Any year is a challenge when it comes to owning or operating a business. But, 2009 has been an exceptionally challenging year. The media told us that we are in an economic downturn…a worldwide financial crisis unlike anything my generation has ever seen. Small town business owners like you folks have felt the impact of that in many different ways. This year especially, that’s what makes the story of our business of the year honoree all the more remarkable. It is a story of three men, who put up everything they had of value to save a company and their employee’s valuable jobs. It is an emotional story, and I am sure I will get emotional just telling it, just like the three men who told their story to me.
The story really starts with Barry Stevens, who was employed with Diversified Plastics, a manufacturing company located west of Centralia on the Sunnydale campus. Barry was the Production Manager who needed a change and decided to go to work for a company out of Booneville.
It was there he met two other men that together would change each other’s lives.
Matt Old and Lance McCann both worked in the Booneville plant when Barry showed up. Within weeks after starting his new job and meeting his new friends, Diversified Plastics called and wanted Barry back…this time as the Plant Manager. Barry agreed to return convincing Matt and Lance to come with him. Diversified Plastics home office is in Nixa MO and Barry soon found out that they were losing half of their work orders and the home office solution was to close the Sunnydale location and move what they could to Nixa. By the time the final decision to close had been made, only a bare bones staff remained. The day before the officials were to make the plant closing announcement, Barry chose to tell his employees himself. Afterwards, drained and emotional, he sat at his desk not thinking about his job loss, but those of his co-workers. It was then that Matt knocked on his door and said one sentence…”Barry, lets buy this place.”
Barry did something he hadn’t done in a while…he laughed.
But Barry mulled it over and decided it was worth a try. Barry had the management skills, Matt had the accounting skills, they just needed one more element…someone with people skills.
The two men then approached Lance, the man with the people skills, and Lance didn’t hesitate…he was in. Now the next part of the story is something that interested me…they went home and each one talked to their wives. Matt and Lance’s wives took the news in stride. They knew that if their husbands didn’t try to buy the business …they would be out of a job. Barry’s wife had a different reaction…she just looked at Barry and said “You going to do WHAT with those two guys?”
The negotiations with the company had its ups and downs and when the dust had settled, a deal was made. But the three men knew that before they could acquire financing, they would need a business plan. So Matt and Lance locked themselves into a room and for two weeks of fourteen hours days, they broke down every inch of the company and rebuilt the business on paper. Lance recalls those dark long days as the hardest thing he has ever done. When one man was discouraged and said “We can’t do this…the other two would tell him to get over it.” How very fortunate they were that each man was not down on the same day. When they had their business plan in hand, they found an accountant who immediately met with them and helped sort it all out. Then they found a lender that was experienced in Small Business Loans and the world of manufacturing and with their help, found additional financial support through the Department of Economic Development. Part of their funding would come from an Action Fund Loan through the DED. But that loan required a government sponsor and since the plant was in Audrain Co., it was suggested the group approach the Audrain Co. commissioners to sponsor their funding request. But most of the workers in the plant, come from Centralia so the men decided they would approach the City of Centralia for sponsorship. Never before has a loan like that been sponsored by a government entity other than the county the business is in. So, they found themselves sitting in front of Lynn Behrns and when he heard their story, all he said was “Tell me what I need to do.”
Barry, Matt and Lance agree, they left Lynn’s office feeling finally that this thing they started, just might happen.
Well, this story does have a happy ending but it wasn’t easy and it wasn’t without setbacks. But the guys say that every time a door was slammed in their faces, another would open that would beckon them to continue. With an experienced lender, a knowledgeable accountant, and a government entity to sponsor them, these three men made their dream come true.
Today, Alliance Foam Technologies run two shifts, four days a week and employ 25 people all from this area. They manufacture a unique product that involves foam and steel and sand and I am going to let those guys tell you how that all comes together. This year, they hope to top 1 million dollars in sales. How did they do it…they didn’t give up. They took the skills they had and kept asking questions, kept seeking answers. More they anything, they had a plan and after they had a plan, they planned and planned some more.
