MiTek
®
A Global Success Story
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MiTek® 1981-2011
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D EDICATION Every successful project needs a champion. That individual with those rare qualities to “muster the troops” to achieve the goal. For this project, that individual was Terry Nicholson. December 6, 2011 was a dark day at MiTek as we learned of the untimely passing of Terry the day before. As leader of MiTek’s software group, his vision and passion were unwavering. Whether he pushed, prodded, cajoled or, on occasion, showed his temper, he had that uncanny knack to get the most from his staff; making the process a win for him and for MiTek. Building on the success of many before him, he brought a new vision for software at MiTek, and the result was SAPPHIRE™, our flagship software solution. As the driving force behind the creation of this history project, he spent over a year – much of it in secret as the initial plan was to make it a surprise to Gene Toombs upon his retirement – before joining in the decision to bring Gene on board to add his insight into the wonderful history of MiTek’s past thirty years. Using the same skills he did in crafting SAPPHIRE™, Terry went to MiTek staff around the world to get their input on our history, all in an effort to make this effort the very best it could be. It was in mid-November that Terry finished the section covering MiTek’s software history, telling the author that it was complete. Though he was with MiTek for only four years, Terry had the respect and admiration of everyone he touched. It is for his passion, vision, commitment, humor and intensity that he will be remembered and for which we dedicate this book to him.
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What began as a brief overview of the history of MiTek has grown into a comprehensive review of a remarkable company and its people. I look upon Paul Cornelsen as the creator of this unique company and feel blessed to have been approached by him and then persuaded to give up a successful career as an officer of a Fortune 500 company and accept the challenge to join a small organization with a chance to lead it into the future. MiTek began as a small player in an industry that filled a unique position supplying engineered fasteners, machinery and software to the global building components business. Through many acquisitions and aggressive organic growth, the business became the industry leader: and for the last 20-plus years highly profitable despite the global economies of the world. The recognition of software as the key to growth enabled MiTek to obtain and keep its leadership. That and the ability to recruit and retain some outstanding people who, through dedicated hard work, never looked back and always kept the customer first in all that we did. The highlight to this story is, of course, the sale of 90% of the company to Warren Buffett in July 2001. Warren’s agreement to allow many of our management team to own 10% of the company made many of our team wealthy over time and provided an ownership mentality, which I believe is the key to success. His belief and trust in our management team enabled us to make 34 acquisitions in 10 years, allowing for rapid and profitable growth that was instrumental in our success. Working for Warren is truly an honor and having one of the world’s most savvy businessmen as your advisor makes coming to work each day exciting and fun. I have often said that after working in this environment the only way to leave is to be ready to retire, as you could not work for anyone else. As I wind down my nearly 23 years with MiTek I look back with pride on what we have accomplished but also feel that the future for the company is even brighter. I will stay involved as an advisor and Chairman Emeritus, but I leave confident that the team we have in place will be more successful than I was, making now the right time to move on. I owe thanks to many people, starting with my family who put up with my many absences yet were always there for me. Thanks to all of our dedicated MiTek associates around the world who have made my work and personal life a great experience. Good luck to all and always keep moving forward.
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A U T H O R ’ S
F U L F I L L I N G
F O R E W O R D
T H E
V I S I O N
In working with some terrific people at MiTek in the development of this work, it struck me in the way they viewed the company. The Truss Industry is a fairly unique niche. Consequently, those who work in this industry do so for extended periods. With MiTek being the final resting place of many companies, it is not surprising that many view the company through shaded lenses. Yet, to a person, they all recognize that the strength of MiTek is in this unique mix of talent, drawn from outstanding companies across the globe. From the interviews I conducted, it may be said that each of these earlier organizations lacked the key element needed to have survived in a very turbulent industry. They lacked the one ingredient found in the individuals who guided MiTek to its current position. They lacked a strong sense of vision. Ultimately, the story of the birth, growth and eventual market leadership of MiTek is quite remarkable. In essence, it is about two men with a strong grasp of their business, and the industry into which they were selling. It is also about how each envisioned how the organization they were leading – and in many ways, these were two very different companies – could become the industry leader. Just as remarkable, the two men – Paul Cornelsen and Gene Toombs – could not be more different; yet, they each had that one trait that is common in uncommon men: a clear sense of purpose and an unwavering determination to their chosen path. Cornelsen, a financial and operational wiz, was as sharp as a tack in brushing aside the peripheral to see what needed to be done and then finding the right person for the task. However, unlike many of his mold, he had a boldness in his approach, which enabled him to trust those selected for the task, asking only their loyalty and their best effort to achieve the targeted goal. However, Cornelsen also knew that his time at the helm was short. Consequently, he developed a splendid end-game, one that was designed to enable MiTek to not just survive, but to be well positioned to take advantage of opportunities as they arose.
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Toombs, on the other hand, is more of an instinctive leader; the type of man you would want in your corner during a tough 15-round fight. He could gauge the competition, see their weakness, predict their attack, then counterpunch with the best. Affable, confident and self-assured, Toombs seemed to be able to do a gut-check at the right moment to predict the slightest change in the market. Even when things were not going as planned – as some did at times – he never wavered from his belief that he was leading MiTek down the proper path. It was the combination of these two individuals, one following the other, that makes MiTek most unique in the business world. As different as they are, there is a unique bond between them that will never be broken. Each can look upon the other as contributing to the success of the other, much as a coach enjoys the success of his quarterback, while the player’s accomplishments help validate the coach’s game plan.
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T H E
W O R L D W I D E
L E A D E R
There is no doubt that MiTek is the worldwide leading supplier in the Structural Building Components Industry. Whether for connector plates, software or automated machinery, MiTek has the products and services to get the job done for the customer. However, it was not always that way. There was a time when MiTek, viz. Hydro-Air, was not the leader, but merely the pretender. Certainly it was not due to the lack of effort; but others in the field produced better machinery, lower cost plates, better software and had some of the best people in the industry. So, how did the MiTek we see today rise out of the rubble to the top of the industry? Was it done by mere chance? Or was it due to the genius of those leading the company who saw the opportunities available, identified the best and brightest within and outside of the organization, and, in reality, understood the key vision necessary to grab the brass ring? To an extent, as it must be for any great organization to come together in such a manner, the stars had to be in alignment. The two key players in the formation of MiTek – Paul Cornelsen and Walter Moehlenpah – were each in a transition period in their careers when their paths crossed. Had Cornelsen not left Ralston Purina when he did, and, had he not previously been on the board of Boatmen’s Bank, what would MiTek look like today? In addition, had Moehlenpah not had the financial struggles at that exact moment, which caused him to relinquish control of Hydro-Air, would Cornelsen have moved on to other ventures? Finally, had Cornelsen not brought in Gene Toombs to dispose of an unprofitable business – something he did successfully – would Cornelsen have been able to see those qualities in Toombs that would enable him to take MiTek forward? Certainly, a lot of luck – plus good timing – played a role in the MiTek of today.
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In many respects, MiTek has been not unlike a professional sports team that brings in the right players at the right time to achieve something special; in effect, MiTek found its all-stars. However, unlike teams that may have that one special season, MiTek has enjoyed its success for more than 20 years. In overcoming the many challenges faced in those early days of the 1980s, the MiTek of today is stronger, more flexible and financially sound, with product offerings born out of the industry’s best solutions, from some of its top minds. With the upcoming retirement of Gene Toombs, certainly MiTek will be entering its third phase. Whereas Cornelsen fought to save a struggling, nearly bankrupt company, he gathered key resources – people, products and infrastructure – to position it for the future. And while Cornelsen was at the end of his career ready to hand the reins over to a younger individual, Toombs joined at just the right moment, with a strong vision for growth and expansion, to take what Cornelsen had assembled and allow it to blossom. In the past 20-years or so that Toombs has led MiTek he has allowed the talents of those around him to shine, further solidifying MiTek’s position as an industry leader. Certainly there have been a few moments where things might have gone better, but, as with any successful organization, a few failures now and then are good for the soul as you learn from those mis-steps and are often better prepared to take additional steps forward. As MiTek enters the first half of 2012 – in its third phase – Toombs can walk through the door knowing that he has positioned MiTek exceptionally well for the future.
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T A B L E
S ECTION O NE - 1981 - 1993
O F
C O N T E N T S
B UILDING
THE
F RAMEWORK
CHAPTER ONE . . . . . . . . . .HYDRO-AIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 CHAPTER TWO . . . . . . . . .CORNELSEN AT THE HELM . . . . . . . . . . . . . . . . . . . . . . .27 CHAPTER THREE . . . . . . . .MOVING ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
S ECTION T WO - 1994-2011
G ROWTH & L EADERSHIP
CHAPTER FOUR . . . . . . . . .EARLY CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . .59 CHAPTER FIVE . . . . . . . . . .THE ORACLE OF OMAHA . . . . . . . . . . . . . . . . . . . . . . . .69 CHAPTER SIX . . . . . . . . . . .PLANNED GROWTH . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 CHAPTER SEVEN . . . . . . . .INNOVATION FOR TODAY’S CUSTOMERS . . . . . . . . . . . . .87 CHAPTER EIGHT . . . . . . . .INTERNATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 CHAPTER NINE . . . . . . . . .THE FUTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137 CHAPTER TEN . . . . . . . . . .ACQUISITIONS & CORPORATE MANAGEMENT . . . . . . .141 CHAPTER ELEVEN . . . . . . .TEN-YEAR BERKSHIRE HATHAWAY ANNIVERSARY . . . .147 CHAPTER TWELVE . . . . . . .INDUSTRY CHRONOLOGY . . . . . . . . . . . . . . . . . . . . . . .153 INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162 ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166
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T I M E L I N E
O F
E V E N T S
1 9 8 1 - 1 9 9 3
Cornelsen acquires Hydro-Air from the Moehlenpah family
Carlos Rionda named President of Gang-Nail
Cornelsen consults at Hydro-Air
1981
Joint Venture with Bowater to purchase Gang-Nail
1983
1985
MiTek acquires interest in On-Line Data
Cornelsen sells his interest in MiTek to Bowater.
Tom Manenti named President of Gang-Nail
Toombs sells Wood Products Company to Louisiana-Pacific
1987
1989
Gene Toombs joins MiTek
Hydro-Air acquires Panel Clip Company
1991
1993
Toombs named Chairman, President and CEO of MiTek
Hydro-Air and GangNail merge as MiTek Industries, Inc. The Bemax acquisition, including A.C.E.S., is completed
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S E C T I O N
B UILDING
THE
O N E
F RAMEWORK
HYDRO-AIR MARK 8 MONOPRESS “C” CLAMP
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C H A P T E R
O N E
1 H YDRO -A IR
WALTER M OEHLENPAH Walter Moehlenpah was a graduate engineer out of the University of Wisconsin. A talented individual, having survived the dog-days of The Great Depression, his fortunes began to change with the coming of the Second World War. By early 1942, the 34-year-old Moehlenpah and his wife made a living making shell casings for artillery shells. Continuing to design – he was more of an inventor than true engineer – in the days following the end of the War they began creating connectors unrelated to the housing industry. By 1958, he formed Moehlenpah Engineering Inc. as a Vickers hydraulics distributor at 1210 South Vandeventer Avenue in mid-town St. Louis. However, with the continuing growth in home construction, he returned to his inventorWALTER MOEHLENPAH
role in the hopes of developing products needed in the industry. In that area, he would make a significant contribution to the residential housing market.
T HE T RUSS P LATE A. Carroll Sanford is generally credited with inventing the metal truss plate. His design had integral teeth, but required supplemental nailing. Consequently, while this design did make the assembly of trusses somewhat easier, it remained a heavily manual process. In 1955, John Calvin “Cal” Jureit, a professional engineer from Miami, Florida, patented the Gang-Nail Connector, the first punched tooth truss plate that required no supplemental nailing. His plates were pressed into lumber using a concrete vertical hydraulic press and steel table precision jigs. For the next dozen years or
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so, Jureit’s plates were the industry standard. In 1962, while calling on a division of Boise Cascade, Moehlenpah seized on the idea to enter the construction business. His initial product was to market machines that would be used by the fast-growing truss industry. He organized Hydro-Air Engineering specifically for this business. The Hydro-Air name itself reflected the machinery roots of the company: “Hydro” for hydraulics, and “Air” for pneumatic or airoperated machinery. JOHN “CAL” JUREIT
For the next several years, Moehlenpah’s firm built equipment for the industry. At the same time, the inventor side of him examined the components used in the assembly process. Focusing on the connector plate, in 1968, he developed a new type of plate, one that differed slightly from the Jureit or Gang-Nail plate. Moehlenpah hoped that this variance in design would enable him to compete with the Gang-Nail plate. When Moehlenpah applied for a patent for his plate, a legal battle ensued. In the end,
as
part
of
a
very
risky
demonstration, Moehlenpah attached fishing
weights
demonstrating providing between
the his
to
its key and
his
plate,
strength,
and
differentiation Jureit’s
design.
Moehlenpah’s design broke Jureit’s hold on the industry, enabling Hydro-Air to become a key player in the expanding truss industry.
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E ARLY S OFTWARE D EVELOPMENT As early as 1968, Hydro-Air began investing in computer systems specifically for truss design. That year, Hydro-Air purchased an IBM 1130 computer with 4,000 bytes of memory. Using Fortran, they wrote their own programs, which were stored on stacks of IBM cards. The individual truss jobs were keypunched onto additional IBM cards (7 cards for each job) and loaded into card readers along with the program cards. By the early 1970s, more complex truss jobs were analyzed using IBM’s STRESS program. While this program was an improvement, it required designers to literally “count nails” to derive the design. In 1972, Hydro-Air installed its truss program on a General Electric mainframe computer,
allowing
manufacturers country
across
access
to
the the
program
via
remote
terminals.
This
enabled
customers to select from dozens of standard designs, or enter a special geometry. From 1974-78, additional enhancements were made to automate the more complex designs and provide more accurate member cutting. In 1978, Hydro-Air invested almost a million dollars in a DEC VAX11/780 computer, which greatly expedited truss analysis. Jobs were entered via a remote terminal, replacing the key punch and card reader. However, despite this advancement in computing power, much of the actual method used to generate the
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certified data continued to remain a manual and tedious process. Customers would send in their data and the Hydro-Air technical service representatives would record their information on forms and then pass it on to the engineering department. The engineers would pour over the information, verify the data and develop the required specifications. This information was then given to the data input staff who keyed the data into the VAX. The printout was passed to the drafting department
who
generated
detailed
WALTER MOEHLENPAH AT A HYDRO-AIR MEETING
drawings and models. These drawings and models were then presented to the customer. It was time consuming and costly. However, it was necessary if Hydro-Air was to provide the certification seals that customers needed for their projects. In other situations, where customers had competent engineering staff, they continued to pay for computer time on the Hydro-Air system to perform their own validation of the data. However, the majority of truss manufacturers did not have engineering staffs, plus, the Hydro-Air software, while adequate, was not a real competitive advantage for the business.
T HE B USINESS
OF
T HE B USINESS
Most companies competing in the truss industry were dominated by structural engineers. It was their sliderule based calculations that determined how trusses were to be assembled and, in effect, how buildings were constructed both for roof and floor truss engineering. A number of companies focused on single aspects of the business – connector plates, for example – while
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others manufactured the machinery and jigs used to assemble the trusses. Moehlenpah used its engineering capability to attract customers to use their plates and machines by providing the required engineering specifications for their projects and having Moehlenpah engineers certify the design. At the same time, the Hydro-Air business was manufacturing the machines and plates to satisfy these requirements. It seemed to be a good match; and for years it was both successful and quite profitable. As late as 1979, Moehlenpah was doing over $50 million in annual sales. However, by 1981,
A HYDRO-AIR “C” CLAMP PRESS
the company was in trouble. Through a series of acquisitions and over-aggressive customer service, the profits had been eroded. In addition, Walter made large capital purchases of an airplane and a boat that further diluted profits. By 1981, sales were only $22 million, with the company experiencing a negative cash flow for over eighteen months. A key factor in the decline of Moehlenpah / Hydro-Air was Walter’s reluctance to make key investments in software – an item that was becoming a major factor in customer decisions on which products to purchase. At the same time, his chief competitor, Gang-Nail, was spending heavily on software. And while Gang-Nail had machinery that was well-respected in the industry, Hydro-Air’s products seemed inferior by comparison. Despite a cadre of quality staff in engineering and sales, Hydro-Air seemed doomed.
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C H A P T E R
T W O
2 C ORNELSEN
AT THE
H ELM
Born in Wellington, Kansas, a small farm community south of the “big city” of Wichita, Paul Cornelsen rose to the highest levels of corporate America: as Vice Chairman and Chief Operating Officer at pet food giant Ralston Purina. Along the way he headed divisions across the country and, more importantly, across Europe, South America and Australia. Little did he know at the time how important each of these roles would be in the future.
R ETIREMENT On September 30, 1981, after several years of wrangling among the top executives at Ralston as to who would take the top spot following Hal Dean’s retirement, Cornelsen decided that his time at Ralston needed to come to an end. With that decision, he turned in his keys and retired. However, in the case of someone with Cornelsen’s vast experience, retirement from one company only opened up opportunities at many others! At age 57, Cornelsen was far from ready to “retire” in the normal sense. Offers came from a family-owned business in Mexico; a privately-owned St. Louis candy company; and a large mass-merchandiser. Each felt that Paul’s vast experience would benefit their organizations.
