Lending partnership is a manufacturer's strength
“We knew that the best ideas were going to come from the people on the floor.”
In 2004, Jim Umland bought a small business in West Lebanon with the goal of “turning a good company into a great and impactful company.”
CEPS made high-precision plastic components, mostly for medical and analytical lab equipment, and Umland added value through engineering advice and design that assured not only the right price, but also the right mold.
He also enlisted his 15 employees as partners in eliminating waste and becoming more efficient. Three teams looked for waste in housekeeping, part-handling and machine changeovers.
It took several months of meetings, but “once people realized they could say what was on their minds, that they were respected, heard and had some of their ideas accepted,” Umland said, “It got pretty exciting.”
One team cut machine changeover times from over two hours to less than one hour by creating a set-up cart containing the most-used pieces and tools, and by making certain parts of the changeover a two-person task (instead of one who walked around the machine 20 times). Another team overhauled the workflow of the shop floor.
CEPS went from winning 15-20 percent of its quotes to winning almost half, and sales grew an average of about 17% a year – while maintaining the same number of employees.
In 2009, the owner of Johnson Precision, in Amherst, wanted to retire. Umland saw a company very similar to what CEPS looked like when he acquired it nine years earlier, and with the same potential. When bank financing left him $1.6 million short of what he needed to buy the larger (58-employee) company, he began talking with the Vested for Growth team at the Community Loan Fund.
“They were willing to go deeper to understand what was behind our numbers. They really listened, understood our business and potential for growth, and felt like we were trying to do something positive,” Umland said.
Vested for Growth offered an alternative financing structure based on its royalty approach, which made sense not only to Umland but also to investors who had turned him down. As a result, Umland said, “other people we were talking with started reaching for their wallets.”
Umland sealed the deal in January and is now busy merging the two companies’ workforces, processes and cultures and finding a new plant with room to grow.
This story was published in the New Hampshire Community Loan Fund's 2010 Annual Report.