take on with it?" So now, you know, sharing the risk with other people, just so much more comfortable. Can sleep much better at night, a lot less risk on my shoulders, you know?
[Jeff]
Fantastic. And then, Andy, what drew you to this industry, uh, specifically, and, you know, from an economic perspective, how do, how do job shops and small manufacturers play a role, uh, in America's manufacturing? And just, just the, the one thing I, share that I ran across recently, just to paint some color for, for myself, is I heard there's, or I saw the stat, there's 600,000 manufacturers in the United States of America. And 75%, or 450,000, are less than 20 people. Uh, so, you know, given that kind of backdrop, uh, you know, wh- what drew you to the, to this industry? And, and, you know, how do, how do job shops and small manufacturers play a role in, in the United States, uh, economy?
[Andy]
Yeah, I mean, I think maybe I'll take your questions in reverse, Jeff. My business partner, Dan Burseth, who I think many of you will hear from later today, he and I love manufacturing. I mean, it's, it's what I've been involved in my entire life. My wife thinks I'm crazy. My mother thinks I'm crazy. I really, really enjoy, personally, the, the pace, the chaos, the pandemonium that comes with working in manufacturing. I think it's a, um, noble calling. You get up every morning. You get out into the trenches. You work with real people who have no filter and who care deeply about their livelihoods, because most of them have a job that pays their mortgage, puts food on their table, allows them to go to a state park in the summer on a short vacation. But very few of them, right, have, have a lot of the luxuries that many of us in this environment enjoy on a day-to-day basis, including being able to come to an event like this. They're all working on the line. And so, when Dan and I step back and assess what the term that's used in industry is smart money, right? There's a ton of smart money. I can't... I don't know the statistic off the top of my head. But trillions and trillions of dollars of dry capital money that's waiting to be invested in businesses, and most of that smart money, people who work on Wall Street-... are chasing what they call CapEx-light businesses, and you know, businesses that don't look like a small job shop with 160 different customers. Purchase orders come in on a three to four to five-day basis. Once you deliver, you don't know what's coming in the next week. It's a very direct labor-intensive business model. You don't powder-coat a thing without direct labor. So you have all this direct labor in your business. You have about a week to two weeks of visibility. You wanna grow the business, which means you have to bring labor into the business because you can't typically produce more with less, unless you improve your productivity, which we're working on. But I think the thing that's just super exciting about this, and, and I'm sure what has drawn all of you here today, is it's challenging. It's very challenging. It's not easy. It's not for the faint of heart. But the problems themselves that plague job shops are fundamental problems. First conversation I had with Rob, "Andy, I need help hiring direct labor. Can you help me hire team members who will work here and help build the business?" "Yes. Let's bring a great leader like Lindsay on board who has been instrumental in helping us build our team." We need help on the floor. Process efficiency. Step number one, "Rob, look at this big cavernous building we're in. There's wooden pallets everywhere. How do those wooden pallets get moved? With fork trucks. We've got buildings full of people, fork trucks moving all over. Everything is stagnant on the floor." Goal number one, "How do we get stuff on wheels so we can decouple fork trucks from our process? How do we drive up the utilization vertically, take advantage of all this vertical space? Let's go buy some vertical racking from the guy up two miles down the street, put some vertical racking in. How do we make our processes visible? So when I look in front of our blast booth, I can see what's the cadence of work going in and coming out? When I go to our prep area, what goes to prep? What goes directly to the line? What has to go through the dip line?" All these key processes and being able to leverage Steelhead as a tool to help us on that journey with great people, with a great partner, ultimately you wake up in the morning, you're excited, you're energized. And again, taking baby steps to improve, lots of satisfaction amongst the team because we're solving real problems. It's fun.
[Jeff]
Yeah. Andy, just a quick, uh, follow on to that. Uh, you know, a lot of talk about how AnchorBay has grown and appreciate the specificity of examples. Sometimes you just hand wave and say grow or, or whatever, but, you know, literally pallets on the floor and space utilization and, and forklifts being as part of workflow. And so I really appreciate the specificity. I think that's really helpful for everyone here. But how do you evaluate whether AnchorBay has the potential to grow in the first place from the outside in during that, that, that, uh, evaluation process?