O PPORTUNITY In late 1981, Don Brandon, Chief Executive at Boatmen’s Bank - one of the Boards Cornelsen had served on – called Paul. Brandon asked Paul if he remembered a company named Hydro-Air. Cornelsen did indeed remember the firm. Brandon had often noted that this little St. Louis engineering firm was a shining example of entrepreneurship. Headed by Walter Moehlenpah, they had about $40 million in sales and a $5 million line of credit, which they hardly used. However, Brandon’s call was much different this time. Hydro-Air was in serious trouble. “They have gone to pieces,” Brandon told Cornelsen. “If something isn’t done soon, we are going to have to foreclose.” Boatmen’s did not want to be associated with having to foreclose on the firm so Brandon wanted Cornelsen to meet with Walter Moehlenpah to see what might be done. As a favor to Brandon, Paul agreed to meet with Moehlenpah. Cornelsen arranged a meeting with Walter Moehlenpah and his outside board members, which included
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local businessman Fred Wacker. After a brief discussion with Walter, it was immediately apparent that Brandon had not overstated the situation. Moehlenpah was in serious trouble. It was also obvious that the directors were each embarrassed that the situation had gotten so far out of hand. Walter was adamantly opposed to Cornelsen being engaged. Almost immediately he told Paul, “I don’t want you here but I have to let you come in and talk to us to satisfy the bank.” Paul immediately knew where the real problem with Hydro-Air was, and PAUL CORNELSEN
he knew that solving it would not be easy. At the conclusion of the meeting, Cornelsen told the group that he would take on a 60-day project to review the company’s operations, provided they paid him in advance. Another provision was that he was to have complete access to all company records and staff. The group told him they would give him their answer within thirty-days. As Cornelsen left the meeting, he fully expected never to hear from them again. He traveled to Mexico to continue his work with a business there when he received a frantic call from Fred Wacker. They had been told by the bank that they had to get someone to analyze the business immediately or Boatmen’s was going to bring suit against them, forcing Hydro-Air into Chapter 11. Wacker further told Paul that they would agree to all of his terms if he would begin immediately. Starting with the U.S. operations, he found Hydro-Air’s two facilities – Earth City and Baltimore – in good shape. He moved on to Canada and then Europe, carefully examining each of their operations. Overall, the operations were adequate, though bloated in some instances. In addition, some of the managers were, in his opinion, not up to the task. Upon his return to the U.S., he delivered his report to the full Hydro-Air board, telling them that if they could find the right person with both U.S. and international experience, and were prepared to give that person a substantial ownership position and have the Moehlenpah family withdraw from the business, it might have a chance to succeed. While Paul’s analysis was accurate, he deeply believed that it was this final point that would spell doom for the company: Walter would never agree to give up ownership of his company! 29
C OMING A BOARD Within a few days, Fred Wacker once more contacted Cornelsen. “Paul, we want you to come back and take over the company. We will make any kind of a deal necessary to do it. Just come back and let us talk before the bank shuts us down.” Paul and his wife, Floy, talked at length about the offer. In the end, Floy convinced Paul that he would be happier running something than being a consultant. He told Floy that he would give himself five years to turn things around. After that, he would find a way to move on. Paul laid out for the Hydro-Air board his demands: he would become Chief Executive of the company; the family members would have to give up any position of employment with the company; the Board of Directors had to be reorganized; the By-Laws had to be re-written; and there had to be a third-party financial control prohibiting the majority shareholders from forcing a dividend. A key player in the final negotiations was Charles (Gene) Dapron – an extremely talented attorney from Armstrong, Teasdale – who was the attorney for Walter Moehlenpah. On at least three occasions, Paul felt an agreement was at hand; only to have Walter back out at the last minute. Each time, Dapron would counsel Moehlenpah and one obstacle or another would be resolved. Ultimately, at the rate the company was going, Cornelsen was their last hope if they were ever to see a dime from a sale. Finally, at the end of May 1982, the deal was completed.
C REATING
A NEW
V ISION
Cornelsen’s first official day was June 1, 1982. Arriving at the tired brick two-story structure on south Vandeventer Avenue that served as Hydro-Air’s headquarters, Paul hoped for a smooth transition: but did not expect one. Rather than take an office on the first floor with Walter, Paul cleaned up an old empty office on the second floor and began to enact his plan to make Hydro-Air profitable. One of his first acts was to eliminate items that were of little value to a company that was bleeding cash. The first of these was the firm’s Beechcraft Baron airplane. Cornelsen contacted Armand Hinkle, chief of Ralston’s aviation group, and asked him to help
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sell the plane. In addition he sent lay-off notices to the firm’s two pilots – while at the same time asking Hinkle to help find them new positions. The second item was a boat moored on the Mississippi. Ultimately, he was able to sell both assets and eliminate those expenses from the bottom line. With these issues out of the way, Cornelsen had to tackle some of the larger issues that had caused the financial upheaval at Hydro-Air. Two of the issues were internal: the overhead on the new 60,000 sq. ft. manufacturing facility and offices in Earth City, and the rent on the Creve Coeur office. Perhaps more significant was the housing recession that began in the early 1980s. With Hydro-Air’s focus on the residential market – and a 50% drop in sales as a result of the housing decline – Cornelsen had some very difficult issues to address to make Hydro-Air profitable once again.
Cornelsen’s first post-acquisition conflict with Walter came on his third day on the job. Walter, knowing full well that Cornelsen had grounded the plane and laid-off the pilots, told Paul he was taking the plane to a customer site in Kansas City. While the ensuing clash nearly ended with a physical confrontation, in the end, Walter relented, realizing that the company was now Paul’s and that he would have to learn to deal with that reality.
One of the main obstacles that needed to be overcome was the old way of thinking that existed at Hydro-Air. Cornelsen believed that there were a number
of
good,
reliable
and
SENIOR MANAGERS AT THE 1988 BUSINESS PLANNING MEETING SEATED: PAUL CORNELSEN. STANDING L-R: BARRY GRIFFIN, HERB MCCURDY, RICK GRODSKY, MIKE CONFORTI, HUGO DU PREEZ.
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competent people within the organization. However, they had become accustomed to having Walter make all the decisions, never being put into a position to do any creative thinking. Cornelsen knew that for the new organization to grow and to be effective, the staff needed to start becoming more independent. For insight into the company, Cornelsen turned frequently to Herb McCurdy, the Chief Financial Officer under Moehlenpah for Hydro-Air. McCurdy provided key insight into the company that was valuable as Cornelsen began to make decisions impacting the future of the firm.
R IGHTING
THE
S HIP
Cornelsen knew that if the company was going to begin to be profitable, he needed to visit various operations and ensure that they were on-board with his plans. He visited England first, where they were reasonably profitable, before moving on to France and Germany. The British group had been hoarding cash in advance of a capital spending project. He persuaded them to hold off on this, enabling them to repatriate the funds to the U.S. parent. Moving on to France, he closed one of the two stamping operations and replaced the French Board with an old ally from his Purina days. In Germany, he took away some of the perks available to the staff and told them that they had to run the business on cash flow, while removing their ability to borrow money from the bank. In Australia, he was able to remove the Board, have the Managing Director tender his resignation,and put himself in as sole Director. Each of these moves had the effect of infusing cash into the U.S. parent at a critical time, enabling Hydro-Air Engineering to stay afloat. Upon his return to St. Louis, Cornelsen found that McCurdy had followed through on Paul’s request to move his office from Vandeventer into the same building in Creve Coeur that housed the Hydro-Air business. Shortly after this, Cornelsen also consolidated the Vickers distributorship, moving them into the same facility as their warehousing.
Another key move was the removal of the plant manager at the Earth City manufacturing facility. The once-profitable operation was now only rolling out inferior products compared to the competition, and at
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prices that did not cover material costs. Cornelsen was able to eliminate many of these unprofitable agreements as he began to formulate how to turn this portion of the business around. After eighteen months at the helm, things finally began to turn for the better. Cornelsen had stopped the bleeding and for the first time in years, Hydro-Air was in a positive cash flow, even booking a small profit.
T HE B IRTH
OF
M I T EK - 1986
Moving away from the Moehlenpah name was necessary if the company was to move forward. While the Hydro-Air name was well known in the industry, its image had been tarnished with the decline in the Moehlenpah business. Cornelsen felt that the business needed a new identity. Paul’s Administrative Assistant, Judy Schroeder, was key in how this next step came to pass. Judy was discussing the need to create a new corporate identity with her son. She was explaining to him that the company was a technology company: not high tech and not low tech, but right in the middle. He suggested calling the company the Middle Technology Company. When Judy shared this with Paul, he immediately grasped the concept, but felt that a shorter name was
JUDY SCHROEDER CORNELSEN’S LONG-TIME ADMINISTRATIVE ASSISTANT
needed. With that, MiTek was born.
T HE S OFTWARE V ISION By late 1982, having been in charge for several months, Cornelsen began to understand the intricacies of the business and, more importantly, where Hydro-Air could position itself to make money. Like most companies in the truss business, Hydro-Air was staffed with very competent structural engineers who could supply customers with the specifications requested for their projects. In addition, Hydro-Air would tell customers that if they “build to our design” and use our plates, Hydro-Air would guarantee the performance. However, the existing Hydro-Air software - the DEC FORTRAN solution - was a run-of-the-mill truss program when compared to others in the industry. Expensive to maintain, difficult for customers to use, and lacking specific functionality, it was ranked in the middle among the 15 or so competitors in the market. A
33
new direction was needed if Hydro-Air was to move to the top of the ladder among truss suppliers. Cornelsen envisioned a new and dramatically different way for computers, and their related software, to be utilized within the industry. He understood that whoever had the best software could “own” the industry. Cornelsen felt that by developing a proprietary software solution that could be used by his customers to validate the calculations – and with a guarantee by Hydro-Air tied to the use of their products and design – that this would give Hydro-Air the competitive edge he was looking for in the market. This was, of course, the opposite of the direction Moehlenpah had been taking the company in software. While he had invested heavily in hardware, the Hydro-Air software remained inferior to most of the competition. To Cornelsen, if software drove increased sales of plates and machinery, Hydro-Air needed to improve its position. Then again, Cornelsen felt that just improving what was currently being used was not necessarily the solution. He believed that MiTek needed to find the differentiation to make them unique in the market. He spent many restless nights struggling over this, trying to find the key to the business. Finally, in late 1983 it occurred to him that what MiTek needed to do was to develop a program – not merely use computers as expensive calculators – where customers could easily enter their data and get the results they needed for the project. In addition, the program needed to run on the new personal computers.
T HE M OEHLENPAH ’ S
EXIT THE BUSINESS
Under the original agreement when Cornelsen purchased Moehlenpah Engineering from the family, Walter, his sons Donn and Arlo and their sister, Jocelyn, remained on the board. The family was eager to cash out of the business, while Cornelsen had to ensure that the company had sufficient cash to close the transaction. In 1985, Mellon Bank was brought in to perform an evaluation of the business. While the children were willing to sell, Walter remained opposed. However, with some gentle persuasion from his attorney, and with the help of his wife Virginia, he finally relented. With the business valued at approximately $9.5 million, less debt of about $3.8 million, and the family holding 60% of the shares, the basis for the buy-back was completed. In January 1986, an agreement was reached and MiTek bought back all the outstanding Moehlenpah family shares.
34
T HE O N -L INE D ATA E XPERIMENT There was one company that appeared to have an edge in software. A Dallas firm – On-Line Data, Inc. – was generally considered to have the best software in the industry. Owned by Dan and Camilla Hurwitz – both graduate engineers in mathematics from Washington University in St. Louis – they were primarily software programmers who offered their applications to truss manufacturers through computer timesharing. In addition, they also had an engineering systems department that provided design services to truss manufacturers. From all indications, On-Line had positioned themselves quite well to take advantage of the growth in the housing construction market. In the fall of 1983, Cornelsen approached On-Line to see if they might be capable of adapting their software for Hydro-Air’s use. In order to share proprietary information, Cornelsen purchased a 42% minority interest in On-Line. Next, he went to Steve Cabler, a young engineer (today, Senior Vice President of Engineering and Technical Services at MiTek) who had been with the company for about six years and asked him to move to Dallas to see if there could be a marriage of the two businesses. At the same time, Cornelsen moved much of the St. Louis engineering work to the OnLine engineering department in Dallas. From an operational perspective, having
STEVE CABLER HIS TIME IN DALLAS IN THE MID-1980S AT ON-LINE DATA CONVINCED CORNELSEN OF THE NEED TO DEVELOP CUTTING EDGE SOFTWARE.
engineering close to software development made a great deal of sense. Although this all seemed to make sense, what was not immediately apparent at the time was that having the engineering service function controlled by a group separate and distinct from the sales group, and with Hydro-Air holding only a minority position within the company, eventually created service difficulties. To rectify this the engineering group was moved back to St. Louis to be close to the sales and management team so the two could work together to deliver better service to customers during challenging times when customer retention was critical. Despite some initial success, it became apparent that Hydro-Air’s minority investment in On-Line would not yield the results desired.
35
By 1990, Cornelsen sold his interest back to Hurwitz for the same price. Despite this setback, the HydroAir development and engineering teams had gained much knowledge from the relationship through the years, eventually putting all of this into “game-changing” software products that would position MiTek as a leading software development organization. By early 1987, with the On-Line situation clearly not working as intended, Cornelsen was more determined than ever to create the “game-changing” software solution he envisioned. Cornelsen had a strong supporter in Cabler, now back from Dallas, who remained enthusiastic about the concept of a program that would take the engineer’s knowledge and place it into the computer.
T HE B IG G AMBLE In April 1987, Dave McQuinn joined Hydro-Air in the software development DAVE MCQUINN HE WAS INSTRUMENTAL IN SETTING THE LONG-TERM IT STRATEGY FOR MITEK SOFTWARE
group. With a degree in computer science, McQuinn was atypical from most of those currently developing software within the industry: namely, he was not an engineer. This enabled him to look at the company’s software from a different
perspective. In the years to come, this would prove invaluable as Hydro-Air – and later MiTek – sought to change the direction of software within the industry. Cornelsen tasked McQuinn to develop a truss software solution that could run on a Personal Computer: a PC. As odd as that may seem to us today – in 2011 – asking McQuinn to accomplish this in 1987 was a bit of a leap of faith. PC’s of that day were slow, green-screen models, mostly running only DOS, or early versions of Windows – the first version of Windows was formally released in November 1985. Yet, Cornelsen had a strong belief that PC’s would expand and he was determined, with the help of McQuinn’s development group, for MiTek to be ahead of the curve on this issue. McQuinn believed that a Windows-based solution would allow users to use a mouse to click their way through tasks, such as laying out a truss. Furthermore, Windows 1.0 enabled users to run multiple applications simultaneously; something that was unheard of before then. When Cornelsen allowed McQuinn to approach Microsoft about becoming a Windows Beta site, it set
36
the stage for future software development. This move was significant as MiTek became an early adopter of the Windows environment in the truss industry, enabling it to acquire many customers looking to team-up with an industry leader. After attending a Microsoft Developer Conference, McQuinn literally picked up the Windows Beta software and brought it back to St. Louis, where he and his team began the process of developing the Windows product. Over the next two years, with the help from a number of key individuals, and a lot of trust that it could succeed, MiTek realized its goal.
A B REAKTHROUGH : R UNNING
ON A
PC
While the Windows development continued, McQuinn had another issue to deal with: finding a method of taking the Hydro-Air PowerCalc FORTRAN code and making it run on a PC. After researching several options, McQuinn found a FORTRAN compiler product for DOS – referred to as Leahy FORTRAN – that could take the existing million lines of code and enable it to run on a PC. At the time, the maximum memory for a PC was only 640K! This meant that the compiler had to take a large amount of data and condense it to only 640K. This is somewhat akin to stuffing five pounds of material into a one pound container. However, through clever programming, the project was successful, enabling the Hydro-Air PowerCalc product to run on a PC. Though the software was still being marketed as a timeshare solution, at least for Hydro-Air’s customers, the hardware platform was now much more affordable. This was a huge advancement for Hydro-Air, enabling the company to provide PC’s and software to its customers, and thus gain significant market share in the truss plate business. McQuinn recalls how he satisfied customer orders during that period. With check in hand, he jumped into his car and drove
THE “C” PROGRAMMING LANGUAGE BOOK USED BY THE MITEK SOFTWARE DEVELOPMENT GROUP AS THEY MOVED AWAY FROM FORTRAN IN
to the Forsythe Computers warehouse in Brentwood. Once there, he loaded his
THE DEVELOPMENT OF
MITEK 2000.
37
car with the IBM 80286’s needed for the customer order. He drove back to MiTek, unpacked the computers, and loaded PowerCalc on each one. After testing each one, he repacked them and shipped them on their way. All a customer had to do was turn on the computer and it was pre-loaded and ready to begin running PowerCalc. Customers were quite impressed with this process. Despite the development of the PC solution, the Hydro-Air software itself had not been improved. The development team had been able to extend the life of the software after being ported to the PC, but it continued to lack the much-needed functionality to be ranked among the industry’s top software products. For the next several years – 1988-91 – McQuinn’s group worked to improve the ease of use of the software, while educating the sales force on how to position the software in the sales cycle. It was also during this time that several outside factors began to influence how Hydro-Air’s customers would use the software, and the manner in which architects began changing how they looked at truss configuration.
