During the recession, Nicole came in to her family’s company, HM Manufacturing thinking she was going to learn the family business and bring it to a whole new level. Little did she know in the midst of this recession she would be bringing not just a new level to HM Manufacturing but a whole new beginning; a renaissance. We learned about all of this in the first part of the interview, where Nicole shared how she came in to her family’s company during the recession and began learning how HM Manufacturing worked. As she learned each new role she began to uncover discrepancies that didn’t make sense. Further research led her to question whether or not she had a mole in the operation.
Recession Is Just the Beginning
Dan: So how did you start figuring out what was going on?
Nicole Wolter: That was a time where I brought that up to my dad. And again, he’s like, no, I think it’s just because everyone’s trying to to undermine each other and stay in business, that maybe our customers are telling them our prices and they’re beating it to keep the jobs. Then I go, well, those aren’t loyal customers, I don’t want them. Who needs that?
It was a long year from 2010 to 2011 when I finally had it, because at that time, we were hemorrhaging money like crazy. We were losing jobs. I couldn’t keep jobs. We had customers that were now canceling orders, even though they’d given us the jobs just because the competitor was beating us. And again, watching the material go down, watching the scrap, watching lead times on the machines and just losing constantly. I said, you know what, this doesn’t make sense. So, I went to a private investigator. I looked into this competitor. What comes back is the most terrifying and shocking thing one would ever envision to find. What came back was everybody that was a part of that business certificate was in my shop?
Dan: Oh, wow.
Nicole: It all made a lot of sense at that point.
Dan: So the materials were still being produced here, they just weren’t going out under your name, they were going out under this other company.
Nicole: Correct. They had built like a nice little shell company inside of mine using my machines, my materials, my packaging supplies, my flanges, my assembly, everything that they could get their hands on, they were using. Of course, at that time, we didn’t have an ERP system, that was never in the forefront of our mind, nor did we have money to even have that. So everything was a paper trail. So they could go through the drawers and they could read what’s on the POs, they could go through the systems and see what things were quoted as.
Of course, my dad was very, he was very open about things. So on the CAD drawings he would have on the sticker, how many to produce and what he was selling it at. When I asked him, I confronted him, I was like, well, why do you have how much you’re charging on the CAD drawing that’s being fielded throughout the shop. He explains, “Well, because we’ve had problems in the past with shipping that once it gets invoiced out, it’s wrong. They are going so fast, they’re hitting the wrong keys and it’s changing the amount that’s on the invoice.” And I go, “Yeah, but that’s a problem. Why can’t we lock that out? We shouldn’t have throughout the entire shop that we’re selling 10 pieces at 50 bucks.” That is not a good situation. You don’t really know and with everything that’s going on right now, I just don’t think that that’s a smart idea. They had every advantage to undermine us in every facet.
Dan: So at this point, you’ve gone from 10 employees down to eight.
Nicole: Correct. Now we’re down-
Dan: How many of the eight were actually involved in this whole thing?
Nicole: It’s a good amount, yeah. We were left with not a lot of people. When we let everybody go, it was dark and eerie in the shop. No machine was running at that point.
Dan: So that’s got to make it pretty difficult to recover from that because you pointed out yourself, you’re not a machinist and I don’t expect that even after you let these people go, you were out there running the CNC.
Dan: This was what time? 2009 still or was it later?
Nicole: At this point when we let everybody go, it was the beginning of 2011.
Dan: So we’ve gone a couple years forward.
Nicole: Yeah. A year and some odd months. A year and a half trying to figure out not only what’s happening in the business, but trying to understand what we do. It was a very trying time. So in 2011, when all this stuff happened, we’re pouring over the bank records, we’re looking at everything that’s happening, what’s coming down the pipeline sales wise. We only had $80,000 in sales that was to be for the year which is super scary. We only had a few months left of capital to bankruptcy.
Dan: Wow. So was there long term play because this is very similar to another business that I’m working with, where somebody, and in this case it was a family member had come in and they were intentionally trying to tank the business so they can buy it back in pennies on the dollar and then make it their own. Was it a similar situation there or was it just these people were oblivious and they thought, well, you’ll make enough it will just skim off the top.