[Andy]
So I think, you know, obviously the, the, it's an age-old adage. You don't wanna be in the, in the situation of, of a lot of... We're in Detroit right in the heart of Downtown Detroit in the Motor City. You do not wanna be under the thumb of an automotive OEM. So check that box. Rob's not under the thumb of an automotive OEM. You don't wanna be at the mercy of a tier-one supplier where based on pro- program volumes, right, a major program gets canceled, and it materially changes the economics of the business that drastically alters the business model. Rob has a 160 unique customers. None of them represent more than 5% of his total revenue. So there's a lot of customer diversity. There's a lot of avenues for us if customer A ... Something happens to customer A, JLPV program gets canceled or delayed, we have avenues of opportunity to go into other end markets or really start to grow with other customers, for example, in the commercial realm where a business or an end market is ultimately scaling and growing. And then ultimately being able to have systems in place where we can improve how we serve our customers. Most of you know in this audience that any business typically grows and typically improves when you improve how you serve your customers. I see Andrew sitting in the front row. If any of you have a chance, talk to Andrew here in the front row, who started with a... What was it, Andrew, $300,000 business? 200 thou-
[Andy]
$200,000 business in a rat's nest of a building. And I think has one of the most beautiful professional coating businesses in the country right now down in Florida. His philosophy, "Improve how you serve customers and you will grow." We're working really hard, Lisa, to improve how we serve you and how we serve our other customers. It's a journey. You know, one of the funny con- I shouldn't say funny, but early conversations Rob and I had early on was, like when Dan and I showed up, you kinda have this mindset as a business owner, we're, we're gonna walk in, we're gonna sprinkle pixie dust on the desk, and in a couple weeks everything's just gonna be sunshine and roses. Has it been sunshine and roses, Rob?
[Rob]
Not exactly.
[Andy]
[laughs]
[Andy]
So we're working, we're chipping away at it, right? We're making little baby steps, incremental steps every day.
[Jeff]
Yeah. So maybe, uh, Rob, just, uh, pivoting into that. You know, since it's been about six months, so you know, what changes have, have happened in the last six months or so that would've been difficult to do absent, you know, this, this whole transition?
[Rob]
Well, I mean, the, kinda the first change right out of the gate that was nice is, you know, we've been able to hire people, but just never really the people that we needed. Andy definitely had a, a little flair for that right out of the gate 'cause that was the first day he came in. He's like, "What's our number one issue? We need more, not just people. We can get all the people we want, but we need good quality people." And that's where we were struggling. He is like, "All right, I'm on it." Literally found a desk and sat down and went to town on it. And literally just started bringing people in, and they were...... decent people. I'm like, "Wow, this is great." So that was just the, the number one thing. You can do nothing there. Like you said, super labor-intensive. If we don't have good people, we just can't do anything. So that was number one. Got some good people in there. Great. And then like you said, "Let's get Palletrack going. Let's get this stuff off the floor. Let's get, get carts going. Let's just get processes more sorted out where everybody's using them." That's one of our bigger issues too, is, you know, you have tiers of people, right? I'm here and I got guys here and, and under them and down, down it goes and something just gets lost. You know, from me down to the bottom guy-
[Rob]
... it, it just gets lost. So if you don't have a solid process in place where it's like, you know, I don't even need to say it. We already have a process for it, goes all the way down to those guys. So really getting those processes solidified where everybody just knows what they are, that's probably the most important thing right there.
[Jeff]
Yeah. It's, uh, it really underscores that the people inside the business, it's not just, like, this casual thing that just kind of happens, which, uh, Rob, you know, I, I, I know some years ago, right, I think you said for every 10 people you hire, one sticks around for a multi-month period of time. And then I think even last year, the COVID and all the government subsidies to stay home type of thing, it was like one in 25. It actually got way worse. And so it's a colossal drag in the business, colossal challenge. And, uh, but it's something that can be fixed, right?