M&A A CTIVITY - T HE G ANG -N AIL M ERGER In the midst of the drive to develop a new software solution, a new and
P OWER C ALC S OFTWARE
significant opportunity arose. For some time, Cornelsen had been toying
THIS WAS THE BRAND NAME FOR THE HYDRO-AIR TRUSS DESIGN PROGRAM THAT WAS MARKETED FROM 1988 TO 1995. ORIGINALLY WRITTEN IN FORTRAN, THIS IS THE CODE THAT WAS CONVERTED TO RUN ON EARLY IBM XT PC’S IN 1987. A CHARACTERBASED SOLUTION, IT WAS NOT
with the idea of acquiring their largest competitor, Gang-Nail. As noted earlier, Cal Jureit’s patent on the truss plate was perhaps the single-most important event in the truss industry as it changed the way every company did business. Walter Moehlenpah’s breaking of the patent was another huge event, however, it only enabled other firms to enter the fray. While
INTERACTIVE AND DID NOT HAVE A GRAPHICAL USER INTERFACE
(GUI).
Gang-Nail and Hydro-Air were the largest firms in the industry, a number of smaller firms competed quite well in niche areas.
Gang-Nail was twice the size of Hydro-Air, but not very profitable. Redland, PLC, an old, respected British firm specializing in roof tiles and related products, was their parent company. Looking to expand into the U.S. market, they acquired Gang-Nail in 1978. Cornelsen believed that since Redland had a lot of money tied up in a company not considered part of their core business, they might be interested in listening to offers.
38
However, in order to accomplish that, MiTek would have to go deep into debt, something he was not prepared to do. It was at that time that fate played a role in the process. In late March 1987, Carlos Rionda, president of Gang-Nail, contacted Cornelsen and asked him if he would meet with David Lyon, Managing Director of Redland, in New York, for a very private meeting. Over breakfast, Lyon proposed that Redland buy MiTek and merge it with Gang-Nail. Cornelsen would become CEO of the merged organization. Lyon told Cornelsen that there was some concern within Gang-Nail over MiTek’s minority interest in
1988 POST-MERGER MEETING IN HILTON HEAD BETWEEN THE HYDRO-AIR AND GANG-NAIL TEAMS. (L-R) ART SORDO, CLAUDE LACASSE, TOM MANENTI, MIKE CONFORTI
On-Line Data, causing senior management to reach out and approach Hydro-Air on the idea of a merger. Of course, to Cornelsen, this was the very reason HydroAir was working hard on developing new software, in an effort to acquire new customers at Gang-Nail’s expense! However, Cornelsen knew many of the key Gang-Nail management and was concerned that the new attitude and entrepreneurship that now existed within MiTek might not survive under a merger as proposed by Lyon. Later that day, as Lyon was preparing to fly back to England, Cornelsen made a bold move. Instead of telling him he would consider his offer, he told him that he was proposing that MiTek buy Gang-Nail. Since Redland was also considering selling-off Gang-Nail, Cornelsen’s proposal was not dismissed. Lyon told him he would take the idea back to his board for consideration. As Cornelsen began discussions with his four key executives and MiTek’s general counsel Gene Dapron – all of whom were in favor of moving the process forward – he received a call from Lyon. He told Cornelsen that he was leaving Redland and moving to Bowater, another English firm, as Chief Executive. More importantly, he wanted to continue the discussions to see if Bowater could be involved in the discussions with Hydro-Air to buy Gang-Nail from Redland. 39
Cornelsen flew to London and met with Lyon at Bowater. MiTek would own 51% of the new company and Bowater 49%. However, they did not know what the final numbers would be for the Gang-Nail acquisition, as that needed to be settled with Redland. Finally, in November 1987, all parties gathered in Chicago for a meeting where everyone hoped an agreement could be reached. After hours of discussion and a few last minute posturing by attorneys for Redland, an agreement was reached. MiTek now owned Gang-Nail, with Bowater a 49% owner in the new company.
C ULTURAL S HOCK Creating the merger on paper was quite different from bringing it to life on the street. Many customers identified themselves as “Gang-Nail” or “Hydro-Air” and went so far as to not allowing the other rep on their premises. In certain markets there was outright distrust and dislike for each other. In addition, customers used their relationship with Hydro-Air or Gang-Nail as competitive advantages when selling to their customers. What would happen to that with this new alignment? Cornelsen and the MiTek Board decided not to attempt a merger of brands and names immediately. Instead, both companies would operate under the MiTek corporate umbrella, creating the “Blue” and “Green” Companies: Blue for Gang-Nail and Green for Hydro-Air. It even went the additional steps of having this reflected on company business cards with the blue color that continued to be painted on the Gang-Nail plates. This had the effect of reducing the angst many customers were feeling, while beginning the consolidation efforts. One of the first areas where consolidating took place was in the back-end of the business, those areas that were not directly involved with customer contact, while allowing the customer-facing areas to continue as before. With the two companies continuing to operate independently, the initial savings in these areas were small, MIKE MCMANUS THIS FORMER MONSANTO
though overall, neither business suffered significant customer losses; in fact, both
EXECUTIVE WAS BROUGHT ON BOARD BY
CORNELSEN TO REFEREE
gained a few in the process. Cornelsen knew that without a complete merger, the
THE ISSUES THAT AROSE DURING THE
MITEK BLUE-GREEN
MARKETING PERIOD.
40
real savings sought as part of the merger could never be realized. However, in the
first year, over $2 million was saved through the combined purchasing of steel alone. As the new engineering software was being developed additional savings were soon-to-be realized. Things were beginning to fall into place. Internationally, the issues were perhaps even more unique. While HydroAir had an international
presence in certain markets, their overall
effectiveness was poor in many European markets. On the other hand, GangNail was the de facto standard in a number of overseas markets. Each of these issues would have to be addressed on a country-by-country basis. No one JACK CASPER THE FORMER GANG-NAIL CFO
believed it would be easy.
REMAINED IN THAT CAPACITY WITH
MITEK FOLLOWING THE MERGER.
P OST-M ERGER S OFTWARE M EETINGS
In mid-1988, shortly after the Gang-Nail and Hydro-Air merger was completed, a series of meetings were held to discuss the future software direction. At one of the meetings, McQuinn approached Cornelsen with a bold proposal: rather than try and “make” the current FORTRAN solution work, the company needed to move in a different direction. It needed to rewrite the software. McQuinn recalls his meeting with Cornelsen. “He was not really hard to convince. Deep down, Paul knew that software was the key to what we were doing. He just wanted to know two things: how long would it take to get the product to market and what would it cost?” At a subsequent meeting, held between the development groups from Hydro-Air and Gang-Nail, the topic was which direction to adopt for the
REORGANIZATION AS
PART
OF
REORGANIZATION, FORMED THE
A
1989
CORNELSEN
NORTH AMERICAN
METAL GROUP, CONSISTING OF: • GANG-NAIL SYSTEMS, USA • HYDRO-AIR ENGINEERING • PANEL CLIP, USA
future software development. There were at least three options: first, use
• GANG-NAIL CANADA
either the Hydro-Air or the Gang-Nail products as the primary solutions;
• MITEK MANUFACTURING, USA
second, combine the best of both and go to market with a revised product; and third, take a new direction entirely with a different programming model.
• MITEK METALS RESEARCH • ENGINEERING SYSTEMS DEVELOPMENT UNIT
From appearances, there seemed to be little difference between the
41
A UTO T RUSS ® S OFTWARE
“back-end” of either solution: both were written in FORTRAN; both had
THE MIAMI-DEVELOPED TRUSS DESIGN PROGRAM FROM GANG-NAIL, IT WAS IN USE FROM THE LATE 1970S UNTIL THE MID-1990S. LIKE HYDROAIR’S POWERCALC, IT WAS GEARED TOWARD ENGINEERING USERS. THOUGH BRIEFLY PORTED TO RUN ON A PC IN THE LATE 1980S, THE HIGH
a good, loyal customer following; and each lacked the more advanced functionality, which was beginning to enter the market. One key difference was the hardware platform. Gang-Nail’s AutoTruss ran on the Sun MicroSystems, a UNIX-based solution on expensive Sun Workstations. On the other hand, Hydro-Air had already taken steps to move PowerCalc
COST OF THE HARDWARE REQUIRED TO RUN
AUTOTRUSS, ALONG WITH THE
to the PC, a much more cost-effective hardware option that customers
SOFTWARE ARCHITECTURE, LED TO THE EVENTUAL ABANDONMENT OF
seemed to prefer.
AUTOTRUSS AS A VIABLE PLATFORM. At the initial meeting, as one might expect, each software team viewed their approach as solid. However, McQuinn, leader of the Hydro-Air team, was formulating a totally fresh approach to the issue. Rather than attempt to combine the two FORTRANbased solutions, his vision was to do a complete rewrite in the C programming language. The Gang-Nail team leader, Miguel Tellechea, had another vision; his desire was to keep the Gang-Nail AutoTruss program as it stood and use it moving forward. A factor in these discussions was likely based upon the perspective each group had going into the meeting. Traditionally, most industry software – among all companies – was developed or designed by engineers. Consequently, they were comfortable with a software language like FORTRAN, which was the standard in that industry – though beginning to lose a following among the rising young software development teams taking hold across the country. McQuinn, on the other hand, was coming at the issue from a computer science perspective. His objective was to find the best solution for the task. While the Gang-Nail team did have a good, solid product, the decision to move away from both of the FORTRAN-based solutions was in the best interest of the newly combined company. Beyond that, McQuinn had several factors to consider; first, what operating system was best for this new software product. There were several to consider: O/S2 from IBM, Windows from Microsoft, DOS or Macintosh. In the end, the mouse functionality and graphical capability of the Windows solution, along with
42
L-R: PAUL CORNELSEN, GENE TOOMBS, TOM MANENTI AND ERIC PRIESTLEY, MANAGING DIRECTOR OF REXAM U.S.A.
the price of the PC’s on which it would run, was what sealed the deal. McQuinn’s instincts were also a significant factor, and it paid off. Cornelsen and his new key executive, Gene Toombs, discussed this approach, and once they made the decision to proceed things moved quickly. McQuinn and his team of three programmers began to create the new C-based product. Within a week, they completed the basic design and began to prototype the solution. Within six months, they were showing the new product to groups at internal meetings. Finally, in April 1992, they released the first version – MiTek2000 – to customers. Over the next several years, the existing FORTRAN programmers were trained in writing C, as McQuinn’s team continued to enhance the software, turning it into the premier solution in the market.
E XIT S TRATEGY By 1990, having stayed nearly three years past his original “retirement” date that he had promised Floy, Cornelsen began to consider who would succeed him in running the organization. The Bowater agreement contained a five-year buyout option, lending additional credence that a succession strategy needed to be put into place.
43
Following the completion of the merger, Cornelsen persuaded a number of key GangNail executives to stay with the new organization. Carlos Rionda agreed to continue running Gang-Nail, while Jack Casper became the new MiTek CFO. Arturo Sordo remained on-board after receiving assurances from Cornelsen that he would give him an opportunity to run the combined U.S. DAVE MCQUINN (SEATED) DEMONSTRATING FEATURES OF THE NEW MITEK2000 SOFTWARE TO SENIOR MANAGEMENT. (STANDING L-R) ART SORDO, GENE TOOMBS MIKE CONFORTI.
Operations, while another key individual, Barry Griffin, remained in charge of the Great Britain operations. Cornelsen anticipated that the new
senior executive to run the combined companies would likely come from Gang-Nail, as they were the larger and had the more seasoned staff. However, to his dismay, this did not materialize. Despite their individual talents, when it came to leading the new organization Cornelsen did not believe that anyone showed great promise. Consequently, he began to think more and more about looking outside of the organization.
T HE M AN F ROM B OISE As a member of Algonquin Golf Club, Cornelsen had been an occasional golfer, enjoying the company of a broad group of friends and associates. One of the group had brought a young man out to play on a few occasions and Cornelsen had met him several times. His name was Eugene Toombs. A vice president of Sonoco, the packaging company, Toombs had also worked for Boise Cascade. As he moved up the corporate ladder with Sonoco, they planned to have him move to their corporate headquarters in Hartsville, South Carolina. Toombs was not entirely thrilled with the move, and began to see if other options were available to him. Upon hearing of the news, Cornelsen contacted Toombs and invited him to lunch. Toombs had a terrific
44
reputation as an outstanding salesman and leader. He was blessed with that rare quality whereby, when he entered a room, he seemed to take control of the situation. He had charisma and an outgoing, smart personality. While Cornelsen was obviously impressed, he wanted to see how sharp Toombs really was. Over lunch they discussed many points, but finally, it came down to one thing that was critical for Cornelsen: did Toombs have the insight and forthright attitude so important to him? Cornelsen asked Toombs one final question: “What are your weaknesses?” Paul had a good idea of what the answer SHOULD be from his discussions with those who knew Toombs; but he wanted to see what Gene had to say. To his credit, his response was right on. He knew exactly where he could improve, what his business weaknesses were and what was needed to complement them. Paul knew immediately he had his man. However, rather than create a long term marriage, both agreed to give the position a “test period.” Paul would have some specific tasks for Gene to carry out. If they proved successful, Gene would have the option to continue in a senior position or to resign. In either case, there was a handsome bonus in it for Gene if he succeeded in this trial period. Toombs officially joined MiTek in October 1989. Toombs’ initial task was to take responsibility for the Wood Products Division and make it profitable, or at least reduce the losses it was taking. At the same time, he was to position the division to be sold. Over the next year, Gene made contact with several prospective buyers before coming to terms with Louisiana Pacific in July 1990. In addition, it was for a price better than
GENE TOOMBS
what it had been appraised for as part of Gang-Nail. Following on this success, Paul appointed Gene head of U.S. and Canadian operations. Furthermore, he began to accompany Paul on his international trips, providing Gene the opportunity to better understand the global business. Cornelsen was setting the stage for the next significant step, the complete merger of the businesses.
45
P REPARATION
MEETS
O PPORTUNITY
For decades, architects designed buildings – commercial as well as residential – with a triangular design. However, the existing software within the truss industry did not lend itself to improved productivity or comprehensiveness in the design. By the late 1980s, architects were not just designing simple truss configurations; they were designing complex roofscapes: challenging the very heart of the truss design industry. With the focus on hipped roofs, skylights, vaulted ceilings, attic room spaces, turrets and other designs, architects began looking at how wood fit together to form a virtually infinite variety of shapes rather than the traditional triangle design. This required new, innovative software to match the new design characteristics. Likewise, truss manufacturers needed software that would design entire roof systems, not just individual truss components. Like other companies in the truss industry, early on in this cycle, Hydro-Air had no valid solution for this new approach. The Hydro-Air solution, like most others, remained a 2D solution. It would be a few years before MiTek would be able to move beyond this limitation and begin to dominate the market. In the fall of 1990, just before the merger of Hydro-Air and Gang-Nail under the MiTek logo, Toombs had an epiphany. While he instinctively knew that software was important, it was not until then that he understood the true value of owning the best software in the business. He went from being a believer to being its strongest proponent.
46
T HE B EMAX A CQUISITION : A.C.E.S. During the late 1980s, Bemax was selling a low-cost connector plate into the market. However, it was not the plate that brought customers to Bemax; it was their industry-leading A.C.E.S. 3D layout program. Most truss software developers, including MiTek, continued to produce programs that displayed the layout in a 2D format. In addition, although PowerCalc was a fine product, it was primarily a roof-truss solution. Early versions did not even address floor trusses! On the other hand, the three-dimensional A.C.E.S. solution could model the entire house, a real breakthrough. When customers compared the A.C.E.S. solution with others in the market, they were willing to overlook the quality of the Bemax plate to get their hands on the software. This situation did not escape the keen eye of the Toombs-led MiTek management team.
BARRY GRIFFIN IN MAY 1989, GRIFFIN ASSUMED THE ROLE AS COO OF THE NORTH AMERICAN METAL GROUP. WHILE CORNELSEN HOPED GRIFFIN WOULD DEVELOP TO LEAD THE ENTIRE ORGANIZATION, HE EVENTUALLY RETURNED TO
ENGLAND.
While initially viewed as an annoyance - since MiTek plates were clearly superior - as Bemax continued to make inroads into the market as a result of their software, it seemed that a new approach was needed. Aware that one of the owners had a Cuban background - as did MiTek Vice President Art Sordo - Cornelsen asked Sordo to make the initial overture. However, despite their common heritage, this approach did not prove successful. Not willing to back off, Cornelsen asked Jack Casper and Toombs to take the lead. It was clear that MiTek needed the Bemax solution to become part of the MiTek2000 product. Based in New Jersey, Bemax was owned by three individuals: Bernie Boilen, Max Diego and Mehmet Ilter. Bemax was focused on their software and related services, while producing and selling connector plates almost as an after-thought. Ilter’s son, John, along with his college friend Gilles Beauchacourt, were a pair of young, sharp engineering graduates from the University of Miami who had developed the 3D product that was getting all the attention. The Bemax owners had formed a separate software company – A.C.E.S. (Advances Computing Engineering Specialties) – where the two college buddies continued to write and improve their software product, also called A.C.E.S.
47
In 1990, Cornelsen sent McQuinn to Miami to view the software and report back. McQuinn was very impressed with what he saw. However, he viewed its value to MiTek in terms of the time it would take to develop a similar product internally. Certainly, purchasing the product would save years of development time. It remained for Cornelsen to determine the right purchase price. With Casper and Toombs now negotiating with Bemax, it appeared that it would not be long before A.C.E.S. would bear the MiTek logo. Finally, in April 1991, Casper and Toombs struck a deal with Bemax. However, the agreed upon price was somewhat higher than had been previously discussed. Nevertheless, it was presented to Cornelsen for his approval. In something of an unusual move for Cornelsen, he agreed to the Bemax acquisition, even at a price that was viewed at the time as having been over-paid. However, as time has proved, the Bemax purchase not only saved significant and valuable development time, it proved to be one of the most
MIKE CONFORTI RETURNED TO MITEK TO HEAD THE HYDRO-AIR DIVISION IN 1990.
significant acquisitions in MiTek’s history. It was this purchase that marked the beginning of the market consolidation strategy that propelled MiTek to the forefront of the industry.