Nicole: I don’t know. Maybe. Just because we’re an established company. We have a lot of machines out there, a lot of machines. And so yeah, maybe. I don’t really know what their situation is nor do I care, I kind of like to move past that. That would be the smart move. In the back of my mind do I think that that was a big possibility, yeah, I think it’s a very big possibility.
The Fall Is The Beginning of Renaissance
Dan: So, you figure this out and let people go. What’s next because you’re dealing with skilled labor and as you know and I know, there is less and less of that type of skilled labor around so it’s not like these people grow on trees. How did you go about finding replacements and how quickly were you able to start rebuilding?
Nicole: That day, because my dad fired everybody at like five in the morning. I was like wait, just wait for me. Just wait for me to get in, I’m going to bring the cops, I want to do this diligently, I want to do this so we can have it on record. You do some legal action. But my dad was so hurt by the whole thing. He didn’t think clearly and so let everybody go. That day, I was like, okay, well what do we do. Now the scary ordeal of we’re going to lose the business, we only have a few months left. We don’t really have sales, we don’t have anyone who can run these machines even if we did get sales, so what do you do.
My dad and I poured over manuals for about four months. We’d do it from five in the morning till midnight. I was trying to help him figure out how to turn these machines back on. He used to run them so it was just kind of getting him back into the realms of things of how to turn these back on and how to start them and how to program them. Let’s be honest, I wasn’t going to do that. But what I decided to do was, I gave him and I a task. This is what I was responsible for and this is what he was responsible for. I was responsible for setting up interviews, trying to find help, calling prospects, calling customers and past customers to let them know what has transpired, like why we were losing, why our lead times were so aggressive and trying to win back some business. And then my dad was tasked with hiring people. I would get the people in for interviews and then he would be tasked with hiring them, trying to get the machines to run.
He had called some of his past networks that used to work for us back in the day asking if they could come in just a few hours after their first shift to kind of help us get some orders. People were willing to do that. I mean, my dad has a great rapport, he’s a good guy and I think people were willing to help out. So that, we were super thankful to have that and I think that that helped in the grand scheme of things. So as we were trying to get people, and of course, like we had people that, I had family members on my mom’s side that used to work for us back in the day. As luck would have it, as fate would have it, I had two of my cousins move back from California because the housing market had crashed and so there was no construction anymore and so they needed a job and at that time before they left, they were running machines. So, one would run a gear hobber and one would run a CNC lathe.
Little by little I was able to start getting some health back in and then getting some part time people that were looking for some part time help. So little by little we started to generate getting machinists back in.
Dan: So you mentioned you were about two months away from bankruptcy?
Nicole: A couple months. Yeah, it was like three to four.
Dan: Three to four months. What did you have to do to secure yourself financially because that’s a pretty precarious time when you know that there’s kind of an end in sight if you don’t turn things around. There’s kind of this perfect storm of things going on. So how did you work financially to kind of stabilize things and get back on track there?
Nicole: So at that point, we had blown though our line of credit and the banks weren’t going to give anything at that point because of the recession and they just didn’t want to have to deal with any of this. So my dad who is the greatest saver poured all of his life savings back into it. And so, actually, the exciting thing is that as of next year, he’s officially paid off.
Dan: Oh, great.
Nicole: Yeah, we paid off our line of credit already. So next year it’s like the big excitement that he’s paid off and now we’ll have all this extra money to reinvest into more machinery which is exciting. He had to pour everything into it because banks weren’t loaning out and and this was like the last hurrah. So, talk about a scary time knowing that all of your life savings are being poured into this and this is the last shot. That’s what we were dealing with, yeah.
Nicole: Oh no, I didn’t take it up until 2017. January 2017.
Dan: So now walk me between 2011 to 2017. What sort of process did you have to kind of grow and get back out of the hole?
Nicole: I dedicated myself to sales, very much so. I did that nonstop. I knew we were going to have to start innovating in regards to having a website. We only had a one page website. So I really poured into rebuilding, re-branding, getting out on social media, being a part of a LinkedIn network, using that as like a nice new pipeline to get exposure. I would do that every day. I’d do calls, start kind of getting new stuff in, I travel a lot. So pretty much what I’m still doing now but more on like a scarier scale, like, oh my God, we need to do this to survive. So I take things very personally.