[Jeff]
It's, it's ... If you ... It's almost like your kitchen. If you don't put any energy in, it just gets dirty and, and it kind of atrophies. But if you set up systems and processes, uh, you can fight that, that kind of gravitational pull. Uh, Lisa, how's, uh, how's your perspective, your experience changed over the, over the whole transition here?
[Lisa]
We have a lot more visibility into what is happening with our jobs, which is obviously for me huge. Um, you know, we've seen them grow over the past six months. And even prior to that, things that were being implemented that really didn't just help them, it also helped us as a customer. And obviously, as a customer, that's what we are always looking for. Um, so I ... You know, what they did ... the data that we're able to get from Steelhead, that's great for us. But also the communication, the transparency. Um, again, working in defense, the traceability is huge. You know, I think we've talked a lot about trust today. And one of the things is we are able to trust in AnchorBay that when we take our parts there, they're gonna produce them to what is on our purchase order, um, and provide us with the documentation that we need for us to be able to ship to our customer. Um, so it's not just about trust with us and AnchorBay. It also creates trust between our customers knowing that we're gonna do what we say we're gonna do because AnchorBay is doing what they say they're gonna do. Um, and the digital data part of it is huge for us. Um, it cuts time, um, and our employees having to be calling around and figuring out where things are, when things are gonna be ready. Um, and I know we talked a little bit about, uh, AnchorBay's growth, the things that have been put in place for them. Something that's helped us as a customer, uh, they recently purchased a semi-truck. Um, so now we're able to get our parts delivered and picked up. Um, I know it's a new thing. They have a great driver, Paul. He's great. Um, he'll come in there with a smile on his face. We get our parts there. Uh, the other day, I didn't even know parts were coming. I hadn't checked the dashboard, and he just showed up. Um, so it's, it's great. Again, the paperwork side of it, if I need something, it's in Steelhead and I go there and I can look for it, um, without having to bother everybody else. Um, so it's been huge.
[Jeff]
Fantastic. Lisa, uh, I just want to touch on that. And anyone from the AnchorBay team can answer this, just kind of side question, 'cause I, I think it's the really specific topics that, that people are really gonna stick with. Buying a brand new truck. I saw the picture on LinkedIn. It's got the pull away tarp. There's n- not a lot of people buy brand new trucks. They're like, "H- how is that any- ... How is that not just a complete flimflam waste of money?" Like, what's the ROI of buying brand new off the truck shiny semi-truck? Like, how, how ... Talk us through that business decision.
[Rob]
See, for me, it was more of another added benefit for our customers. You know, it's one of the number one things we hear, is, "Oh, man. You know, trucking this or trucking that. We have to get it." And I thought, "Man, it would just be nice to me as a ... Not only for our customers, but as a growth thing, right? If I have this truck, I can get these other customers that, you know, if they're maybe a half hour away, they have another coater that's five minutes from them-
[Rob]
... but they would prefer to use us. They like our quality better. They like our, you know, customer service better. But they're just not gonna go the half hour versus the five minutes."
[Rob]
So it's like, "Hey, if you want to come and get the parts, we'll use you." So it's like, "Yeah, we definitely need, need a truck."
[Rob]
So early on, we'll see how it really pans out. But so far, it's been ... I mean, you heard it right from her that, that's ... Just they just love it. Our customers absolutely love it.
[Jeff]
Great. It's a beautiful truck. Uh, Lynnsie uh, growth in adding, uh, another operation by way of future acquisition, which I know is part of the plans here, is, is, is difficult. So, like, how do, how do you scale that? We just talked about how difficult it is to kind of herd the chickens, uh, manage all the people with, with 30 people, 50 people, a- and now we're at 80. And then there's talk of, of more. Like, how is that not just a, a big scary thing? Like, w- what gives you confidence on that as far as processes, templates, standard processes, things like that?
[Lynnsie]
Yeah. So growth and acquisition is always challenging. And for me, being with AnchorBay for just a few short months, I'm still very much in, deep in the trenches and covering a ton of ground. Um, but as we continue to grow, I've learned that it's gonna be super important for us to formulate formal processes, uh, templates, as you had mentioned, for onboarding processes, training, policies, procedures. But also knowing that, um, we need to remain flexible so that way we can adapt to any organization that, um, we partner with. Um, and then for me, um, a- in addition to that is I'll say ... I'm, I'm an over communicator. Communication is key. And then just showing our partners that we are there to support them, um, whether the, the task is big or small.