M ANAGING T HE C USTOMER B ASE As Cornelsen continued to evaluate the existing staff, he knew that there might be people outside of MiTek who could help the company. One of these was a former president of Hydro-Air under Walter, Mike Conforti. Cornelsen’s admin, Judy Schroeder, had worked for Conforti, so Paul asked her to contact him on his behalf. After a series of wary meetings, Conforti returned to MiTek, heading up the Hydro-Air division. With many customers still wary about Cornelsen, the hiring of Conforti was of significant benefit to MiTek. Conforti was well respected within the industry, not just by existing customers, but also by many non-customers. His presence at MiTek, leading the Hydro-Air subsidiary, provided the stability customers were looking for, causing many to continue with a “business as usual” approach to MiTek.
48
E XPANDING S ALES A RT S ORDO Between 1981-84, Hydro-Air had a very competent sales force. They
SORDO’S TIME AT MITEK WAS
could talk truss fabrication in great detail and were well respected by their
PUNCTUATED BY SEVERAL
customers. However, many of them looked at the customer as “theirs” and
ACTIVITIES THAT PROVED
not as Hydro-Air’s. Cornelsen tried to change this mentality by putting whom
VERY BENEFICIAL TO
MITEK.
THE FIRST WAS HIS
he viewed as a strong person in place as sales manager. However, just the
INVOLVEMENT WITH THE
opposite occurred. With all of the changes taking place within the company,
A.C.E.S. SOFTWARE ACQUISITION, WHICH
a small group among the sales staff, unhappy with the anticipated changes, began causing customer issues to arise. As a man who demanded trust and loyalty, Cornelsen immediately made a change, moving a young sales
PROVIDED SUBSTANTIAL ENHANCEMENTS TO THE EXISTING SOFTWARE PRODUCTS.
THE SECOND WAS
engineer, Dick Marriott (now President of MiTek USA), into the role as sales
THE CONSOLIDATION OF THE
manager over half the country. Marriott continued in this role for the next
MANUFACTURING UNITS INTO THE
EARTH CITY FACILITY.
year, before leaving the company in 1984. However, he would return to MiTek in 1989, making his mark on the organization for the next twenty-plus years. In 1991, when Toombs took over the new MiTek, he formed new Eastern, Central and Western divisions. While the Western division was based in Sacramento, the Eastern and Central remained headquartered in St. Louis. The goal of this reorganization was to allow more frequent one-on-one contact with customers, making the MiTek sales team more aware of local market issues and in a better position to address them. In addition, each division was staffed with its own team of engineering, design, technical support and sales. Tom Manenti headed the Eastern division, Mike Conforti led the Central division, while John Hurder was over the Western Division. In addition, each division staff was further trained on AutoTruss and PowerCalc, the two design software programs currently marketed to customers, while work continued on the next generation software, MiTek 2000, which was introduced in early 1992.
49
T HE B EST
OF
B OTH C OMBINED
INTO
O NE
With this slogan, a new era began in 1991 as Hydro-Air and Gang-Nail began the formal merger. In an aggressive 90-day campaign, they set about combining literature, selling organizations and the marketing promotion under the MiTek brand. The best of Gang-Nail and Hydro-Air were presented to the market. This consolidation simplified manufacturing and warehousing, while enabling engineering to provide more value-add to MiTek customers. Toombs was heavily involved in planning this new rollout, and its success
DICK MARRIOTT
further assured Cornelsen that his instincts about Gene were justified. Just before the rollout was announced, Cornelsen made another announcement; he named Toombs President and Chief Operating Officer of the corporation.
B REATHING R OOM The latter half of 1990 saw the economy fall into a recessionary period as the oil market spiked and the Savings & Loan crisis was in its early stages. This carried over into 1991 as markets continued to fall and the housing market slump continued. However, the sale of the Wood Products Division placed a large cash infusion into MiTek, enabling the company to make key acquisitions that would have significant, long-term impact on the organization.
T RANSITION During the last few years of Cornelsen’s tenure, he and Toombs spent a great deal of time strategizing over what was needed for MiTek to move ahead of the competition. After naming Toombs president and COO in 1991, a great deal of their time together was determining the future strategic direction. With much greater input from Toombs, Cornelsen began to turn more of this phase of the business over to Toombs; knowing that in the end, it would be Toombs and not he, who would guide MiTek in the future.
50
During the final years of Cornelsen’s time as Chairman, it was Toombs who began to structure the acquisition plans that he and Cornelsen had discussed previously. Ultimately, this was a good partnership as Toombs had the energy and drive to undertake the ambitious programs, while Cornelsen began to look toward the day when he would step aside for good. With Cornelsen’s retirement, Toombs became CEO on January 1, 1993.
A G REAT B ACKFIELD DURING
MANY OF THE DISCUSSIONS
TOOMBS,
WITH
FREQUENTLY NOTED HOW WELL THEIR PERSONALITIES COMPLEMENTED EACH OTHER.
PAUL
WHEN
In 1995, the first joint meeting of Hydro-Air and Gang-Nail production groups met to discuss tool and die technology. Meeting in
WAS THE CONSUMMATE
OPERATIONS AND NUMBERS GUY, WHILE
TOOMBS
B EST P RACTICES
CORNELSEN
WAS
IN
MOST
FRONT
COMFORTABLE
OF
CUSTOMERS.
CORNELSEN
REFERRED
SITUATION AS
“MR. INSIDE
TO AND
THIS
MR.
OUTSIDE,” REMINISCENT OF THE GREAT 1940S ARMY
RUNNING BACK TANDEM
Miami, FL., key production, tool and die, and management joined together
OF GLEN DAVIS AND DOC BLANCHARD,
in a common goal: to find the best method of producing high quality plates.
BOTH
HEISMAN TROPHY WINNERS.
This was a significant milestone as this was the first time that the combined companies got together to review the existing tool and die technology to make connector plates and determine the best direction for MiTek tooling going forward. There were many philosophies and approaches, and the team worked for some time to come up with the best technology for MiTek connector plate tooling; technology that, for the most part, is still in use today. As new connector plate companies were acquired over the years, the best practices approach that came out
E ARLY S OFTWARE T IMELINE 1983 JOINT PROJECT WITH ON-LINE DATA 1987 MERGER OF HYDRO-AIR AND GANG-NAIL
of the 1995 meeting were put into place for each new company. It was this consistent methodology that serves MiTek well as it produces what is
1988 PORT POWERCALC SOFTWARE TO A PC 1989 ADOPTION OF WINDOWS 1.0
believed to be the best tooling and the best
1991 ACQUISITION OF BEMAX / A.C.E.S.
connector plates in the industry.
1992 RELEASE OF MITEK2000 1996 MITEK BUSINESS APPLICATION (MBA) RELEASED 1998 MITEK VIRTUAL PLANT (MVP) RELEASED
51
52
C H A P T E R
T H R E E
3 M OVING O N
Under
the
terms
of
Cornelsen’s
agreement with Bowater, following the fifth anniversary of the Gang-Nail merger, Bowater had the right to become majority shareholders. Conversely, Cornelsen and the other members of the Class A Voting Trust could have requested that Bowater buy them out anytime after the third anniversary, however, no one wanted to exercise that option. Under terms of the agreement, a Bowater Call for the stock would value it at 100%, while if the option was exercised by members of the Voting Trust, the stock would have a lower value. The only caveat was that Bowater had to be able to acquire 80% of the voting shares. That meant that Cornelsen was bound to sell his shares, while other MiTek shareholders sold their shares as well. Another key part of the agreement was that Bowater had to operate MiTek as a separate entity for at least five years. In August 1992, Bowater informed Cornelsen that they would be exercising their option on or shortly after October 1992. They wanted to proceed with having the appraisal of the business take place. Cornelsen selected A.G. Edwards to perform the appraisal. A.G. Edwards completed their appraisal in September 1992. The price was established. Following a series of due diligence reviews, a closing date of January 1, 1993 was set. Bowater completed the purchase of 100% of the PAUL AND FLOY CORNELSEN VIEWING ONE OF THE GIFTS THEY WERE PRESENTED AS THEY TOURED EACH MITEK FACILITY PRIOR TO HIS RETIREMENT IN 1993.
54
outstanding shares of MiTek. Considering that their
original investment in MiTek was $26 million, and the company had grown to a valuation of about $240 million, it had to be one of the best investments they ever made. For his part, Cornelsen had mixed feelings leaving the company he had spent ten years developing and growing. He knew that he had an excellent management team in place, so there were no doubts in that area. He had invested much in MiTek and he and Floy were now ready to enjoy their well-deserved retirement. Cornelsen was also shrewd enough to know that when individuals have a vested interest in the organization they will perform better. Part of his legacy is that he negotiated stock options for a number of key MiTek senior managers, ensuring their long-term commitment to the company. In the end, this may be one of his lasting legacies at MiTek. In an odd twist of fate, just a little over a month after Cornelsen sold his interest in MiTek to Bowater, Walter Moehlenpah passed away at the age of 85.
INVITATION TO THE RETIREMENT RECEPTION FOR PAUL CORNELSEN
55
T I M E L I N E
O F
E V E N T S
1 9 9 4 - 2 0 1 1
MiTek becomes a Berkshire Hathaway company.
Tom Manenti promoted to President of MiTek Industries
Diamond Machinery Acquisition
1994
1998
2001
Remaining 50% of Rexam New Zealand acquired
MiTek acquires Tee-Lok Corporation and Aegis Metal Framing, LLC.
MiTek introduces SAPPHIRE™ Software
MiTek acquires the Koskovich Company
2005
Tom Manenti returns to MiTek as President and COO
2007
MiTek has operations on five continents
MiTek forms joint venture with Aegis Metal Framing
2009
Tom Manenti promoted to President and CEO
2011
MiTek has operations on six continents Gene Toombs announces he is stepping down as President and CEO, remains as Chairman Dick Marriott promoted to President of MiTek Industries
56
S E C T I O N
GROWTH
&
T W O
LEADERSHIP
58
C H A P T E R
F O U R
4 E ARLY C ONSOLIDATION
With the ascension of Gene Toombs as President and Chief Operating Officer in 1991, and then CEO in 1993, it was not long before MiTek began to implement a new product strategy that would set the tone for the future. Since Cornelsen knew that he was bound by agreement to leave at a designated time, most of his decisions focused on growing shareholder value for MiTek. That meant taking calculated risks, while foregoing the more risky ventures, regardless of how potentially profitable they might appear. However, Toombs was under no such constraints. His time at MiTek was not pre-defined. Consequently, he set upon a bold, aggressive path, which he believed would better position MiTek for the future.
I NDUSTRY S ITUATION GENE TOOMBS CHAIRMAN OF MITEK, INC.
In the mid-1990s, there were two events taking place within the industry; both of which needed to be addressed if MiTek wanted to assume a leading industry position.
1996 SENIOR MANAGEMENT TEAM L-R: STEPHEN FRAY (AUSTRALIA), RICHARD POOLE (NEW ZEALAND), TOM MANENTI, TREVOR JENKINS (ENGLAND) GENE TOOMBS, DICK MARRIOTT, ART SORDO, ANDY HYDE, CLAUDE LACASSE (CANADA), HUGO DU PREEZ (SOUTH AFRICA)
60
First, there was a considerable amount of consolidation taking place within the industry. Small truss companies were being acquired by regional organizations, who in turn were being acquired by still larger national firms. Toombs reasoned that by addressing the needs of the national organizations, MiTek products would become the standard for their entire company at each level. Secondly, and for some time, Toombs realized that the plate and machinery business remained highly
THE “BLUE-RIBBON” CONNECTOR PLATES
fragmented. Among the competition in the market was a very diverse set of suppliers. Some produced quality plates; others produced inferior plates at low cost; others supplied plates and machinery; still others produced inferior plates with good software, while others were simply the low cost supplier to the market. How was MiTek to compete in this environment to become the market leader?
Doing what he had always done, Toombs began visiting customers and non-customers to get from them - first hand - the issues they faced and their thoughts about MiTek and the competition. When visiting non-customers, he was impressed with the loyalty they felt toward their suppliers, especially when it came to software. Often, the plates these firms supplied were inferior to MiTek’s products - many even showed signs of rust - however, they were willing to accept this because of the ease of use of the software that came with the plates. While some programs offered were only layout programs, a few were faster, with better features, and often less expensive than what MiTek was offering. On the other hand, when Toombs visited MiTek customers they expressed their loyalty to the organization, but would add that they were aware of what the competition was offering and that they believed MiTek needed to step up with more competitive products. Clearly, there was work to be done. 61
C OURSE
OF
A CTION
Toombs surmised that there were two courses of action to address these smaller software and plate organizations: he could attempt to drive the price down and remove them as competition; or he could make an offer to buy them. While the first might be less expensive, it did not get MiTek what they wanted most from the situation - the customer base. Consequently, his plan consisted of two approaches: MiTek would begin to consolidate the industry by bringing the best products and services into the fold through strategic acquisitions. Then, by evaluating where each product fit within the overall strategic software plan, MiTek would keep what was useful and move the remaining assets into a maintenance mode. Gradually he hoped that customers who came to MiTek as part of the acquisitions would see that MiTek products, software and services were superior and move in that direction. Secondly, knowing that software was a key to differentiation, he began to formulate plans to become the leading provider in the market. However, rather than look at software as merely one of the business tools available to the company, Toombs saw it as the key component to the company’s future, leading with it at every opportunity.
B EING A G OOD S UPPLIER “WHAT
WE
WANT
(OUR
EMPLOYEES) TO DO IS BASICALLY
The implementation of the strategy began with a targeted acquisition approach focused on key competitors. Beginning with Bemax and Interlock in 1991, these were followed by Truss Connectors of America (TCA) in 1992.
UNDERSTAND THE CUSTOMER’S BUSINESS FROM A SENSE OF HOW
Of these three, the Bemax acquisition - and the A.C.E.S. software - which
YOU WOULD BE A GOOD SUPPLIER
was highlighted earlier, ultimately provided the most benefit to MiTek.
TO THEM. WANT
IN
THEM
CUSTOMER’S
PARTICULAR, WE TO
FEEL
THE
PAIN
IF
THE
SOFTWARE IS NOT CORRECT.”
GENE TOOMBS APRIL 2006
62
With a firm belief that MiTek must have the industry’s best software, from 1994 to 2011 MiTek remained focused on finding niche players with successful products and/or services and targeted them for acquisition. The aim of this being that the total solution offered by MiTek would bring the
highest value to its customers, while providing them the best long term solution for increased business activity and longevity.
Another issue that needed to be addressed was that many customers, as noted previously, considered themselves Gang-Nail or Hydro-Air customers. Even though the two former-rivals were now a single company made little difference to them. Furthermore, although connector plate manufacturing – whether for GangNail or Hydro-Air – was consolidated in the same facilities, customers wanted to feel that their particular “brand” remained unique to them. To satisfy this “brand ownership” among customers, a blue-stripe was placed on Gang-Nail plates indicating their intended target customers. However, other issues arose among the customer base that would be less easy to address. Gang-Nail had frequently positioned their customers as “franchisees;” as though they had a guarantee to an exclusivity with the product in their area. Being the talented salespeople they are, the MiTek sales force began to persuade truss distributors to drop their “other” plate and software business and begin using MiTek’s. This upset a number of Gang-Nail and Hydro-Air customers who believed that their market area was being infringed. While not wanting to upset existing customers, this strategy was necessary if MiTek’s plate business was to grow.
POSITIONING Toombs believed that having the combination of the best products and the best software to support MiTek’s customers would serve the business best moving forward. As everyone would THE EARTH CITY MANUFACTURING OPERATION IN THE MID-90S
63
come to know, this approach was not just an accurate assessment; it was the key to becoming THE industry leader. In the final years of Cornelsen’s tenure, he, along with Toombs, made strategic acquisitions that fit into the MiTek family. The Bemax, A.C.E.S., and Interlock Steel acquisition in 1991 and the 1992 TCA purchase helped MiTek MITEK’S BOOTH AT THE 2009 BCMC SHOW
consolidate
the
plate
business,
further
strengthening the company’s role as the market leader. With Toombs playing a key role in this strategy, it was
becoming clear that MiTek would become the 900-pound gorilla in the room before long. Over the next several years, additional acquisitions took place in Australia, Europe, Africa, Canada and in the U.S., as the strategy took a global approach to the industry.
When Cornelsen stepped aside in January 1993, Toombs continued looking for companies to fill-out the MiTek product offering. The first acquisition in the post-Cornelsen era was Diamond Machinery Corporation of Lansing, Michigan in 1994. A manufacturer of roller gantry systems, this product line was needed to complete the MiTek assertion that it was a full-line solution for the industry. In 1998, Hughes Manufacturing was targeted for acquisition and rolled into MiTek. Then in 2000, the remaining 50% of Rexam New Zealand, was finalized.
During this period, MiTek was essentially in a “who do we buy next mode.” Executive sessions focused on finding organizations that would be a good fit within the product strategy model, while not “bogging” down the company by requiring a lot of fixing. By focusing on the core competency of MiTek, everyone’s eye remained on the ball, ensuring that each subsequent acquisition would fit nicely into the big picture.
