Financial Armageddon

If there is one theme common to the success of those businesses that have managed to weather the economic storm (so far, at least), it is their flexibility -- that is, their willingness to:

• Radically shift course and redefine their overall strategy
• Rethink pricing
• Diversify into new markets
• Target new categories of customers
• Consider fresh approaches to purchasing, manufacturing, marketing, and other processes

The following recent reports highlight some real world examples:

"Evolving Strategy Helps Weitz in Recession" (Des Moines Register)

Leonard Martling, the new chief executive of Weitz Co., has been described by his boss, Glenn De Stigter, as "receptive to coaching."

The metaphor also applies to Iowa's largest building contractor, as Weitz feels its way back from an economy on the brink.

Well before the downturn began, Weitz's independent directors - a collection of executives with non-construction experience - were providing clues to the future from their own industries. Once the trouble began, Weitz began taking one-off jobs - retrofitting factories instead of building new plants, and repurposing commercial space instead of creating new.

Even further back, in 2006, Weitz acquired a California company that builds military bases. That move has paid big dividends in terms of government contracts since the economy slowed, and it is expected to become even more valuable in years to come.

Weitz's constantly evolving business strategy has kept it viable for 155 years.

"Success Story: Focus Shift Helps StormSmart Weather Recession" (The News-Press)

Business started exporting products, selling wholesale

When the new construction market dried up in Southwest Florida, many Lee County businesses serving homeowners sought new ways to keep sales steady.

Fort Myers-based Storm Smart Industries, a manufacturer and installer of hurricane protection products, shifted the focus of the company from retail to wholesale and export to keeps sales steady through the downturn.

"If you go fishing and you keep fishing in the same pond and you don't catch any fish, you go to a different pond," said Brian Rist, company owner.

For the first quarter of 2010, Storm Smart reported $2,133,215 in overall sales - an $18,404 increase from the first quarter of 2009. Rist attributes the growth the the company's efforts to plan ahead and diversify, selling products to more markets.

To set themselves apart from other hurricane protection companies in Lee County, Storm Smart looked at fortifying the whole house: from the designs of the roofs to the different shutters and screens you can use to protect vulnerable openings such as covered patios and lanais.

The company carries impact resistant windows, metal and clear shutters, and wind abatement screens - a product tested to reduce hurricane winds by 97 percent.

With 15 years in the industry and seeing business triple after the 2004 season that produced Hurricane Charlie, sales started to slow in 2006, Rist said.

"I could start to sense a downturn in the new construction business and in the rebuilding after Charlie," he said. "And so I realized then we had to do something different, and that's when we started to work on getting into the export business."

"Recycled Plastic Bottles Help Foss Manufacturing Shine Yet Again" (Seacoastonline.com)

HAMPTON— Since this latest recession began there have been the horror stories — businesses closing, employees laid off.

Well, Mike DeGrace and Dave Rowell want their neighbors in Hampton and all across the Seacoast to know at least one company has not only survived in these difficult economic times, but actually thrived and grown.

DeGrace is president and Rowell is vice president of sales for Foss Manufacturing Co. LLC in the heart of downtown Hampton — in a 565,000-square-foot facility on 94 acres between Route 1 and Towle Farm Road, just south of Exeter Road. The 56-year-old textile business was formerly a family-owned business and is now run by Alinian Capital Group of Ft. Lauderdale, Fla.

Several years ago Foss was listed as the 18th largest producer of non-woven textiles in the country.

"The most important thing we want people to know is that we are here, we support the community and we are doing good things," DeGrace said.

The fact Foss is still around and in Hampton is no small accomplishment. In 2005, the company was on the brink of bankruptcy and owed creditors an estimated $50 million, despite having patents on a number of important fabric processes.

Alinian took the company over in 2006 and in early 2009, a settlement was reached with creditors and Foss was free from the taint of bankruptcy.

However, that year the recession hit the automotive industry involving some of Foss's biggest customers. More than 100 workers had to be laid off, jeopardizing a major Community Block Grant the company had received, and used to modernize its processes and shifts the direction of its production.

"We've been struggling since we took over the company," DeGrace said. "We've been low-key because business has been tough."

However, now Foss Manufacturing is ready to tell the world about its new direction and products, and the world is apparently ready to listen. On-air personalities and cameramen from CNBC visited the plant last week to prepare a segment on the company scheduled to air in September.

"They were so excited about what we're doing that we became excited all over again," DeGrace said. "We thought we should let our local communities know about it as well."

The segment the CNBC people filmed at the Hampton plant will be part of a show on environmentally active companies across the country. Foss fills that bill based on the decision to institute a new approach to the development and manufacturing of non-woven textiles using plastic PET (polyethylene terephathalate) water bottles.

"Until we bought the company, they had never used plastic bottles," DeGrace said. "Now about 90 percent of what we produce is made from them. "We took a bit of a risk, (but) it's been good for the company and it's good for the environment."

Rowell said last year approximately 51 billion water bottles went into landfills in the U.S. alone. It takes about 700 years for one of those bottles to degrade, he said.

"(PET) is an oil by-product," Rowell said. "We can spin it like any other prime resin into clothes or rugs.