[Jeff]
Fantastic. And then we have plenty of time for questions. Uh, with the last one, I want to give Andy the, the closing, uh, spot here. What's next? What does the next five years look like?
[Andy]
Well, I think number one is, um, we obviously want to with Rob, as you heard him mention, grow the business. And so for us, our goal is to really differentiate ourselves in North America. Um, we believe that there's plenty of opportunity, um, in the United States, Canada, and Mexico. So our, our goal is to really expand and grow in the North American region. And continue to carve out a niche space in the aerospace and defense end markets. We do quite a bit of work in the commercial space. While we're most certainly not, uh, uh, completely avoiding automotive, um, you all know that the automotive industry can be extremely volatile. And, and it's- it's really hard when you're- you're constantly just riding the rollercoaster. So, our goal is to continue to bring stability to the business through growth and really expand into end markets, expand our offering. So, you know, we spend a lot of time looking at and assessing how we can expand our current suite of solutions, to expand what we offer to our customers, um, product and service-based solutions. And so, we're very excited. Um, we've talked to a number of, uh, of coating and finishing businesses, um, across the United States. And, um, believe that there's a lot of folks that are kind of in that baby boomer generation, um, where businesses are going to be turning over in the next five to 10 years. And we think that we're positioned to help a lot of the- the baby boomer generation who want to sell their businesses, to acquire those businesses, provide those owners with a very smooth exit transition plan, and ultimately be able to be good stewards of the business that many of them have spent their whole life building.
[Jeff]
Excellent. Uh, thank you. Feel free to raise your hand of any- any questions for the panel.
[Audience]
One thing I am curious is, how are you able to leverage the reduced uncertainty that AnchorBay now provides you?
[Lisa]
Well, previously, when we would drop stuff off, again, it was all a paper trail. Um, so we would be, you know, there was a time many years ago, when I got a phone call and I was told, "Hey, um, we just found your parts in a box in the corner. Sorry, nobody checked these in. Um, it wasn't visible." [laughs] We thought they had our work. We thought they were doing it, uh, you know, expected a- a delivery date. Um, that wasn't the case. In that situation, they did work, um, to get those parts pushed through faster, make sure that, um, we got them. But now with the new system, we're able to see that our parts are checked in, that our parts are moving, where they are at in the process. Um, so it's really helped us as far as visibility and just knowing that we're gonna get what we need when we need it. Does that answer [laughs] your question?
[Jeff]
He- he's asking like, "Okay, you have visibility." Like, "So what?" Like, why is that important?
[Lisa]
It's important to not just us, but our customers, too. Uh, just like AnchorBay trying to provide us with on-time delivery, in turn, we're trying to provide our customers with on-time delivery. Um, as I talked before, the statistics we track, one of them is on time. Um, so we're able to, you know, see- make sure that we're providing our customers with what they need, as well as, um, Rob providing us with what we need.
[Jeff]
All right. Next question.
[Audience]
Yeah. [clears throat] I have a question for [clears throat] Rob and Lisa. Uh, if you could revisit the past, and you got to a point where you were concerned about survivability. Uh, at that tipping point, what would you do differently today, if that occurred?
[Lisa]
That's a tough one.
[Rob]
Pretty reactionary that way, so I pretty much stay out in front of most of those types of things. So, you know, I'm constantly watching the business. So, if I have something that just seems that's going in the wrong direction, I just shift gears into- into a different direction. Like Andy was saying, if I'm in automotive and that's going down, then I'm gonna go look at something else, heavy truck, or I'm gonna look at, you know, military or something like that to- to get out ahead of it. And, i- over the 20-something years I've been doing this, that- that's always worked well for me.