64
CUSTOMER FIRST Toombs’ personality – along with his salesmanship and leadership skills – took him out of the executive suite and right to the customer’s doorstep. An avid golfer, and someone who easily made the rounds at customer receptions and who seemed to make any room seem smaller as he entered, Toombs had one driving goal with his approach to customer service at MiTek: make the customer Number One! With this principle clearly part of the MiTek philosophy, Toombs created the Customer Summit events. Toombs would gather key MiTek staff – sales, software and engineering – to meet with customers at their site. The focus of these meetings was to review customer needs, understand the issues impacting their business and discover what they looked to MiTek to provide. In doing this, MiTek was able to get closer to each customer and in the process develop systems and products to meet their needs. With the MiTek team sitting “on the same side of the table” with the customer team, strong bonds and relationships were forged which ultimately benefited both organizations. Another key customer event was the Customer Appreciation Dinners, which took place annually at the BCMC (Building Component Manufacturers Conference) show. From its early beginnings in 1990, within two years, invitations to this event became among the most sought-after of all industry gatherings. It was this customer-centric approach, driven by Toombs and melded into the entire organization, which may prove to be his strongest and most lasting legacy.
REXAM With the acquisition strategy moving forward, MiTek’s software development group continued to roll-out industry-leading products. It seemed as though MiTek’s path was clear and that little stood in its way to significant growth. Suddenly, a storm cloud appeared on the horizon, one which threatened to knock the legs right from underneath the business. By 1995, Bowater, PLC had gone through a reorganization and had renamed itself Rexam. As part of this new marketing effort, its Board had decided to return to their core business: packaging products. The MiTek business - while very profitable - was clearly on the outside of this
65
model. From 1996 to 1999, Rexam divested itself of the majority of its non-core businesses, leaving only MiTek and TBS Engineering in its Building and Engineering sector.
All of this had come as no surprise to Toombs and CFO Ron Burkhardt. As they attended numerous Rexam meetings where the discussion turned to one or more of Rexam’s former divisions, which no longer fit with the new corporate model and was placed on the auction block, they often wondered when the next name mentioned would be MiTek’s. However, the problem for Rexam - and MiTek - was that MiTek was very profitable; and while Rexam wanted to divest itself, there were few takers willing to pay enough cash for the business. A few made offers of stock transfers and the like, but in each instance, a deal could not be worked out to everyone’s satisfaction. As a result, MiTek was placed in a limbo position: they knew Rexam wanted to sell the company, while at the same time Rexam was not willing to authorize funds to continue the acquisition strategy. Delaying the continued implementation of this key business approach might seriously harm MiTek’s future. One example of this took place in 1999 involving Tee-Lok. Toombs approached Rexam regarding the Tee-Lok acquisition, which he believed was critical to MiTek. However, with MiTek continuing to pour profits into the Rexam coffers, they were reluctant to give Toombs the go-ahead.
While
this
frustrated
MiTek’s
management, it enabled it to focus on another aspect of the acquisition strategy: the consolidation of key multi-site component manufacturing organizations. With a number of these now becoming significant MiTek customers, the business continued to expand. While a number of larger competitors scoffed at this strategy, with many actually encouraging MiTek to continue down this path (which they viewed as a poor business strategy), MiTek continued to be blessed by a strong market vision, enabling it to invest in these areas well in advance of their future success. And, with few exceptions, this strategy proved to be a key differentiator in which organizations would eventually succeed.
66
When viewing this period in MiTek history – when there was much uneasiness, along with significant doubt about what MiTek would look like as a business following the anticipated sale - it was the ability of MiTek’s senior management and Gene Toombs’ leadership to recognize where and when to invest in technology, acquisitions and people before the competition – and to do so with an uncompromising attitude – which likely made the difference as to where MiTek is positioned today.
67
68
C H A P T E R
F I V E
5 T HE O RACLE
OF
O MAHA
From 1999 to 2001 Rexam continued to shop MiTek to prospective buyers. Potential suitors loved the fact that MiTek continued to show good profitability; however, the deal being structured by Rexam either soured them, or they lacked the cash to make the transaction happen. One strong prospect appeared in early 2001, which everyone thought would finally be the one to make things happen. However, despite everyone’s best efforts this deal also went by the wayside. Toombs and CFO Ron Burkhardt were keenly aware of the situation they were in: constrained by Rexam from making key acquisitions, which they viewed as necessary to long-term growth. Their frustration became more evident each time they sat to consider another option. Each knew that the “right” owner for MiTek was out there in the market. They had to find some way to locate them. It was at this point that the hand of fate came forward. While on a plane, Toombs happened to be reading an article in the February 19, 2001 issue of Fortune Magazine titled “The Value Machine” about Berkshire MITEK CFO RON BURKHARDT
Hathaway and its founder, Warren Buffett. In the article, Buffett noted that there were six criteria necessary for any company they acquired. As Toombs read further, he realized
that each of Buffett’s criteria applied to MiTek. As he continued reading the article, Toombs had an epiphany of sorts; perhaps Berkshire Hathaway might be interested in acquiring MiTek! When he returned, Toombs and Burkhardt met to discuss if such a call might even be accepted by the man referred to as the “Oracle of Omaha.” Believing that there was little risk in the attempt, Toombs first contacted Rexam CEO Rolf Borjesson, sending him a copy of the Fortune article and suggesting that they attempt to arrange an introduction to Buffett. Borjesson, though surprised by the move, had an ONE CAN ONLY IMAGINE WHAT WARREN BUFFETT
idea. Toombs’ initial reaction was to attempt to find an
MUST HAVE THOUGHT WHEN HE OPENED
MITEK’S PACKET OF INFORMATION, ALONG WITH A BUBBLE-WRAPPED CONNECTOR PLATE.
70
intermediary who would make the introduction of MiTek to Buffett. Borjesson told Toombs that he had just the individual in mind to make the call into Buffett: Toombs! With that, Borjesson gave the plan his blessing. Calling upon his excellent salesmanship, Toombs called Buffett’s office and spoke briefly with his Administrative Assistant, gaining valuable information in the process. Essentially,
(LEFT) WARREN BUFFETT, CHAIRMAN OF BERKSHIRE HATHAWAY AND MITEK CHAIRMAN, GENE TOOMBS
put your information in writing and send it to Buffett’s office. Toombs now had the information he needed to put together a presentation for Mr. Buffett. Toombs set about drafting a letter to Buffett, while Burkhardt gathered the necessary documents to be included in the packet. After they were satisfied that they had pulled together the proper information and were preparing to send it off, Toombs had another idea: suggesting that they include a connector plate in the packet. In doing their research, Toombs knew that Buffett was an investor in Gillette and that he likely would understand the razor/razor blade analogy, with MiTek’s software being the razor. Toombs surmised that if this did not get Buffett’s attention, nothing would. Burkhardt wrapped the plate carefully, even including a note to beware of the sharp edges and sent it - along with the packet - off to Berkshire Hathaway’s Nebraska offices. The letter was dated March 26, 2001.
In the early part of April, while vacationing in Florida, Toombs’ secretary, Barb Wilson, called and left a message that Warren Buffett had called. Toombs was amused at first, believing that his staff was playing a joke on him. When he called back and spoke to Barb, she assured him that indeed, Warren Buffett had called. The connector plate had gotten his attention. Buffett wanted to learn more about the man and the company that sent him a connector plate.
71
Toombs returned Buffett’s call and they spoke for some time. As Toombs and Buffett spoke, it was evident that MiTek was of interest to the Omaha native, though as was his style, he continued to downplay his level of interest. They ended up talking for over an hour about the business and about Gene’s vision for MiTek. Just as important to Buffett, he asked Gene a number of
S IX
WARREN B UFFETT ’ S I NVESTMENT P RINCIPLES
IN
personal questions; about his family, where he was
2001
1. LARGE PURCHASES (AT LEAST $50 MILLION OF PRETAX EARNINGS, UNLESS THE BUSINESS WILL FIT INTO ONE OF OUR EXISTING UNITS)
2. DEMONSTRATED
CONSISTENT EARNING POWER
(FUTURE PROJECTIONS ARE OF NO INTEREST TO US, NOR ARE “TURNAROUND” SITUATIONS)
educated and his other executive positions. Finally, he asked a very important question: Would the current MiTek management team stay? To each of these Gene answered very candidly; and yes, he believed the MiTek team would stay. Buffett would later relate that within
3. BUSINESSES EARNING GOOD RETURNS ON EQUITY the first few minutes of their discussion, he felt that there
WHILE EMPLOYING LITTLE OR NO DEBT
4. MANAGEMENT IN PLACE (WE CAN’T SUPPLY IT) 5. SIMPLE
BUSINESSES
(IF
THERE’S
A
LOT
was a strong synergy present and he knew he wanted to OF
TECHNOLOGY WE WON’T UNDERSTAND IT)
6. AN
OFFERING PRICE (WE DON’T WANT TO WASTE
OUR TIME OR THAT OF THE SELLER BY TALKING,
bring MiTek into the fold. True to form, once Buffett makes up his mind, it did not take long for things to come together. In addition, Buffett requested Toombs send a
EVEN PRELIMINARILY, ABOUT A TRANSACTION WHEN PRICE IS UNKNOWN)
packet of information to Charlie Munger, Vice Chairman of Berkshire Hathaway, as Warren knew that Charlie had
some experience in building and engineering.
After some brief due diligence and two visits to MiTek by some Berkshire Hathaway staffers – along with a team of accountants from Buffett’s outside accounting firm – a purchase price was established for MiTek; though it was considerably below the original price Toombs initially presented to Buffett. Toombs, who acted as an intermediary between Berkshire Hathaway and Rexam, presented the price to Rexam, only to have the figure rejected. Rexam countered that MiTek had just purchased Hardy Frames and they believed that this deal had not been considered in Buffett’s offer. With Rexam anxious to make the deal – but also willing to hold out for a better price – they presented their counter offer to Toombs to take back to 72
Berkshire Hathaway. Essentially, include the Hardy Frame acquisition in the price
A T RUSS W HAT ?
and a deal could likely be completed. This put Toombs in the unenviable position of having to call Buffett and tell him that his initial price needed to be adjusted -
DURING
THE DISCUSSIONS WITH
BUFFETT, TOOMBS upwards. Toombs was able to gain Buffett’s agreement that even at the higher price, the deal made sense. Buffett, going against one of his sacred principles – never renegotiating the previously agreed-to price – accepted Rexam’s revised
THE CONNECTOR PLATE AS A TRUSS PLATE.
UPON
BUFFETT THOUGHT
terms.
REFERRED TO
HEARING
COMMENTED, TRUSSES
THIS,
“I WERE
SOMETHING THAT OLD MEN WORE!”
This exchange set its own unique mark in the Berkshire Hathaway history: it is believed to be only the second time that Buffett agreed to renegotiate an offer previously submitted, showing the high esteem with which MiTek was held. Following Rexam’s approval, the deal was ready to be made. All that was needed was to ink the forms and MiTek would join the Berkshire Hathaway family. A July 31 closing was established. On July 26, Toombs faxed Buffett a detailed outline of his visit to MiTek. Not long after the note was sent, Buffett faxed back his reply to Gene’s plans: “We’re in for everything! The schedule sounds great and all of us are looking forward to next Tuesday!” On July 30, the Berkshire Hathaway lawyers in California and the Rexam attorneys began a day-long session to seal the acquisition. However, as time pressed on, the process slowed. Nevertheless, by mid-evening the documents were completed and an agreement was met. All that was left was the formal wire transfer of funds, which was to take place early the following day. Toombs and Burkhardt, along with senior staff, had made plans to celebrate at dinner that evening. However, as the session continued to back up, the dinner plans also were delayed. Finally, not really sure when things would conclude, Burkhardt sent out for K.C. Masterpiece ribs. It would be a dinner not long forgotten. The next morning, Gene arrived at Spirit of St. Louis Airport to await Buffett’s arrival. As Buffett’s Gulfstream taxied to the gate, Toombs felt a surge of emotion come over him. As Buffett emerged from the plane, the two hugged on the tarmac. Also on the plane were Buffett’s Administrative Assistant and and two
73
Y OU ’ RE
NOT AT THE
L IBRARY ?
GENE TOOMBS WAS IN BALTIMORE TO PLAY GOLF WITH A CUSTOMER.
HE
HAD JUST
ARRIVED AT THE COURSE AND WAS TAKING
others that he brought along. The three of them jumped into a waiting limousine to take them on a day-long tour of St. Louis, plus a little shopping. Meanwhile, Buffett and Toombs made the short trip to MiTek’s
HIS BAG FROM HIS CAR WHEN HIS CELL PHONE RANG.
“GENE, I’VE
IT
WAS
WARREN BUFFETT.
GOT A QUESTION ABOUT THE
DOCUMENTS YOU SENT OVER YESTERDAY.
SAY,
WHERE ARE YOU?”
TO
WHICH
REPLIED;
“I’M
COURSE.”
WARREN RESPONDED, “I KNEW I
LIKED YOU.
IN
MOST
BALTIMORE
GENE
AT A GOLF
new owner of MiTek. He toured the offices, greeting everyone and taking-in the moment. All MiTek headquarters’ associates met with him and he obliged by having his photo taken with each of them. After some brief remarks to the assembled staff in the training center, Buffett
GUYS WOULD TELL ME
THEY’RE AT THE LIBRARY OR SOMETHING, BUT WOULDN’T TELL ME THEY ARE OUT PLAYING GOLF!”
Chesterfield offices, where Warren quickly settled into his role as the
moved through the group, shaking hands and posing for additional photos. To a person, they found him friendly, engaging and a genuinely warm individual. Later, a number of the senior management team joined Gene and
Warren for lunch in a conference room. When lunch was concluded, an overview of MiTek’s business was presented, along with a financial review, and a demonstration of MiTek’s software. The last item of the day was a discussion around pending acquisitions. Traditionally, Buffett has a very hands-off approach to his businesses. He concludes that he would not have taken them on if they were not talented, so why would he interfere at a later stage? One of the purposes of Buffett’s visit was to discuss two pending acquisition proposals. Tee-Lok and Aegis Metal Framing had been on the radar for months and were viewed as key acquisitions for future growth. Burkhardt and Toombs had prepared a neat 3-ring binder filled with details on the companies, the dollars involved, the market potential and the acquisition process. They placed the binder in front of Buffett. As he opened it, he casually thumbed through the pages. Closing the binder he asked, “Do you expect me to read all this? Is there a last page?” Buffett turned to Toombs, took a sip of his Cherry Coke, and said, “Do you want to do this deal?” Toombs replied, “Yes.” To which Buffett countered, “OK, I’m in, let’s go!”
74
With the day complete, all that was left was for the ladies to rejoin Warren for dinner. Gene had arranged for Warren and his entourage to dine at Morton’s – Warren is a lover of fine steak – before heading to the airport for the short trip back to Omaha.
C LOSE ,
AS BERKSHIRE HATHAWAY AND MITEK WORKED THROUGH
of acquisitions completed in 2001 was presented to shareholders. Below is what Warren noted about the MiTek acquisition. “A few days before last year’s annual meeting, I received a heavy package from St. Louis, containing an unprepossing chunk of metal whose
from Gene Toombs, CEO of a company called MiTek. He explained that
ACQUISITION
PROCESS,
A
EXCHANGED,
SOME
WITH
RATHER
SUCH NOTE WAS SENT FROM
WARREN
AMUSING SIDEBARS.
ONE
BUFFETT TO GENE TOOMBS IN APRIL 2001. IN PART IT READ:
“THERE
WILL BE NO FINANCING
CONTINGENCIES IN OUR CONTRACT – IT WILL CLOSE IF THERE’S NUCLEAR WAR, IF THE
1,000 function I couldn’t imagine. There was a letter in the package, though,
THE
NUMBER OF LETTERS, FAXES AND PHONE CALLS WERE
At the Berkshire Hathaway 2002 Annual Meeting, a summary
NO MATTER WHAT !
OR
IF
IT’S
DISCOVERED
DOW
GOES TO
THAT
ALAN
GREENSPAN HAS FLED TO ARGENTINA, TAKING THE GOLD OF
FT. KNOX WITH HIM.”
MiTek is the worlds’s leading producer of this thing I’d received, a “connector plate,” which is used in making roofing trusses. Gene also said that the U.K. parent of MiTek wished to sell the company and that Berkshire seemed to him the ideal buyer. Liking the sound of his letter, I gave Gene a call. It took me only a minute to realize that he was our kind of manager and MiTek our kind of business. We made a cash offer to the U.K. owner and before long had a deal. Gene’s managerial crew is exceptionally enthusiastic about the company and wanted to participate in the purchase. Therefore, we arranged for 55 members of the MiTek team to buy 10% of the company, with each putting up a minimum of $100,000 in cash. Many borrowed money so they could participate. As they would not be if they had options, all of these managers are true owners. They face the downside of decisions as well as the upside. They incur a cost of capital. And they can’t ‘reprice’ their stakes: What they paid is what they live with. Charlie (Munger) and I love the high-grade, truly entrepreneurial attitude that exists at MiTek, and we predict it will be a winner for all involved.”
75
Over the past decade since the acquisition, MiTek has called upon Buffett, on select occasions, to assist in some very targeted customer marketing. In each instance, Buffett has not been just willing to assist, but goes out of his way to make sure that the specific project is handled in the best manner possible.