And then of course, I decided to build an e-commerce site where we’d have PayPal and we could sell things that were stock items to kind of generate higher SEO placement. So just doing the little things started to help little by little. And then we had a CAD person. So we started to hire, we started to get new clients. Started to become more compliant with the ISO from that point. Now we’re in like 2014.
Dan: Now, were you ISO compliant prior to that?
Nicole: We would do things to their standards.
Dan: But it was never certified.
Nicole: Correct. Yes. So I knew that was going to be the next big wave. If I wanted to get the big fish, I was going to have to fully commit to that. So, I would task myself with that. I was very much involved with a lot of the management meetings, operation meetings; wearing multiple hats. and I was so nervous about letting people work on their own. Because of this, I was micromanaging so much, because I just, I didn’t trust anybody at this point. Not to say that I micromanage, but I still every day, I go to everyone’s cubicle or office or I’m out in the shop, what are you doing today? What’s happening today? What are we going to get done today? What’s on the agenda? It’s trying to take that stuff over.
Trust But Verify: The Way To Success
Dan: So walk me through that a little bit because that’s a thing I work on with a lot of clients because the lack of trust for whatever reason exists and mostly because they started the business, they own the business, they want to make sure it still continues. What have you done to kind of step back, trust but verify is always important.
Nicole: It’s my favorite line.
Dan: You’ve got to get to that point where you’re able to let some things go but know that you still need to do checks and balances. How have you implemented that so it’s not hands on all the time, and allows you to go do what you need to do which is sell?
Nicole: Sell and go close deal. That’s my thing. It took me a while. I realized that I need a life and as much as I eat and sleep with this business all day long and I enjoy it and I love it, I was starting to stress out so much. I was watching my hair fall out and I’m gaining weight. And it’s all of these things that I’m too young to be having to deal with. I wanted to get involved in associations and I wanted to be a part of boards and I really wanted to start networking. So that goal, in order for me to go network and be a part of these associations and boards, I was going to have to start passing things off.
I know what I’m good at, and I’m not good at having to answer phones every day or having to do quotes every day or do CAD. And even though I’m CAD certified now and I made it a point that during all of this to go do precision machining classes and do night school and be CAD certified and now I’m NIM certified and CNC milling, like I made it a point to really understand the shop so that I know everything about the company. But in order for me to go do that, I was going to have to start delegating. I was okay with that. I learned quickly what I’m good at, what I like to do and there’s a reason why have employees so that they can do their job. So I’ll circle back with them every day and and I’ll get like a progress report in the beginning of the day and at the end of the day and my door is always open if they have anything that they have questions on, they can always come and ask me.
I watched my dad do it. My dad micromanages. He’s here, he’s there, he’s everywhere, but doesn’t accomplish anything. He doesn’t finish anything because he’s got his hands in too many things and it creates chaos. So I watched it firsthand blow up in his face. I go, I can’t do that because it’s not effective for the business, it’s not good for the business. And if I want to grow, I can’t do everything. That was the big awakening experience. If I wanted to do things and I wanted to grow, I have to start passing things off and really dedicate myself to what I’m good at. And like I said, I love sales, I love closing deals and that’s what I’m good at.
Dan: How much ownership do the employees have for their jobs or what they’re responsible for?
Nicole: Yeah, 100%. I have metrics and stuff and if they fall short, we have a conversation, yeah, they’re all responsible for it. I don’t think that it’s a good thing when they’re half in, half out.
Dan: Okay. What kind of decisions do they, I mean, when I look for autonomy, what decisions do they have the power to make without having to bounce off you? Still have to notify you but if there’s something not working on the floor or whatever, at what point do they have the right to say okay, we need to change this because it’s not working.
Nicole: Yeah. So if they scrap a piece and something’s happening, if it doesn’t happen by the second or third time, and I have a production manager and I have a shop foreman out there. They’re constantly back and forth. He’ll let me know, hey, this isn’t going to go on today because we’ve had problems or this machine’s down. But they’re able to make their own decisions. They’re very much responsible for their own machines. They have a daily list of things that they have to get done and in that order, and if they don’t because something’s going wrong, they need to inform the supervisor and the foreman. And then they’ll let scheduling know and they’ll left customer service know. But I don’t really need to know unless it’s all hands on deck. We’re not able to ship this out code red kind of deal.