[Lisa]
For me, my husband is a visionary, so he is always looking, "What's next? What's upcoming?" Um, you know, "What can we forecast? What do we see?" Um, we did actually have that happen. One of our biggest customers ended up just really pulling back and trying to keep a lot of stuff that they were outsourcing in-house. Um, that had a huge impact on us. Um, like I said, we are a family-owned business. We've been in business for seven years. Um, and at first, we had a few good customers. Well, one of those few good customers pulls back, it gets you in that situation where like, "Okay, what's next?" And kind of like what Rob was saying, that just made us p- pivot. Um, that's when we really started hammering into the defense, uh, industry. Um, and it takes, again, in defense, a long time to get in. So, it's something if you can be proactive rather than reactive, and have those, you know, conversations out there, and knowing kind of the direction you're looking to go, it's- it's really helpful, um, in the planning process.
[Audience]
Michigan, much like the State of Florida, where we're at, there's about 380 metal finishing, uh, businesses here. What differentiates AnchorBay? Why do you pick them as opposed to others?
[Lisa]
With AnchorBay, they really understand the requirements. Um, one of our biggest contractors, um, about a year or so ago, they put a new quality clause in place, and didn't really tell anybody about it. It kind of just came about, and it was there, and it was something we were supposed to know about. We were processing parts with this quality clause on it, and we reached out to Rob, and we were like, "Hey, have you heard of this?" And he's like, "Actually, yes. I'm working with that customer right now to get a better understanding of it, um, to know what I need to do, how I need to change my processes." Um, and that, to us, was huge. There was a lot of companies in Michigan that weren't working with AnchorBay, didn't know about the quality clause. And honestly, you couldn't find somebody to do it unless you just knew. Um, so Rob took the time to meet with that customer, make it happen, and so now, the majority of my parts go there, especially when they have that quality clause. Um, and like he took the time to figure it out. So, that's why I choose AnchorBay. I know I'm getting reliable parts, and- and I'm 100% sure you're gonna be right. Um, that is not my area of expertise, so [laughs] Rob and his team really look into that and make sure we have what we need. And I can trust that they're gonna be right without having that knowledge.
[Jeff]
... adaptive, reliable partnerships versus 'take it or leave it,' is another way of saying that.
[Audience]
We overpay for our market. We have full medical, dental, health insurance, and a great PTO pro- program, but I still can't attract the right staff. What do I need to do differently?
[Lynnsie]
[laughs] Oh, that's a loaded question.
[Lynnsie]
Offering those types of benefits you... Is not going to be attractive to everyone. You're gonna have people who have no interest enrolling in benefits. There are people who, um, just want to come in and just grind and have no intention of ever taking any PTO. So, I think having, um, diverse benefits, um, to attract different walks of life is gonna be beneficial, whether it's benefits, offering a, a stipend in, in lieu of benefits, something like that. But one thing that I find super attractive as of recently, since COVID, is work/life balance. So, how much mandatory overtime do you have? What's your pay rate? Um, do wage surveys in your area. Is your wage, is your wage competitive? It's just, you're gonna want to also look at your retention, possibly even explore doing exit interviews to find out why your people are leaving. I wouldn't necessarily focus it just strictly on benefits and, and PTO, because, like I said, that's just not gonna be attractive to, to everyone. Um, and then, if you... If, do you have somebody in-house that, like an in-house recruiter or?
[Lynnsie]
Yourself? Okay. Um, even partnering, um, with some staffing agencies, um, getting some contingency clauses in place, um, might be helpful as well. Um, but like I said, just look in your specific area. Do wage surveys, make sure that your pay is competitive, and, and take a peek at how much overtime you're offering, 'cause that's not also gonna be attractive to people, either. They might just want to work 40 straight hours, go home as soon as they punch that clock. Or some people are like, "Nope, I wanna work 80 hours a week." And, and they need that too. So, just understanding what your team wants and then understanding the reasons what they're... why they're leaving is gonna be key, and then you can focus on those areas.