2001-2012: A S A B ERKSHIRE H ATHAWAY C OMPANY In the 10+ years MiTek has been part of Berkshire Hathaway, it is evident that the marriage of the two organizations has been good for both. From the perspective of Berkshire, it’s probably best to let Buffett’s own words tell of their take on the success of the acquisition. In his annual Letter to Shareholders in 2006, Buffett referred to MiTek on several occasions: each with specific comments on how an organization
M I T EK ’ S “T UCK -I N ” D EALS WARREN BUFFETT IS A GREAT BELIEVER IN ACQUIRING COMPANIES THAT FIT NICELY
WITHIN
STRUCTURE.
AN
IN MITEK’S
EXISTING
like MiTek has not only been a good fit for Berkshire, but continues to deliver. “Charlie and I love it when we can acquire businesses that can be placed under managers...who have already shown their stuff at Berkshire. MiTek, for
FIRST FIVE
14
example, has made 14 acquisitions since we purchased it in 2001, and Gene
ACQUISITIONS WERE MADE, WITH EACH
Toombs has delivered results from these deals far in excess of what he had predicted.
YEARS
WITH
BERKSHIRE,
FITTING VERY NICELY WITHIN THE
MITEK
BUSINESS
PROVIDING
BERKSHIRE. ENABLED
MODEL,
SIGNIFICANT
THIS
TOOMBS
WHILE
VALUE
EARLY
TO
SUCCESS
We will make many more.” Later in the same 2006 Letter to Shareholders, Buffett provided a brief
TO CONTINUE TO
SEEK OUT ADDITIONAL ACQUISITIONS
-
20 ADDITIONAL PURCHASES SINCE 2006 –
In effect, we leverage the managerial talent already with us by these tuck-in deals.
WHICH HAVE LED TO CONTINUED
GROWTH AND PROFITABILITY.
IN
ALL,
34 ACQUISITIONS...AND MORE TO COME!
summary of MiTek and the degree of success generated for Berkshire in the first five years following the acquisition. MiTek, a manufacturer of connectors for roof trusses at the time we purchased it in 2001, is developing into a mini-conglomerate. At the rate it is growing, in fact, “mini” may soon be inappropriate. In purchasing MiTek for $420 million,
we lent the company $200 million at 9% and bought $198 million of stock, priced at $10,000 per share. Additionally, 55 employees bought 2,200 shares for $22 million. Each employee paid exactly the same price that we did, in most cases borrowing money to do so.
76
And are they ever glad they did! Five years later, MiTek’s sales have tripled and the stock is valued at $71,699 per share. Despite its making 14 acquisitions, at a cost of $291 million, MiTek has paid off its debt to Berkshire and holds $35 million of cash. We celebrated the fifth anniversary of our purchase with a party in July. I told the group that it would be embarrassing if MiTek’s stock price soared beyond that of Berkshire “A” shares. Don’t be surprised, however, if that happens (though Charlie and I will try to make our shares a moving target). During these past 10 years as part of Berkshire, Buffett has been, as Toombs noted in his Introduction, a significant advisor to him and MiTek. Whether it was during the periodic business reviews in Omaha or a golfing excursion with some of Buffett’s closest friends, Toombs – and along with him MiTek – continued to benefit from the trust and confidence Buffett has rightfully placed in the MiTek management team.
BEING PART OF BERKSHIRE HATHAWAY HAS ADDITIONAL BENEFITS, APART FROM THE FINANCIAL STABILITY OFFERED BY BERKSHIRE’S RESOURCES. TOOMBS HAS JOINED BUFFETT AND GATES SEVERAL TIMES AT AUGUSTA NATIONAL GOLF CLUB. THESE PHOTOS ARE FROM A 2008 OUTING. (LEFT-RIGHT) TOOMBS, MICROSOFT CHAIRMAN BILL GATES, WARREN BUFFETT, MICROSOFT CEO STEVE BALLMER, PAUL ANDREWS, CEO OF TTI (ANOTHER BERKSHIRE COMPANY)
ABOVE L-R: STEVE BALLMER, GENE TOOMBS AND BILL GATES.
77
78
C H A P T E R
S I X
6 P LANNED G ROWTH
B EYOND T HE C OMFORT Z ONE During 2005 and 2006, with over two million housing starts nationwide, MiTek’s strong position in the residential housing market, bolstered by the acquisitions of the previous years, began to pay huge dividends. With the company’s strong focus in its core competency – residential construction – there seemed little need to think about going outside MiTek’s strength. However, by 2007, as the economy began to experience the beginnings of the current downturn – and with housing starts at a third of the 2005 levels – Toombs and the management team sensed that it might be the right time to move beyond MiTek’s traditional markets. However, this would not be the first time MiTek had looked to move outside of the residential market. In 1992, MiTek made its first step into the non-residential construction market by forming a light gauge steel construction division. This turned into a joint venture with Dietrich (a division of Worthington Steel) in 2002. MiTek acquired Dietrich’s interest in 2009 to gain 100% ownership of the business. By 2001, Toombs had seen that another of MiTek’s sister companies within Rexam – TBS Engineering – had the type of business that would fit nicely into a diversification model. With the Berkshire Hathaway acquisition underway, Toombs briefly considered bringing this to Buffett’s attention. However, not wishing to do anything to jeopardize the pending MiTek acquisition, he decided to wait. However, this pushed the diversification concept to the forefront for future planning. Following the Berkshire Hathaway merger, Toombs once more focused on shoring up MiTek’s core business with strategic industry acquisitions – beginning with Tee-Lok – in early 2002. However, he continued to keep a watchful eye on businesses that showed promise as a fit for his diversification strategy.
MITEK–GLOBA
MA
RKETS
SERVED
IN
2002
RESIDENTIAL CONSTRUCTION
NON-RESIDENTIAL CONSTRUCTION
DIVERSIFIED INDUSTRIES
100% OF REVENUES
0% OF REVENUES
0% OF REVENUES
BUSINESS UNITS:
BUSINESS UNITS:
BUSINESS UNITS:
MiTek Industries Hardy Frame
80
L
The first acquisition that fit this model was TBS Engineering in June 2003, followed in January 2004 with Tekmax, Inc., which fit into TBS. Both companies were highly successful, and profitable, in the battery industry. Next among the diversification acquisitions was Hohmann & Barnard in May 2008, then Blok-Lok, Ltd., and TMI Custom Air in October 2008. Blok-Lok fit nicely within Hohmann & Barnard, while TMI would become its own segment within MiTek. In January 2009, the acquisition of the remaining portion of Aegis was completed, followed in April 2009 by the purchase of SidePlate Systems, and in November 2009, Heat Pipe Technologies came into the MiTek fold. The business segment was further strengthened by the Hohmann & Barnard acquisition of Dur-O-Wal in April 2010 and then in April 2011, with their purchase of Sandell Industries, Inc. In between these purchases, Rush Air in October 2010 came aboard under TMI, and then Battery Technology Group – under the TBS Engineering umbrella – was completed in March 2011. Finally, the United Steel Products (USP) purchase, also in March 2011, while within the residential construction arena, is both a retail and distribution product - an area outside of MiTek’s traditional business model. Where MiTek had been 95% focused on residential construction less than a decade earlier, by 2012, a full 30% of MiTek’s revenue was now from non-traditional market areas. This intentional diversification strategy has enabled MiTek to continue to get “a leg up” in other areas and markets, such as the retail market with the USP acquisition, that would have been unheard-of previously.
MITEK–GLOBA
L
MA
RKETS
SERVED
IN
2011
RESIDENTIAL CONSTRUCTION
NON-RESIDENTIAL CONSTRUCTION
DIVERSIFIED INDUSTRIES
70% OF REVENUES
25% OF REVENUES
5% OF REVENUES
BUSINESS UNITS:
BUSINESS UNITS:
BUSINESS UNITS:
MiTek Industries United Steel Products Hardy Frame Zone Four Simpad
Aegis Metal Framing H&B/Sandell TMI Custom Air Sideplate Systems Heat Pipe Technology
TBS Engineering
81
Utilizing this “product line extension” approach has enabled MiTek to offer a diverse range of products and services for non-residential customers. The new portfolio addresses business segments in commercial, institutional and industrial markets: Structural • Masonry anchoring systems, flashing, waterproofing and vapor barrier products. • Pre-fabricated cold formed steel trusses and wall panels. • Structural steel frame connection technology for wind, earthquake, blast and progressive collapse applications. Mechanical • Engineered custom air handling equipment for rigorous healthcare and industrial applications. • Heat pipe technology for advanced dehumidification and energy recovery. A brief overview of these diversified businesses will provide insight into how they will continue to benefit MiTek for years to come.
A EGIS M ETAL F RAMING In 1992, the lumber market was in a tailspin. MiTek looked to diversify outside of their traditional residential market. The metal frame industry - catering to commercial, hospitals, education and the military - was targeted. A relationship was developed with the Dietrich company, owned by Bill Dietrich. Over the next ten years, MiTek was, at various times, a customer of Dietrich and, at other times, a competitor. In February 2002, MiTek formed a Joint Venture with W.D. Ventures, Inc. (Dietrich), which by then had been sold to Worthington Industries, Inc. Later, in early 2009, MiTek acquired the remaining share of Aegis, bringing it completely into the MiTek family. The Aegis name came out of a discussion between Tom Valvo, President of Aegis, and the then-president of Dietrich, Ed Ponko. Aegis was the legendary name for the shield of Zeus, the mythological greek god. Referring to the shield as a protector, it was a fitting name to how the metal framing business is viewed in construction.
82
TBS E NGINEERING As noted previously, TBS, like MiTek, was part of the Rexam organization in 2001. With TBS reporting to Toombs, he knew how profitable TBS was for Rexam. Less than two-years after the Berkshire Hathaway acquisition, Toombs convinced Buffett that the acquisition of TBS – though clearly out of MiTek’s core area – would be an excellent financial investment for the company. Results over the past 8 years have proven him right. With TBS being the leading manufacturer of automated machinery for the battery industry, OEM suppliers to the major car producers – Ford, Honda, BMW, Fiat – use one or more TBS products for processing their batteries. In addition, most medium to large Uninterruptible Power Supply (UPS) systems in operation worldwide, use cells that have been produced on TBS machinery. Based in the U.K., with a plant in Oregon, TBS continues to be the industry leader in the battery machinery industry.
H OHMANN & B ARNARD The May 2008 acquisition of Hohmann & Barnard, a Long Island, New York-based company with threegenerations of experience serving the architectural, design and building community as a leading manufacturer of reinforcement and anchoring systems for masonry and stone, brought to MiTek the ability to broaden its product offering beyond the truss industry. The broad line of H&B anchoring and flashing products enables MiTek to expand its product offering into masonry, brick and concrete solutions for residential and commercial applications.
TMI C USTOM A IR S YSTEMS Since 1982, TMI has been providing engineered solutions ranging from the rigorous extremes of government research facilities to the health concerns surrounding the indoor air quality of our nation’s hospitals. In addition to pre-piped and wired custom units, TMI also provides complete factory assembled mechanical penthouses. Also part of TMI is Rush Air, Inc. Rush Air provides custom pumping systems and chilled water systems for commercial, industrial and institutional clients.
83
S IDE P LATE S YSTEMS Since 1995, SidePlate has helped deliver hundreds of successful and cost-efficient projects for the US Government, Military, Higher Education and National Health Care Industry for wind, earthquake, blast and progressive collapse design environments. SidePlate provides steel connection technology to help engineers design strong structural steel buildings with open floor plans that are predictably fast and economical to construct with minimum foundation cost and steel tonnage. These benefits are repeatedly realized because: • Stiffened connection system permits use of lighter beams and columns. • Connections are prefabricated in the fab shop shortening construction schedule. • No Complete Joint Penetration (CJP) welding, which equals no UT inspection. • Diagonal bracing is eliminated thereby providing architectural freedom.
H EAT P IPE T ECHNOLOGY HPT is the leading manufacturer of custom engineered heat pipe systems for the commercial, institutional and industrial markets to facilitate energy recovery and advanced dehumidification. HPT’s patented products are used in HVAC systems and are installed in both new equipment and on-site retrofit. For over a quarter of a century, HPT has led the way with revolutionary products that save energy and reduce indoor humidity for better indoor Air Quality.
U NITED S TEEL P RODUCTS The acquisition of USP Structural Connectors from Gibraltar Industries in March 2011 marked a significant expansion of MiTek’s capability to supply structural framing and bracing solutions to satisfy critical aspects of woodframed structures in the residential and light commercial industry. USP’s product line is sold through professional distribution centers, national building material supply companies, structural building component manufacturers, and in home centers across North America. Based in Burnsville, Minnesota, USP has maintained complete engineering and manufacturing capability to support builders, contractors and professional designers. 84
S UMMARY Since being acquired by Berkshire Hathaway, MiTek has: • Freedom to run the business to maximize shareholder value • Financial wherewithal to grow the business via •
Acquisitions and
•
Investments in software and production capabilities
In addition, the Berkshire Hathaway name has opened doors to: • Major customer prospects and executives and • Acquisition candidates.
THE ACQUISITION BY
B ERKSHIRE H ATHAWAY
HAS MADE
M I T EK
A FAR BETTER COMPANY
85
86
C H A P T E R
S E V E N
7 I NNOVATION
FOR
T ODAY ’ S C USTOMER
SOFTWARE AS A KEY BUSINESS DIFFERENTIATOR As early as the late 1960s, organizations that had the vision to understand the impact software would have on business began to develop strategies to take advantage of this new opportunity. However, for decades through the early 1990s for certain - most companies saw software as a collection of stand-alone programs; most did not see the value in integration. To be fair, even most commercial software development companies failed to see beyond the standalone program approach to the market. While Walter Moehlenpah saw the value in having a computer make and validate the computations for the engineering design, his vision stopped there. Paul Cornelsen understood that having the best software in the industry, not just for computations but also for the layout, would put Hydro-Air – and later MiTek – in a unique position. However, Gene Toombs grasped the true potential of quality software. Toombs realized that software would become the reason that customers would select MiTek over the competition. Providing programs to support not just engineering and layout, but also management and production needs, would give MiTek’s customers the competitive advantage needed to make their business more efficient and more profitable. Quality software from MiTek would become THE key business differentiation between MiTek and the competition, and this differentiation, Toombs envisioned, would enable MiTek to win the market! Over the next several years, MiTek would continue to refine its software “SMARTSCREEN” CYBER SAW IN 1996
FOR
development strategy. However, it would not be until 2008, when Toombs brought Terry Nicholson out of the Enterprise Software Industry that the concept of a
completely integrated, modular suite of software in an end-to-end solution would materialize. Coming out of the supply chain software market, Nicholson understood that integration within the software suite – and across the supply chain – was the key to unleashing the true power of software within a market. In the years leading up to Nicholson's hiring, his predecessor, Paul Pinsky, had made significant advances
88
in software development at MiTek, introducing software engineering processes such as the Agile development methodology, and creating Product Management and Software Quality Assurance groups within the MiTek software team. All of these processes were already well founded in the software industry itself. But in cottage industries like the component manufacturing industry, these processes were generally not part of their development cycle.
THE EARLY APPROACH: AN ENGINEERING FOCUS In the early days of the Hydro-Air software development, the focus was developing the best software needed for the market at that time. That meant engineering software. The goal was to develop the best application possible to apply the calculations needed to ensure that the structure being designed would perform as desired. Little or no thought was given regarding the overall design or layout of the structure. This would come years later as CAD systems came more into vogue. By the early 1980s, Hydro-Air sought-out the best software available to drive down the costs while improving functionality. Moving from a mainframe-based, time-sharing solution to a PC solution was a key advancement. However, as noted previously, using the
MITEK 2000 SCREEN FROM 1996
same code – but on another hardware platform - made it accessible to more customers, but did not improve the overall functionality. The Gang-Nail / Hydro- Air merger in 1987 was driven, in part, by the concern of both companies that the other was about to gain an edge in the software development area. Hydro-Air’s early partnering with OnLine Data was done, in part, with the hope of gaining an advantage over the superior Gang-Nail solution; and in the process, gain market share. On the flip-side, Gang-Nail approached Hydro-Air about a buyout as they
89
feared that a Hydro-Air merger with On-Line would enable them to steal Gang-Nail customers! It was as if all the stars were aligned at that exact moment. When Cornelsen informed Lyon that, instead of accepting the proposed buyout, he would attempt to purchase Gang-Nail, it turned the industry upside down. Who could predict what MITEK TEAM WITH BILL GATES AT MICROSOFT IN 2006. (L-R) DAVE MCQUINN, GATES, GENE TOOMBS, PAUL PINSKY
might have taken place over the past 24 years had the reverse occurred and Cornelsen had accepted Gang-Nail’s offer?