When I asked them what they would tell other entrepreneurs, they told me they would say...have a goal, have a mission statement...have a plan. Find your strengths and your weaknesses. Make sure the market needs what you can supply and stay positive. Expect sleepless nights and lots of second guessing. And never, never be too proud to ask for help. Barry, Matt and Lance all told me that one of the lighter moments of this whole process, was to see Lynn Behrns face, when they plopped the five inch stack of required depart of economic development paperwork on his desk. Lynn, that must have been some look!
So this year, the year of financial turmoil, our Chamber recognizes a business that took a chance, a risk, and an opportunity to steer their own destiny and save jobs while they did it. It is a privilege to give the 2009 Chamber of Commerce Business of the Year award to Alliance Foam Technologies.
When Diversified Plastics announced it was planning to close its plant near Centralia, three employees put together a plan to buy the operation. Their efforts prompted Centralia’s then-Mayor Shelley Becker to call Barry Stevens, Matthew Old and Lance McCann “heroes.”
“I’m no hero,” McCann said. “I’m just a guy who believes in something and found two other guys to believe in.”
The trio purchased the plant’s equipment, inventory and furnishings, but they couldn’t save all of the jobs. Half of the 56-member work force was laid off by Diversified Plastics before the change, and Stevens, Old and McCann could only retain eight employees.
“There’s not a day that goes by without that gnawing at us,” McCann said.
The reality of owning a business gradually has been sinking in for the trio of northern Boone County men who decided a month ago to buy the business that was getting ready to put them out of work. Two weeks ago, Old wrote out the first payroll checks for the 11 employees of the newly created Alliance Foam Technologies.
“That was a little bit of a dose of reality,” Old said.
The three men faced a different, harsher reality in February when Nixa-based Diversified Plastics announced it was going to close its plant on the campus of Sunnydale Academy Adventist School near Centralia. The plant, in operation since 1976, was getting the axe from Diversified because Citation Corp. was pulling about half of its work from the plant.
For Stevens and Old, the business venture is personal. They put up their homes as collateral for the Small Business Administration loan through The Bank of Missouri.
“That was a make or break” for the deal “if we didn’t do that,” Stevens said, explaining the only other option was to let the plant close and look for another job. “We didn’t have a pocketful of money sitting around.”
Old hopes to see the number of employees grow to at least 20 by September, “if things continue on the upswing like we’re seeing.”
That’s good news for former employees — many of them frequently ask the new owners about job opportunities. Seven of the plant’s 16 presses and three of its four specialized glue machines are in operation. “It’s really hard to tell them it may be a while,” McCann said. “We’d love to have everybody back here tomorrow.”
It was Old, systems manager for the new company, who first suggested to Stevens that they join forces to buy the business.
“You build your life around your job,” Old said. “It’s time to see if we can make this work on our own.”
And if the venture doesn’t work?
“We can’t blame anyone else,” Old said. “I’m tired of not being the master of my own destiny.”
Stevens, an employee of the local plant since 1996 and plant manager since July 2007, admitted he initially laughed at Old’s buyout suggestion. Still, he entertained Old and McCann’s number-crunching to see whether a buyout would be possible.
McCann called Stevens “the glass half-empty guy” — the one who questioned all the answers McCann and Old came up with.
“My job was to ask questions,” Stevens said. “It’s real easy to get caught up in the thing emotionally. We had some pretty intense discussions at times.”
McCann said the decision to become “entrepreneurs in the truest sense” was a “heart-and-mind” decision. He readily identified himself as the most emotional of the three partners. He choked up in a public hearing on March 25 when he was given the opportunity to read a resolution of support from the Centralia Board of Aldermen.
The application for an Action Fund Loan through the state Department of Economic Development required the would-be business owners to have a municipal sponsor. That’s where the city of Centralia stepped in, even though the plant is located six miles from Centralia and is in Audrain County.