[Audience]
Like Lynnsie said, um, years ago, we used to do staffing agencies and then we kind of got away from them. But probably my last eight hires have been through the staffing agencies. And, uh, it's nice because you can bring them in, you can get them work, and, and find out if they're a good fit. And for me, it's, can they play within the sandbox with the rest of the kids, you know? Um, it really gives you a chance to get to know them before you take the time and effort in doing all the training and, and making them a permanent team member. Some people get in there and they just... It's just not for them, and that's fine. Um, but we've had a lot of, a lot of success in the last, I'm gonna say year and a half, with using the staffing agencies. And we currently deal with, we deal with three of them, but mainly, um, we have one that, when they find a good hire, they'll actually call and say, "Hey, Kyle, I think we found somebody for... That would work out for you." So, again, like we... In the last year and a half, we've had pretty good success, 'cause other than that, I've no idea where to find people to work.
[Lynnsie]
Mm-hmm. If you're local, find me after, I'll give you some suggestions on some staffing agencies.
[Jeff]
A follow-up question for Kyle, from, from Inghams'
[Jeff]
Powder there. Just to, uh, go d- bidirectionally for a second. Kyle, can you give us an update on the building? I know you were doubling the size of your, your shop, and then is, is... how many people are y- you're going from X to Y people? How many people are you looking to bring on?
[Audience]
Yeah, my building career is over. Uh, the building is, is almost complete. They're down to like their final five or ten on their punch list. The new equipment's coming in, uh, October 15th. Uh, the ovens and that are coming in. And the rest of the line will be November 15th. So, we're progressing slowly, but it's getting there. It's actually very... It's... The project is on track for where I wanted it to be. Um, the building project couldn't have gone any better. I'm just really sick of the building process.
[Jeff]
[laughs] Thank you, Kyle.
[Audience]
This question is for Rob. If you could give anybody one piece of advice as just getting into the powder coating realm, what would it be?
[Rob]
Well, what I learned, starting as a job shop as I did, and doing a lot of different things, I didn't really get a lot of really good advice from like my representatives from my suppliers, which really surprised me. Um, so I ended up having to learn a lot myself. You know, they would say, "Oh, do this," and I just have a hard time with it. And it's like, well, why is that? It turns out, a lot of 'em... Just some of 'em aren't as knowledgeable or maybe haven't expanded out into like the job shop space as much. I think a lot of the information out there is more for, "Hey, we got 100 of this part, and we're gonna run 'em and run 'em and run 'em all day. Okay, yeah, we're gonna get this pretreatment, we're gonna have this and this
[Rob]
... coat, and then it's all gonna be great." Okay, well, I do 10,000 different style parts. All different colors, all different treatments, all different everything. So that was one thing that I would say is not being afraid to look at a process and say, "Is this really the best? I know so-and-so said it is, but that doesn't mean it is." So that's, that has served me very, very well. There's a lot of things we do that I don't know if anybody else does, and people come to us for it, because I've tried something that I was told will not work, made it work, proved it works. It's like, okay, it doesn't work, that's great, but I'm still doing it, and it works just fine. So that would, that would be my advice. Just make, make sure you're comfortable that your processes are the best they can be.
[Audience]
Thank you so much.
[Rob]
You're welcome.
[Audience]
Um, so obviously, certifications open up new oppor- opportunities. Which ones did you see like the most revenue increase on, and what would you recommend for like a starting business?
[Rob]
Well, it kind of depends what industry that it is in. I think, in general, the easiest, probably most bang for your buck is just going to be ISO 9001 because almost everybody wants to see that, you know, once you go past a, a certain level. For our business, it was more company-specific. You know, we do a lot of defense work, so that's where we get our biggest. As you know, we... Every prime, we have to have a, a specific certification from them to run. So that, those are the big ones for us, personally. Um, but I think, just in general, is the ISO 9001, for sure. And then I think...... specific industries have specific certifications, you know, and like I said, for our specific business, the military, uh, specifications have been the, the big ones for us.
[Audience]
My question is for Rob. Um, I was hoping you could walk through your emotional journey as a business owner-
[Audience]
... to partner with Andy and how you gave up some of the control of your business?