Nevertheless, the merger of the two organizations was beset with its own set of issues. Gang-Nail remained committed to their FORTRAN solution running on a SUN platform. Since Gang-Nail was also in the business of leasing SUN hardware to their customers - and they were so successful with this, that they were the single largest SUN reseller in the country - they were reluctant to change their code or platform. However, with a base price for the hardware around $30,000, small and medium size companies were effectively locked out from using the software. The Hydro-Air approach, moving to a PC-based solution, was more viable, even with their less than spectacular software. For several years following the merger in 1987, the Hydro-Air development team, working at a feverish pace, produced MiTek2000, with the initial release taking place in 1992. It was a major leap forward for the customer base, incorporating both engineering and layout in one solution. TRUSSFRAMER 3D SECTION VIEW
90
MANAGEMENT SOFTWARE - THE MBA STORY Shortly after the release of MiTek 2000 Engineering and Layout in the early 1990s, MiTek customer’s began asking for "management" software – enabling them to keep track of customers, orders, schedules, invoices, and materials. Most customers used some standard accounting software to handle general ledger, accounts payable, accounts receivable and payroll. Still others used an outside bookkeeper to do these basic accounting functions. At the time it was difficult, if not impossible, to find an "off the shelf" system for order management, production scheduling, and inventory that was configurable enough to handle the peculiarities of truss manufacturing. Clearly, they were looking to MiTek to help them with a solution. Unlike traditional bill-of-material TERRY NICHOLSON SENIOR VICE PRESIDENT OF SOFTWARE OPERATIONS 2008-11
manufacturing,
trusses
are
manufactured more closely aligned
W HAT ’ S I N A N AME ? AS
THE
job-shop
manufacturing
methods. To meet this need, MiTek embarked on its third major component of the MiTek 2000 suite:
“FUSION PROJECT.” HOWEVER, IT WAS
DETERMINED THAT A DIFFERENT NAME WAS NEEDED BEFORE INTRODUCING THE PRODUCT TO THE MARKET. IN
PRESIDENT MiTek's Business Application or MBA. Given this new requirement McQuinn asked newly acquired Engineer Gilles Beauchacourt to become the project manager for
PROJECT BEGAN IT
ORIGINALLY HAD THE INTERNAL WORKING NAME OF THE
with
SAPPHIRE™
OF
2009, WHILE SENIOR VICE
GLOBAL SOFTWARE TERRY
NICHOLSON WAS PRESENTING THE PRODUCT TO MITEK’S ASKED
INTERNAL GROUPS HE FREQUENTLY THOSE
SUGGESTIONS
PRESENT FOR
A
IF
PRODUCT
the MBA component. Gilles had come to the U.S. from his native
FOLLOWING
France to study Civil Engineering at the University of Miami.
SENIOR SOFTWARE ARCHITECT CONTACTED
Following graduation, he joined the Bemax organization as a lead software developer, working on the A.C.E.S. software application. Gilles studied the requirements of the truss manufacturing industry
THEY
HAD NAME.
SUCH A MEETING IN THE
NICHOLSON
SAPPHIRE™. AFTER
AND
UK,
PAUL DAVIS SUGGESTED
BOUNCING THE NAME
OFF OTHER KEY STAFF, WHO EACH THOUGHT IT WAS A TERRIFIC IDEA, THE
SAPPHIRE™ NAME
WAS OFFICIALLY ADOPTED.
and ended up recommending that MiTek utilize Microsoft Project
91
as the main component of the "Management System". Microsoft Project was a sophisticated (for the time) application that could schedule work across multiple resources (such as saws and truss tables) and do a good job of balancing workloads and predicting delivery dates. However, this approach was rejected by MiTek management as being insufficient to handle the larger problem of truss order management and invoicing. As a result, it was decided that MiTek would write a management application program from scratch. McQuinn knew that a relational database was needed, and he was also committed to making it run on the same hardware and operating system that MiTek offered for truss layout and design (i.e. Windows). There was only one database management system available for Windows at the time - FoxPro – so MiTek acquired a copy and began an evaluation. Not long after, FoxPro became the development environment and database manager for the MBA program. McQuinn assigned the
project to Oguz Tuna Yildirim, one of the
A.C.E.S. programmers who had been
developing the A.C.E.S. DOS-based Wall
Panel
MiTek
acquisition. Tuna, a native of Turkey, had
been recruited to the A.C.E.S. company
shortly before MiTek acquired Bemax and
program
before
the
A.C.E.S. in 1991. Tuna learned FoxPro, interviewed customers extensively, and was solely responsible for the design and implementation of the first version of MBA. The software had great versatility; it could import the material requirements (lumber and plates) from the truss design files, produce an invoice, and had a rudimentary scheduling module. With development complete, MBA was marketed as an add-on to the core MiTek 2000 program, requiring an additional licensing fee. MBA was so successful – and so important in assisting MiTek customers improve their market position – that the market share of the program grew from zero to over 50% over the next decade. Today, it is still running order management and production functions of the business for most MiTek customers.
PRODUCTION SOFTWARE - THE MVP STORY In October of 1997, one of MiTek's closest customers – Boozer Lumber, located in South Carolina – approached Art Sordo at the BCMC show in Nashville. They had recently enlisted the services of an industrial
92
engineer named Ed Buck to improve their manufacturing productivity. Buck analyzed the truss manufacturing process and had a vision of how manufacturing could be improved and controlled through more formal manufacturing systems and automation. While most of the information needed to run Boozer’s manufacturing
O UTSTANDING P ERFORMANCE IN
HIS
SHAREHOLDERS,
(terminals or computers) were found on the factory floor. Buck's vision for Boozer would require a significant investment in technology and software.
STEEL IN
Boozer would provide the industrial engineering and factory environment
TO
WARREN BUFFETT
2004. “BY DECEMBER,
COSTS
AT
MITEK
WERE
RUNNING 100 PERCENT OVER A YEAR EARLIER.
AND MITEK
USES
665
MILLION POUNDS OF STEEL EVERY YEAR.
Art Sordo and Boozer’s Bob Jones struck a deal at the BCMC show:
LETTER
ADDRESSED THE SOARING COST OF
STEEL
was being delivered to the shop floor via stacks of paper, no electronic devices
2005
NEVERTHELESS,
THE
COMPANY CONTINUES TO BE AN OUTSTANDING PERFORMER.”
necessary for MiTek to develop a factory management system. For its part, MiTek would provide the required programming resources. The end result would be a manufacturing system that Boozer could use exclusively for a specific time period. At the end of the exclusivity period, MiTek would be free to market the system to other truss manufacturers. Initially, the internal name of the system was Real Time Factory Management or RTFM. The MiTek marketing department later changed the name to MiTek's Virtual Plant or MVP. Assigned to lead the project for MiTek was Mike McMahon. Having grown up in the truss industry, McMahon had worked a variety of jobs in truss plants from Nebraska to Illinois to Florida. During the two-year development period, McMahon divided his time between his home office in Florida and Boozer’s truss plant in Columbia, S.C. The MVP system came on-line at Boozer in 1999. After the exclusivity agreement had passed, MiTek implemented MVP to additional plants across the U.S., steadily adding locations each year as the capabilities of the program continued to grow.
e FRAME – 3D BEGINS IN EARNEST In the late 1990s the MiTek 20/20 layout program – which was the Windows conversion of the Bemax/A.C.E.S. program – had become well established within the MiTek customer base for layout of roof
93
trusses in a 3D model. Still, some customers only used the 3D layout program for difficult structures and often entered trusses one at a time in the truss design program, while floor trusses were almost always entered directly into the design program. About 20% of MiTek customers also built wall panels in addition to trusses, with MiTek providing a separate wall panel layout program that provided material take-off and construction drawings necessary to manufacture interior and exterior wall panels. For most manufacturers, having a wall panel program separate and distinct from the roof layout program was not a major problem as the two businesses were typically operated as separate units. However, there was some duplication of work between the two programs – especially in the area of describing the plan view of the structure. However, computer technology, memory and CPU processing, was becoming powerful enough to consider a single “whole house” program – one that would layout floor systems, wall panels and roof systems in a single program and with a single digital model. This was the beginning of Building Information Modeling (BIM) – although the industry would not use this acronym for several years. The MiTek implementation of the “whole house” concept was created by merging the MiTek 20/20 Layout program with the wall panel program into a single executable program. This program was named eFrame. To accomplish this, MiTek developers took the best software design aspects of the Windows roof layout program – menus, user interface, plane solving – and added the wall panel objects to the overall object model. The key developers of eFrame were Peter Emsley and Steve Wyman – software engineers who had started in the U.K. office and relocated to the U.S. headquarters in the late 1990s. They were able to produce, in a relatively short period of time, an eFrame program that became the dominant 3D modeling software for roof layout, floor layout and wall panels. eFrame replaced earlier products, from which it was derived, and continues to be the production software used by many of the MiTek customers today. The development of eFrame proved the concept of a whole house software package: that it was technically feasible and that the marketplace would adapt to this new paradigm. But there was one more major piece of functionality that MiTek wanted to implement beyond eFrame: Whole-house load transfer and design. In 2001, the eFrame application was transferred to the OptiFrame joint venture project. The intellectual
94
property, as well as engineers Emsley and Wyman, were moved to Denver. As part of the joint venture, eFrame was further developed and became the benchmark product for the next generation of whole house software: OptiFrame / TrussFramer / SAPPHIRE™ Structure. But that’s another story!
T HE O PTI F RAME J OINT V ENTURE - N EXT G ENERATION S OFTWARE In 2001, MiTek and TrusJoist Macmillan came together to form a joint venture with the goal of developing the next generation of software for the residential housing industry. The vision of this venture was to create a single, fully integrated, whole-house design program that would be used by each group involved in the supply chain: architect, builder, engineer, lumber yard and the MiTek Component Manufacturer. The joint venture resulted in the creation of a separate company located in Denver, Colorado, OptiFrame Software. Each partner in the joint venture – MiTek and TrusJoist – provided staff, software and funding for the new company. With this, the quest for the next generation, whole-house design software began. As news of the joint venture became public, and the whole-house design concept was announced, the phones at OptiFrame began ringing furiously as customers, vendors and suppliers sought to take advantage of this radical approach to the market. Clearly, the joint venture had found a significant need in the marketplace. Unfortunately, it would take several years before OptiFrame would have a software solution ready for the market. Despite the premature press release for the software, the project began to move forward as the housing industry began to grow at an unprecedented rate. In October of 2007, the OptiFrame software was finally ready for introduction into the market. The original joint venture agreement stipulated that there were to be
95
three versions of the new program. Javelin for iLevel customers – who had acquired TrusJoist – TrussFramer for MiTek customers, and RealStructure from OptiFrame for joint customers of MiTek and iLevel. As these programs made their way into the market, they were heralded as nothing short of revolutionary. While other similar programs stopped with the engineer, the OptiFrame solutions incorporated the best of all of the industry standard CAD programs, with the addition of a focus on the details required to actually make the components and build the house! No sooner were these programs released to the market than a list of new features requested by customers began to pour in to OptiFrame, keeping the development team busy for years to come. One premise of the joint venture was that the partners had to agree on any and all work performed by the developers at OptiFrame. For the first several years this was an easy task. But as time went on and the program developed, achieving this mutual agreement became increasingly more difficult. Consequently, in November 2008, the joint venture was dissolved with each partner taking the source code as it existed at the time, along with half of the development team and half of the office staff. Essentially, each was free to continue development as they saw fit. In the end, the OptiFrame joint venture was a clear success as it delivered to each partner a world-class piece of software from which each could move forward.
A N EW S OFTWARE M ODEL As noted earlier, the hiring of SVP Terry Nicholson in 2008 marked a dramatic turn in the evolution of MiTek software. Coming from the Enterprise Software Industry – and in particular the supply chain market – Nicholson understood that integration of each software function was the key to unleashing the true power of the MiTek solutions. Building on what his predecessor Paul Pinsky had begun – SQA, Product Management Process and Agile Methodology – Nicholson was able to quickly develop a strategic software plan to bring MiTek solutions to the marketplace in near record time. As previously stated, software development in Europe took another path. Recognizing the need for a product to meet the specific needs of Western Europe, the United Kingdom and Scandinavia, MiTek eventually acquired CSC (Construction Software Center), a Swedish software firm well qualified to produce software for
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the truss industry. This “dual software” approach, while not the ideal situation when approaching the market from a global perspective, was likely inevitable, given the nature of doing business in Europe and their penchant to do business with European firms. However, the SAPPHIRE™ Suite, the most advanced software yet seen in the market, has been widely received by the industry. With features similar to what is offered by commercial software programs, the SAPPHIRE™ Suite is available to all MiTek customers.
T HE S ECRET P ROJECT In 2005 with the OptiFrame project in full swing, Pinsky and his team realized that MiTek’s management program, MBA, was showing its age both technically and from a feature perspective. Consolidation had taken place in the industry and had occurred among many of MiTek's
customers
resulting
in
multi-facility
component manufacturers and several large national footprint businesses that required a level of capability
SAPPHIRE™ IN THE RESIDENTIAL SUPPLY CHAIN
never envisioned when MBA was first developed. It was determined that it was time to start on the next generation solution, just as had been done with the Optiframe joint venture. However this time MiTek would do it alone. And there would be no press release until the software was ready. In fact, the project would be a closely kept secret. The first priority was assembling an international team of MiTek management software experts. This group was based in MiTek’s Chesterfield office and for the first several years the team worked on the collection of requirements from around the globe. This new management program would be a true global piece of software, meeting the needs of all MiTek business units around the world. Another early task was the development of a technical framework (based on the latest Microsoft technologies) that could support an extensible program. Such a technology capability was required if the
97
E XTENSIBLE S OFTWARE
program was to be truly extensible. Also, the technical capabilities of most
A SOFTWARE DESIGN PRINCIPLE THAT
customers was accelerating at an increasing rate, and it was the software
TAKES
team’s vision that this next generation management program should be as
INTO
GROWTH.
THIS
ACCOUNT
FUTURE
IS THE ABILITY TO
ADD NEW FUNCTIONALITY WITHOUT
future-proof as possible. It was in 2008, when Nicholson joined MiTek as head of software, that
HAVING TO MAKE MAJOR CHANGES TO THE BASIC SOFTWARE STRUCTURE.
the wisdom of this decision was proven. Nicholson adjusted the course of the new management program from being a single, extensible program to
becoming a modular software suite – the SAPPHIRE™ Suite – with a new management program as one of the suite’s modules: SAPPHIRE™ Management. Building on the processes Pinsky had introduced, it was the ease with which the technical framework adapted to this adjustment that convinced the team that their technical approach was solid, perhaps passing the first test of future proofing. With this confidence the software team continued forward with the development of the industry’s first truly integrated software suite, one that would meet the requirements of the day and beyond.
As
this
history
is
being
written,
the
SAPPHIRE™ Suite is entering its beta test period MITEK SAPPHIRE™ SUITE
with a variety of MiTek customers. With ongoing deep-dive
meetings
investigating
the
rich
functionality and the high-degree of configurability of the SAPPHIRE™ Management and the SAPPHIRE™ Suite, the development of the next generation of software for the component manufacturer is rounding the final turn and is headed for the finish line. So, where will MiTek software go from here? The rest of the Residential Supply Chain perhaps!
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99
M I T EK S OFTWARE S OLUTIONS SAPPHIRE ™ S OFTWARE S UITE
C OMPONENT D ESIGN
SAPPHIRE™ Structure SAPPHIRE™ Management SAPPHIRE™ Materials SAPPHIRE™ Viewer SAPPHIRE™ Portal SAPPHIRE™ Reporting
MiTek Engineering
TrussCon
OnLine Plus Engineering
RoofCon MiTek 20/20
P RODUCTION M ANAGEMENT MiTek CyberSort MiTek JigSet MiTek MVP
SAPPHIRE ™
IN THE
S UPPLY C HAIN
SAPPHIRE™ Reviewer SAPPHIRE™ Supplier SAPPHIRE™ Specifier
F UTURE E UROPEAN S OFTWARE Pamir
MiTek MVP Walkthrough MiTek ShopNet OnLine Plus Job Manager
S TRUCTURAL F RAMING B USINESS M ANAGEMENT
E UROPE
A SIA -PACIFIC /A FRICA MiTek 20/20 Optiflow
eFrame Layout
MiTek Job Summary
eFrame Panel
MiTek MBA
Power Tools
MiTek Link
OnLine Plus Layout
MiTek WorkFlow InfoStar Database
WIREFRAME ILLUSTRATION CREATED USING SAPPHIRE™ STRUCTURE
100
M I T EK S OFTWARE T IMELINE 1983
JOINT PROJECT WITH ON-LINE DATA.
1987
ADOPTION OF WINDOWS 1.0. MITEK
PURCHASES
GANG-NAIL. GANG-NAIL’S
SOFTWARE
– AUTOTRUSS –
IS A
SUN-BASED (OS)
FORTRAN SOLUTION. 1988
POWERCALC IS PORTED TO THE PC. POWERCALC AUTOTRUSS UNDER
1991
RELEASED AS A
FORTRAN-BASED
IS RELEASED FOR THE
PC. IT
TRUSS DESIGN PROGRAM RUNNING ON A
REMAINS
FORTRAN-BASED,
DOS/PC.
BUT IS CONVERTED TO RUN
DOS ON A PC.
MERGER OF HYDRO-AIR AND GANG-NAIL. MITEK ACQUIRED BEMAX AND A.C.E.S., A DOS-BASED PRODUCT. THE PRODUCT CONSISTS OF A.C.E.S. LAYOUT AND A.C.E.S. ENGINEERING. INTERLOK STEEL IS ACQUIRED BY MITEK. THEIR ILS SOFTWARE PROGRAMS ARE PHASED-OUT.
1992
A.C.E.S. IS RELEASED TO MITEK CUSTOMERS. MBA (MITEK BUSINESS APPLICATION) FIRST RELEASED. MITEK 2000 ENGINEERING IS RELEASED. MITEK 2000 V.1, RUNNING UNDER MICROSOFT WINDOWS 3.0, IS RELEASED.
1993
A.C.E.S. LAYOUT IS CONVERTED TO WINDOWS. THE PRODUCT BECOMES MITEK 2000 LAYOUT.
1995
MITEK2000 IS CONVERTED TO 32-BIT FORMAT RUNNING UNDER WINDOWS 95. MITEK2000 ENGINEERING
IS RELEASED GLOBALLY.