Dan: Okay. Good. So, you’ve now moved up to where it’s 2017, you’ve taken over the business. What prompted that decision to finally happen? Were you buying into the company? Was your dad going, you know what, I don’t want to run this anymore, you’re doing a great job? Hand the keys to the kingdom over.
Nicole: Yeah, can you imagine. It was so great to hear those words. Well, my dad is 75 and I think it was a long time coming and I think he started to see the growth that I was doing personally as well as managing as well. And taking on going to these precision machine classes and night school and CAD and doing my due diligence, I think he felt a little bit more secure with trying to take a step back. But when I landed Boeing as a customer in July of 2016, he goes, I want to take a step back, I think it’s time for you to take over and I said, not yet. We’re getting this new ERP system, I just don’t really want to have to deal with the hassles of that. We got the new ERP (Enterprise Resource Planning) system and it kind of blew up in our face because my dad decided-
Dan: And ERP just so I get it, what’s ERP stand for?
Nicole: Good question, it stands for Enterprise Resource Planning. It handles all of our materials tracking through the plant.
Dan: So you got the new ERP system, you didn’t want to quite jump in then and then it got completed.
Nicole: It was a mess because my dad decided he wanted to shut off the old system and just go straight into the new. So, we lost two new customers because of it, just because it took forever to get into the system, we were all trying to figure out the system. We couldn’t figure out the travelers or the scanning or the live tracking or any of that stuff. Everything was not melding together well. We lost two new customers and I was super frustrated with that and if we would have just had the old system running dually, we wouldn’t have had these problems. I think that’s when my dad decided, so that was December., when everything finally was live and ready to go. He’s like, you know what, I just don’t want these issues, I don’t want these problems. I’m done. This is my last big push for the company. It’s all for you. So I think the ERP system really, it was his last hurrah. And he’s like, now you deal with the problem.
Recession: The Road to Renaissance
Dan: Pass the torch to you.
Nicole: Exactly. Have at it. It was time. He saw the direction I was taking the company and now I wanted to be AS9100 certified, which is for aerospace, and I wanted to start diving into other industries and making a push for all of that.
Dan: Here we are now, probably about a year, a year and a half later. What have you learned being the CEO that was different than when you were not the CEO?
Nicole: The amount of responsibility. A lot of it. I’m very cognizant of the deals that I take because I know that if I make one bad deal, it affects not just the company but the employees. Of course like the amount of bills you have to go through, the budgets. Having to field, because I’m still doing HR at the same time because we’re a small business, right? So I’m not going to have an outside consultant come in and do all of that. But trying to be as helpful as possible, still having to do my own responsibilities. Having to do a lot more of the manufacturing side of things, which was new, because my dad was handling that more. So now it’s like they’re coming to me for a lot of the questions. Because of this, a lot of the time I don’t have the answers so I love Google because I just start, it’s like, what is this, like what am I supposed to know? I’m super thankful to have my dad who’s just a mentor and a wealth of knowledge. So, I’ll go to him and be like, all right, so, they asked me this question, what do you do, what do you say?
Dan: So what’s his final succession plan because you said he’s 75, right?
Dan: Is he planning on just going until-
Nicole: Until we have to bury him here? Yeah.
Dan: LOL! Don’t want to word it that way but yeah, it’s kind of like-
Nicole: That’s literally what it’s going to be. That’s fine, I need him. I think it’s great because when I’m not here, I know he’s here and he’s watching and he’s a nice presence to have and people can still go to him and ask him questions. But it’s also great now too because he understands the dynamic of how I manage and how I like my company culture because that’s changed too. Because back in the day, there was no company culture. You don’t like it, there’s the door, get out. Now you can’t do that, right? So, it’s fun when he calls me and says, okay, we have a problem her, how would you like to address it?
So I think that’s a really neat thing that he’s able to call me and now ask me for advice as well. But yeah, he’s going to be here until he’s not here and I love it. It’s great. We have a great relationship with my dad and I’m proud of what we’ve been able to accomplish.
In Part 4 we will learn what HM Manufacturing did to rebuild its culture while improving product quality and sales. Nicole will share the steps she took to create accountability and ownership while putting in checks and balances.