[Rob]
So I'm sure many in here can agree that it's just been a little bit different since COVID now. Um, you talk about hard time finding people, ten times harder now since COVID. The ones you even find don't really wanna do it. So
[Rob]
it just hasn't been as fun for me as it once was. I loved building the business and things like that, and it's just gotten harder to do where I thought, you know, this is gonna be easier. So that kinda lessened that emotional turmoil, I think. It's still there. It's still, it's still tough, um, especially signing. That, that was the doozy. You know, it's like, I'm gonna li- I'm really gonna sign this thing and I'm gonna give up this control of my company? But I just, I had faith. I think that was the key to the whole thing. If it was a situation where I had to sell for some reason, it might have been a little different, but I was confident in what I was gonna do. I was confident that they were gonna help me do it. Always risk. I don't know. You don't know until it's done, right? So that definitely helped me through it. It was probably, I'm not a super emotional guy as it is, but probably the most emotional thing I've ever been through. It was, uh, a pretty big rollercoaster. But, um, got through to the other end of it, and that's, that's, you know, other than having good partners now, not much else has really changed. We just come in. We do our jobs. We run the business as we always have, just trying to do it in a better way. So...
[Audience]
Just because we're here at Ford Field, I'd like to share a quote with you guys concerning these staffing issues. I saw an interview recently with Dan Campbell, the coach, who in any given year might have to turn over a third or a half of his coaching staff, and he did this off season. The interviewer asked him, "How do you put together such a great team on such a short notice?" And he said, "Three things. Look for good people who work hard and work well together." It was such a simple formula. It struck me immediately because it sounded just like Steelhead where I'm, I'm kind of the new guy, but I've seen good people who are hard workers and wo- work well together. And with those three things, it doesn't matter what the, what certifications they have, how many years of experience, what degrees, anything else. But you can do a lot with that.
[Jeff]
I do have one quick question for Andy, actually, uh, kind of a follow on. We, we talked about HR management, and in this case that the owner is doing it, right? So... And Anchor Bay is now in a position where they've grown to a scale where you can kind of afford the specialization of talent. Okay, your job is production. Your job is, is the team, uh, and so on. But Andy, what's your advice on leadership and, and, and growing? Because if you have six people in your company, you can't hire a CFO and six different people to sit in air conditioning and give directive orders all day. So how do you, how do you get ahead of that? So if you're a l- a smaller shop, how do you handle leadership?
[Andy]
Yeah, I mean, I think the, the, you know, best piece of advice that I could give to people in this audience that are running job shops is ask for help. Ask for help. It's, it's strange how the human condition is such that we, we have so much pride. We have a hard time asking for help, and it starts when you're a little child all the way up to adulthood. Ask for help.
[Andy]
So many people want to help. So many people are willing to open their doors, share advice. I think the, the one trait that I just really admire Rob for, and many of you heard it when he, when he... You know, in his opening remarks here today, is the humility that he has. Right? I mean, he, he just speaks very openly about where he needed help, what he needed help with. "I'm good at this." "I'm not really good at that. Will you help me?" "Would love to help you, Rob." Labor. I... Nowhere... I've traveled across the country all day every day of my life. I've never met a business owner who says, "Labor isn't a problem in my business." Like it's just, it's... Everywhere you go, labor's an issue. "It's hard to hire. Can't find the right people." And I always tell Dan Burseth, I love hearing that because we can find really good people and we can find them quickly. Whether you're making pizzas, whether you're teaching kids how to do math, K through 12 students how to do math where you need a very unique, specific skill set, or whether you're trying to get a guy... Where's Sam? Who made Chipotle burritos? Sam? Is that right? Chipotle burritos, sleeping in his car? Like working 80 hours a week at a Chipotle, sleeping in his car, working double shifts. Literally go sleep in the car for three hours overnight at 2:00 in the morning, get up at six o'clock in the morning, go back in to get the restaurant ready for the next day. Am I lying? True story.
[Andy]
You can find good people who, to Joe's comment, want to work hard. You have to be willing to work hard
[Andy]
and you truly have to be willing to work with other people. If you can't work with other people from all walks of life, all skill sets, you're kind of in a rough, difficult place, and it won't be easy to fix, whatever ails you. So to me, those are the... That's the nugget of advice. Be willing to ask for help. Business owners, organizations, academics, get lots of input. Make informed decisions and just focus on taking those baby steps every day. So many people wanna boil the ocean. They wanna go from point A to point B at, at a, at a laser beam speed. It doesn't happen that way in the real world. We're talking very, very incremental changes. Changing human behavior is really, really difficult. My wife, Amy and I, we have eight children, and the analogy I always use at work is loading the dishwasher, cleaning the bathrooms, making your bed. My own children have a hard time making their bed regularly. They have a hard time loading the dishwasher when there's dishes in the sink. They need me to remind them to do that. Why are we so confused about going into an industrial environment than working with people we don't even know and getting them to change their behavior when our own children at times have a difficult time changing their behavior? It's how we're wired as human beings. So it goes right back to leadership. You need leadership to drive that change, and it's an incremental baby step process.