The city’s “sponsorship” did not require making a financial obligation, just an official expression of the plant’s importance to the community’s economic well-being. The city’s resolution of support said Diversified Plastics was an integral part of the community.
Stevens wouldn’t reveal the purchase price negotiated with Diversified Plastics except to say it was “very, very good.” It also helped that Diversified continued to provide operational support two weeks beyond its closing date, to give Stevens and his partners the time they needed to get financing.
“We ran” longer than anticipated “on Diversified’s money,” McCann said. “We just can’t say enough good things about them.”
Financing scrutiny from The Bank of Missouri and the Department of Economic Development called for real numbers, cash-flow estimates and a solid business plan, all of which the new ownership group was ready to provide, partly because the group had already been working for financing through another, unidentified lending institution.
The Bank of Missouri was the third bank Stevens and his partners approached. With the help of bank President David Keller and SBA loan specialist Keith McLaughlin, the loan process was completed fairly quickly.
“We wouldn’t be here without them,” McCann said. The group also had help from Columbia CPA Bob Gerding and plans to utilize the services of the University of Missouri’s small-business center.
Plus, federal stimulus money created a program that eliminated many of the fees associated with SBA loans. “There were a whole host of things that came together for this to happen,” Stevens said.
McLaughlin, senior vice president of The Bank of Missouri’s SBA Lending Division, said the plan presented by Stevens and his partners was “a perfect fit for SBA to step in and help revive this business and get people re-employed. … These are three experienced guys who know how to run the business and a rural community that needs employment. It’s really a success story. These guys are really dedicated. They’re hardworking.”
The new company will continue to lease the building from the Iowa-Missouri Seventh-day Adventist Conference. One stipulation of the lease is that the facility can’t operate on Saturday, which the Seventh-day Adventist Conference observes as the Sabbath.
The new business model has one shift. Diversified had three shifts. The new company also expects to see some savings by working four 10-hour days.
“We’re attacking it from top to bottom,” working hard to create a different, more efficient business model that generates more productivity and greater quality, McCann, 38, said.
Old, 38, added: “If we don’t send a quality product out the door, our customers won’t come back.”
Stevens, 52, said one thing that sold him on the business plan was the indication that the economic decline has stopped or at least slowed down.
“We got in it at the bottom,” he said, “so there’s no place to go but up.”
Alliance Foam Technologies makes foam patterns for foundries, which use the patterns to make castings for industrial and consumer markets.
Utilizing “lost foam” technology, the new company uses expandable polystyrene — or EPS — which is displaced by molten metal to become the housing for water meters or electric motors and other products.
Citation Corp. in Columbiana, Ala., is one of 10 Diversified Plastics clients that committed to keeping a relationship with the new plant if Stevens and his partners could successfully purchase the business. AFT produces patterns for motor frames for Citation’s Baldor Electric Motor Co.
The jobs that are leaving AFT include a Freightliner exhaust bracket and a John Deere corn stalk roller, a part for a combine that once included 32 different parts. Lost foam technology enabled the product to go from a 32-piece fabrication to a one-piece casting.
Old said the company is thinking outside the box and looking for a wide, diverse customer base. “We’re trying not to let any one process be our bread and butter,” he said.
The automotive industry was a staple of Diversified’s business, but Stevens said the new company will avoid that sector for the time being.
“We’ll let someone else bear that risk right now,” he said.
Stevens and McCann have degrees in business management. McCann is a graduate of Rock Bridge High School. Old, a graduate of Southern Boone County High School in Ashland, has degrees from Linn State Technical College and the University of Iowa.
Although McCann and his partners have diverse work and educational backgrounds, he said it “just kind of broke my heart” to see a large percentage of workers in their 40s and 50s being laid off or seeking work with limited or no marketable skills, especially in the current economy.
“It’s been an emotional roller coaster,” Old said.
McCann quickly added, “It’s just starting.”
Original article can be found here.