"It's amazing that the bottle you just drank out of, with very little effort, can be made into T-shirts," he said.

...

Foss is now the largest manufacturer of plastic resin woven fibers in the country, DeGrace said, and it has proven to be a boon to the company.

"Business is up 30 percent over last year," he said. "Automotive is coming back and three years ago we didn't have the big-box store business we have today."

"Staying Viable Through Diversification" (Palladium-Item)

As its traditional business declines, Richmond casket company expands into making parts for trucks, planes and locomotives

One Richmond manufacturing firm continues to find ways to combat the effects of the global recession.

J.M. Hutton Company, a casket-maker headquartered on Richmond's south side, has moved steadily into other manufacturing areas to bring work into its warehouses.

"We make caskets and components for caskets. That's what we do," said Hutton president Richard "Jeff" Jeffers. "That's 84 percent of our business. But it's steadily declining, and that will continue."

So now Hutton builds components for trash trucks for Autocar in Hagerstown, specifically doors and cab roofs.

"That business is growing and will continue to grow," Jeffers said. "We had to do that to maintain our level of employment, our level of income and revenue."

Four years ago, Hutton began making thrust reversers, "the brakes" for the Boeing C17, the U.S. Air Force's cargo and heavy equipment planes. They also began manufacturing medical instrument trays for the medical industry and valve covers for diesel locomotives.

Jeffers was forced to diversify when the casket business declined because of the popularity of cremation and intense competition from caskets imported from China.

"Rolling Out at Stores" (Boston Globe)

Hurt by restaurant slowdown, Finagle a Bagel enters the wholesale fray

Like many chains, the Newton-based company has suffered during the recession as people started eating more of their meals at home. Adding to that, Finagle a Bagel has been facing stiff competition from other bagel chains, doughnut shops, and even fast food restaurants that have increased their breakfast offerings to grab business during one of the most lucrative dining times. Revenue plunged from $20 million in 2007 to $10 million last year, and the company shuttered 11 of its 21 restaurants.

As a result, Finagle a Bagel presidents Laura B. Trust and Alan Litchman decided to overhaul their strategy, starting a new business in 2008, SJB Bagel Makers of Boston Inc., to sell Finagle a Bagel- branded bagels in the frozen food aisles, bakeries, and bread sections at grocery stores. The goal? To dominate the wholesale bagel market in New England.

Trust, SJB’s president, said the company is aiming to adapt to a fundamental shift in consumer habits. Pointing to the growth of the organic food market, she said that consumers are “paying more attention to their health and what they’re eating.’’

“If this test goes well,’’ Trust said, “the sky is the limit.’’

This reinvention will not be the first for Finagle a Bagel. The company — officially called Julian’s Cheesecakes Inc. — started as a cheesecake stall in Faneuil Hall in 1982. It began making bagels as a way to use extra cream cheese, but the bagels sold better than the cheesecakes, so the company changed its brand name and shifted to selling bagels in the early 1990s.

Now, SJB Bagel Makers of Boston, which accumulated $3 million in revenue last year, is laying the foundations of what the company hopes will become a wholesale bagel empire. SJB began selling Finagle a Bagel bagels in the bakery sections of 28 BJ’s Wholesale Clubs in the spring, as well as in the freezer aisles of Giant Food Stores in the winter. SJB also produces bagels for third parties — like Stop & Shop’s Nature’s Promise brand and Giant Food Stores’ private label. And SJB’s brand Bailey’s All Natural Bagels sells bagels to schools and hospitals in addition to miniature bagels at Roche Bros.

Finagle a Bagel’s move follows decisions by other restaurants looking to market their brand-name products in supermarkets, including Jamba Juice, P.F. Chang’s, and Burger King. Larry Flax, cochief executive of California Pizza Kitchen Inc., which started selling frozen pizzas in 1997, said the company now sells more pizzas that way than it does in its 206 restaurants. The frozen pizzas, which are licensed to Nestle, are sold at 22,000 grocery stores and generated $159.8 million in sales last year.

"Local Business Owners Don't Let the Recession Stand in Their Way" (Morning Journal)

Lorain County businesses have been hit hard by the recession that began in 2008, which many economists are calling the Great Recession. But some plucky entrepreneurs have found ways to thrive in the face of adversity, so The Morning Journal asked them how they do it.

Design by DesAnn

DesAnn Collins, of Elyria, started Design by DesAnn in 2006 after the sale of a family owned Convenient Food Mart.

Collins is an interior decorator specializing in home staging, making subtle changes inside homes for sale to make them more appealing to buyers.

“Most of the time the homes are still occupied, and people are working on limited budgets,” she said. “But updating hardware on kitchen cabinets, or adding a new storm door can make the home more attractive.”

Following your dreams and passions and being willing to diversify your career are important keys to success, she said.

“The number one thing to think about is what you would do for free because you love it,” she said. “Then you have to figure out how to get paid for it. But whatever you do, you have to go into it wanting to help others.”

Keeping her prices low was also crucial, she said.

“Many stagers want $500 to walk into your home,” she said. “But I live in Lorain County and $500 is a lot of money to people who live here. I do a walk-through for $150 and the plan I create averages five pages on a legal pad.”