[Jeff]
Thank you.
[Audience]
I got a question here. Uh, so in high school, I worked at both McDonald's and Little Caesars, and I actually quit McDonald's, uh, to work at Little Caesars for a lower wage because there was just a better, you know, shop floor camaraderie and respect, and the culture was better. It was funner to work there. So, you know, down the- the path of labor challenges, you know, outside of- of wages and- and benefits, what kind of shop floor culture, uh, and camaraderie, uh, c- can you talk about at Anchor Bay?
[Rob]
I- I've always tried to keep a good positive mentality, starting with myself. I've always been pretty, um, involved in the shop floor. You know, I've never really spent less than half of my time probably out there, and just talk to the guys, try to be positive myself, try to keep them positive. Identifying very early on when you do get a bad apple in there, didn't really realize that early on in, you know, you might go six months and not realize you have one of those people in there, and they'll destroy the whole thing. Just one bad person can destroy the whole thing. So just making sure you have people that even have the ability to be positive, and then just kinda trying to push that positive mentality. I mean, I joke around with all my guys. I try not to be... If we're getting our work done, great. Then I don't try to be super serious, keep things light, and we've had a lot of people that have left. "Oh, I'm going over here. I'm gonna make all this money." Great, and then two months later, "Can I have my job back?" 'Cause they just went there, they made more money, and it was fine, but miserable, you know? So that- that would be my take is... Another thing on that hiring people situation is you have to make sure if you get 'em that you do have a- a comfortable environment for them to come into.
[Andy]
You just mentioned the magic word, McDonald's. And- and I- I can't help but just share one quick anecdote. How many of you have ever eaten at a Culver's? Anyone in the audience ever eat at Culver's?
[Andy]
Lots of hands. I have a proposition for you. I- I'm gonna start a business, and we have a board meeting tomorrow, and I just wanna let... I'm gonna go into my board meeting and- and tell the board, inform the board, "I wanna start a hamburger joint,
[Andy]
and I have this really cool idea.
[Andy]
I'm gonna make my customers wait for my hamburgers." They're gonna wait. They're gonna put the order in- in the drive-through, and I'm gonna ask 'em to pull up and wait, and I'm gonna deliver them something very magical. It's called a hot hamburger with Wisconsin cheese melting on top of it. The second thing I'm gonna tell the board tomorrow is, "I'm gonna actually spend more on my direct material because I wanna deliver a higher quality product to my customer than the number one recognized brand in the world, McDonald's. So we're gonna spend more. Our m- direct material cost is gonna go up, and the third thing we're gonna do is we're gonna increase our prices. We're gonna charge more. We're not gonna have an extra value meal and ch- charge people 79 cents for a piece of warm cardboard out of a plastic tray. We're gonna actually charge more. We're gonna drive our prices up." How many of you are willing to invest? I need investors.
[Andy]
Culver's has decimated, blown McDonald's out of the water. And if you think of all of your challenges running your job shop business, think of the dynamic. Hey, everybody tells you, "We need to improve our speed. Customers want their Big Mac faster. We need to take cost. We're a publicly traded company, take cost out of our product to improve our margin, and boy, competition's fierce from Chipotle. We gotta reduce our prices and come up with an extra value meal to completely cannibalize our menu." Culver's did the exact opposite. Their business grew, and they've left McDonald's in the dust. Just something to chew on.
[Jeff]
Excellent. All right, well, thank you. We are at time, uh, Jordan will introduce the next panel, but a huge, uh, round of applause for the Anchor Bay panel. Thank you very much. [clapping]