BASE
PRODUCT IS CUSTOMIZED AND RELEASED IN
EUROPE, SOUTH AFRICA, AUSTRALIA AND NEW ZEALAND. 1996
MITEK2000 IS RE-BRANDED MITEK 20/20. MITEK BUSINESS APPLICATION (MBA) IS RELEASED.
1998
MITEK EUROPE ACQUIRES CSC SOFTWARE OF SWEDEN.
1999
MITEK VIRTUAL PLANT (MVP) VERSION ONE IS RELEASED.
2000
EFRAME IS RELEASED. THIS IS THE FIRST MERGER OF THE WINDOWS WALL PANEL WITH THE A.C.E.S. ROOF LAYOUT PROGRAMS.
2001
MITEK ACQUIRES TEE-LOK. THE TEE-LOK SOFTWARE IS PLACED IN MAINTENANCE MODE.
2002
MITEK 20/20 RELEASED.
2006
MITEK BUSINESS ACTIVITY (MBA) IS CONVERTED TO RUN ON A MICROSOFT SQL DATABASE.
2007
MITEK TRUSSFRAMER, DEVELOPED BY OPTIFRAME SOFTWARE, IS RELEASED.
2010
MITEK SAPPHIRE™ SUITE IS RELEASED.
2011
MITEK SAPPHIRE™ MANAGEMENT / SAPPHIRE™ SUITE BEGINS BETA PROCESS
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T HE M ACHINERY B USINESS - P LUGGING H OLES When
combining
Gang-Nail’s
and
Hydro-Air’s machinery plants, Cornelsen brought together the industry’s best hydraulic fabricating machines, however, he still lacked the best sawing equipment and roller fabricating machines. In 1989, the gap in the saw business closed when Cornelsen combined the Gang-Nail Idaco International and the Hydro-AirDePauw Hex Cut capabilities to produce the Easy Set Saw. This was the first gamechanging
THE FIRST MITEK COMPUTER CONTROLLED SAW, THE EASY SET
MiTek
machine that set the tone for future machinery development. To ensure additional reliability, the Easy Set Saws were developed with the Giddings & Lewis hardware and software platform, used in CNC machines around the world and recognized as the standard in the industry. Also in the 1990s, the plant ramped up from one saw every other month in production to one saw a week; completing over 300 Easy Sets, making it easily the most successful machine in the history of the truss business up to that point. Filling the gap that existed in the roller equipment area took a few more years, but by 1994, the target company had been identified. The purchase of Diamond BOB LEPOIRE SENIOR VICE PRESIDENT THE ACQUISITION OF HIS COMPANY, DIAMOND MACHINERY, WAS A HUGE LEAP FORWARD FOR MITEK IN THE MACHINERY BUSINESS.
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Machinery that year enabled MiTek to position itself as a full-service machinery supplier for the first time. With these products now in place the MiTek sales team seized the moment, as they were able to sell entire plants all of their equipment needs, filling the growing demand for plant automation within the industry.
Toward the end of the 1980s, with the Easy Set evolution in full swing, the need for computer control of this device became apparent. In 1989, Easy Set 2000 was released to the market, followed by the Easy Set 3000 in 1992 and the Easy Set 4000, MiTek’s first fully automated saw, in 1994. Each of these utilizing Giddings and Lewis computer controls. This advancement in computer control took the proven technology of the Easy Set platform and lowered the setup time from 4 minutes to only 15 seconds, further solidifying MiTek’s position as the leader in the machinery business.
D IAMOND M ACHINERY The acquisition of Diamond Machinery marked a significant milestone in MiTek’s history. Prior to this, MiTek was unable to market itself as a “one-stop-shop” for all things in the truss industry; the reason for this is that it lacked a roller gantry machine.
BILL WATSON HIRED BY PAUL CORNELSEN IN MARCH 1998 AS DIRECTOR OF HUMAN RESOURCES, BILL HAS THE DISTINCTION OF BEING THE FIRST
When MiTek went searching for a company to bring into the fold, the Michigan firm
MITEK EMPLOYEE HIRED 1987 MERGER
FOLLOWING THE
WHO DID NOT WORK FOR EITHER
seemed to fit the bill. Founded and owned by a former Michigan State graduate, Bob LePoire, Diamond brought significant innovation to the machinery business. LePoire
HYDRO-AIR OR GANG-NAIL IN 1992, HE TOOK ON RESPONSIBILITY AS DIRECTOR OF MANUFACTURING FOR THE EARTH CITY FACILITY, HOLDING THAT POSITION UNTIL 2000.
continually looked for ways to drive down the production cost by the better utilization of technology. Some of his innovative solutions continue to lead the industry to this day. In the end, bringing the Diamond Machinery products into the MiTek family completed the product mix.
C YBER S AW GENE TOOMBS IV SENIOR VICE PRESIDENT OPERATIONS UNDER HIS LEADERSHIP, THE MANUFACTURING BUSINESS CONTINUES TO LEAD IN INNOVATION AND PRODUCTIVITY.
The development of the new Cyber Saw in 1996, marked an upturn in the manufacturing division. Beginning with Art Sordo’s vision for a new saw, he assembled an outstanding team, led by Jose Andrade, Manufacturing Engineering Manager, with outstanding support from individuals such as Randy
103
Mabery and Bryan Stieglitz, as an entirely new computer controlled system was developed, supported by leading-edge technology and software. Featuring a touch screen display and self diagnostic maintenance screens – so
important
to
many
MiTek
customers – the new saws quickly
THE ROOFGLIDER TEAM CELEBRATING THE DELIVERY OF THE 100TH UNIT.
exceeded customer expectations upon their installation. With 22 axes, each computer-controlled, the Cyber saw was clearly on the cutting edge of truss technology. The Cyber Saw developed into a series, with additional products becoming part of the line. These included the Smartset and Smartset Pro saws. Saws continued to be sold at a fast pace with the 100th Cyber Saw delivered to a Canadian customer in April 1999, while unit number 200 shipped in July 2000, just 15 months later! In 2001, the 200th saw in the series was delivered to a customer in Jamestown, California, for one of their new plants. In addition, June 2000 also marked a milestone in the RoofGlider product, with the 100th unit shipped to a customer in Wisconsin. Introduced in 1998, the RoofGlider was the first trackless roof truss roller system in the industry. Units have been shipped throughout the U.S., Hawaii, as well as Europe, Australia and Canada. MiTek manufacturing continued to produce new and better products year after year. In the roller gantry area, MiTek sold more roller gantry systems in less time than anyone else in the industry. The Cyber Saw series are in place THE SMARTSET PRODUCTION TEAM IN 1996
104
THE CYBER SAW SOFTWARE DEVELOPMENT TEAM: L-R: RODGER KELLEY, BILL HOWARD, JOSE ANDRADE, MIKE BOUCKAERT, BOB LEPOIRE, JIM CARROLL, BRIAN STIEGLITZ THE NEW CYBER SAW, INTRODUCED IN 1996, WAS THE MOST TECHNOLOGICALLY ADVANCED PIECE OF CUTTING EQUIPMENT AT THE TIME. DEVELOPED BY AN OUTSTANDING PROJECT TEAM, THIS POSITIONED MITEK AS A LEADER IN COMPUTER-CONTROLLED CUTTING TECHNOLOGY.
across the U.S., Canada, Australia, Europe and Japan. At the 2000 BCMC show, MiTek - as was generally the situation – took center stage as they introduced new machinery and software solutions to its customers. The first of these, the MiTek JackRabbit™ Coil Fed Joint
Assembly
Machine,
offered
touchscreen setup and controls, making it the fastest, easiest, and most efficient way to produce open end jack trusses. It was also at this
event
where
MiTek
20/20
“PerfectVision”™ was announced as the replacement for MiTek 2000.
P LATE M ANUFACTURING Midwest
connector
manufacturing THE CYBER SAW PROJECT TEAM IN 1996
moved from Earth City, MO to Columbia,
THIS TEAM PRODUCED THE FIRST SAW SHIPPED TO FRANCE.
105
MO, in 1995, mainly to free up space for machinery production at the Earth City facility. In addition, the move enabled connector manufacturing to double the size of their operation, allowing them to keep up with increasing demand. However, by mid-2008, with
the housing market in decline – resulting in the
underutilization of the Fountain Lakes machinery facility – and an expiring lease on the Columbia, MO plant, the decision was made to move the plate stamping operation back to the St. Louis area. With a strong workforce already located at Fountain Lakes, and the facility owned by MiTek, the decision was made to consolidate both operations at Fountain Lakes in July 2009, which is normally a slow production month. However, a sudden rise in demand for connector plates that summer saw MiTek’s three other plants (Tampa, Phoenix and Edenton) step forward and fill the void created by the lack of production at Columbia. The move went off as planned and by the winter of 2009, the presses were back up and running. In 1999, the connector manufacturing site in Phoenix also looked to expand their operations as they moved and doubled their space as well. Then in June 2001, the Miami stamping operation relocated to a new facility in Tampa. The 300-mile move offered a significant increase in space, allowing the plant to operate more efficiently and make more effective use of plant resources. Nearly double the size of the Miami facility – 100,000 sq. ft. compared to just 55,000 sq. ft. – the new space allowed the addition of additional stamping presses, a new slitting line and plenty of storage for steel coils. Furthermore, barge traffic down the Mississippi was able to make the move to Tampa much easier, enabling shipments to travel by water, rail and highways to meet customer demand. The acquisition of Tee-Lok in January 2002 added their plate stamping operation – based in Edenton, North U.S. AND CANADIAN STAMPING PLANT MANAGERS IN 2002 (FRONT L-R): BILL ANDERSON (EDMONTON), JOSE IBARRA (TAMPA), MARCELINO MARTINEZ (TAMPA), ANDREA SAFFLES (PHOENIX), GORDON CARTER, SR. (CANADA) GORDON CARTER, JR. (CANADA), IAN MARSH. (BACK) JACK BAER (PHOENIX) BOB LEPOIRE (ST. LOUIS) GREG FINN (COLUMBIA), TODD ASCHE (COLUMBIA).
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Carolina – to the MiTek family. The addition of this fourth facility to the connector plate business enhanced MiTek’s ability to meet customer demand for high-quality plates.
K EY A CQUISITIONS On January 16, 2003, the acquisition of Production Conveyor Systems, LLC (PCS) of Columbia, Missouri was announced. A leading supplier of wall panel machinery and material handling systems, PCS became part of the newly-formed wall panel division. This acquisition enabled MiTek to offer customers a full spectrum of wall panel solutions. Another key production component arrived at MiTek in June 2003 with the acquisition of Calgary-based Pacific
2011 MANUFACTURING LEADERS (FRONT L-R): GENE TOOMBS IV (ST. LOUIS), RYAN COOK (AEGIS EDENTON), JOSE IBARRA (TAMPA), GORD CARTER (CANADA), DAVE BECKEL (ST. LOUIS). (REAR) DENNIS SCHIEFFER (MITEK MACHINERY), JUSTIN NEIL (CANADA), JIM HUFF (TMI), GREG FINN (ST. CHARLES), MARK PHELPS (EDENTON) FRED POWERS (EDENTON), SKIP KNOLLE (PHOENIX), TODD ASCHE (CHESTERFIELD), KEN JURGENSMEYER (HEAT PIPE)
Automation, Ltd. Specializing in designing and building manufacturing equipment for the roof truss industry worldwide, Pacific Automation had a solid reputation within the component manufacturing community. In December 2004, one of MiTek’s fiercest’s competitors, The Koskovich Company, also saw it move into the MiTek family. Besides bringing a quality line of automated component cutters into the MiTek product mix, the Koskovich staff brought some of the best in driving a high level of customer satisfaction. Founded by Jerry Koskovich in 1973, the Rochester, Minnesota company provided consulting and engineering services to housing and building authorities, along with third party inspections for truss manufacturers. In 2006, the expansion of the manufacturing division continued with the acquisition of Robbins Engineering in January. Located in Tampa, FL., Robbins was a diverse organization, offering a complete line of connector products, truss manufacturing and material handling equipment, truss design and plant management software, and also provided licensed professional engineering services. Under MiTek, the plan was for Robbins to continue to operate as a separate company, maintaining its brand, software, engineering support services, and manufacturing facilities. Nevertheless, changes in market demand caused the eventual closure of all of the former Robbins operations, except for the software and engineering units.
107
Also in 2006, the machinery production group moved into a new 177,600 sq. ft. quarters. Located in the Fountain Lakes area of St. Charles, Missouri, the multi-purpose facility combined industrial equipment manufacturing, research and development, and training. This new facility provided MiTek with the resources to develop and produce the next generation of building component machinery. Just as important was the new state-of-the-art training center, enabling customers to take full advantage of the software suite, along with the operation and maintenance of MiTek’s full range of equipment. Finally, the acquisition of the remaining Aegis business in 2008, saw the entire metal framing operation relocate to the Edenton, NC facility in 2009. This move, accomplished in record time, allowed Aegis to continue to exceed customer order requirements.
M ANUFACTURING E NHANCEMENTS While MiTek has continued to play a leading role in all areas of manufacturing and production in the industry, it has also played a key role in the development of new, innovative products, which have served MiTek’s customers well. Some of these industry innovations have been: • Virtek laser projection in 1993 • Slotted top tables with Tekset jigging in 1996 • MatchPoint PLANX automated jigging in 2006 Each of these helped increase productivity at truss assembly stations. For example, the Virtek laser projection system reduced setup and changeover up to 70%, while the addition of the Tekset Puck made precise placement of boards onto the table much easier. However, the gains were not limited to reduced setup; lead time and labor costs were also reduced as a result of these innovations. For customers not looking to add Virtek to their operation, or where lack of space does not allow the addition of an additional table to their production, adding MatchPoint PLANX to their existing table will provide significant production improvements. In many instances, PLANX showed a 50-65% reduction in setup. When combined with Virtek, setup time was lowered from 15-20 minutes down to less than a minute!
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109
M I T EK H ISTORY
Year
Connectors
OF I NNOVATION
Software
Machinery
1989
EasySet®1000 EasySet2000
1990
Floor Truss Stacker
1991
T-Plate
1992
MiTek 2000® Engineering
EasySet3000
1993
MiTek Layout MiTek Wall Panel
EasySet4000 Virtek®
1994
High-Strength Plate
1995
Horizontal Stacker MiTek Cyber Sort™
Cyber® Saw
MiTek MBA™
Slotted Top Tables w/Virtek & Tekset
Stabilizer®Winclip
MiTek Jigset™
RailRider™ HammRR press™
Eliminator™
1998
SmartSet® SmartSet® Pro Roof Glider
Power Band RR™
1999
JackRabbit®
Alternating PosiStrut® webs
Trimmable Posi machine
Trim-It™ Trusses
1996
1997
2000
110
Specialty
MiTek Plate Easy Pak®
MiTek eFrame® MiTek Link™
M I T EK H ISTORY
Year
Connectors
2001
Banded Pack
2002
OF I NNOVATION
Software
Machinery
MiTek™ 20/20 Suite MiTek MVP™ MiTek eWorkFlow
Cyber®A/T, PCS
2003
2004
Hardy Frame® Aegis Metal Framing MT Plates
RoofTracker®
2005
ChemStar RR
Omni Miser®
2006
MiTek ShopNet™
Servo Omni® PLANX
2007
MiTek TrussFramer®
Omni Miser® 2
2008
MiTek University
2009
SAPPHIRE™ Structure
2010
SAPPHIRE™ Viewer SAPPHIRE™ Portal
2011
Specialty
M18SHS
SAPPHIRE™ Suite (beta) SAPPHIRE™ Management (beta)
Multi-Brace™ Improved Stabilizer SpeedBlok™
New Hinge Plate
SAPPHIRE™ Reviewer
111
C OUNTRIES
C OUNTRIES
112
WHERE
WHERE
M I T EK
M I T EK
HAS
HAS
O PERATIONS
M ANUFACTURING O PERATIONS
C H A P T E R
E I G H T
8 I NTERNATIONAL
I NTERNATIONAL B USINESSES With offices on six continents, MiTek has an enviable international presence. With technical support, sales, customer service, warehousing and manufacturing strategically positioned across the globe, the MiTek team is prepared to support any customer, anytime and anyplace! The International Group operates with three distinct Business Units: Canada, Europe and Asia-Pacific/ Africa. Each of these areas face unique challenges in their respective markets. Some mature markets, such as Western Europe, Canada, Australia and New Zealand have a long, established history in the use of connector plates in the wood truss industry. Others - in particular those in Eastern Europe, and parts of Southeast Asia and China – are now just being exposed to the intricacies of structural wood solutions. As a result, the manner and approach taken will vary greatly. Nevertheless, MiTek’s International business remains strong, productive and profitable. Most recently, the 2010 reacquisition of the Gang-Nail, Ltd. business in Sao Paulo, Brazil, brought MiTek’s presence to South America, a locale it had been absent from since 1989 when it sold the business to the thencurrent management team at Gang-Nail. Of particular note is the long tenure of many staff members within each area; many have been with their organization for 25 years or more. In addition, many joined the organization in the Hydro-Air or Gang-Nail days, when these two goliaths battled for supremacy amidst the then-crowded connector plate market.
M I T EK C ANADA I NC . Led by Mike Sandbrook, President of MiTek Canada, a 40-year-veteran of MIKE SANDBROOK PRESIDENT, MITEK CANADA
the business, the MiTek name has come to represent the very finest in structural wood components and software. Having worked his way up from junior designer,
to engineer, sales and now senior management, Sandbrook has a solid perspective on the business, enabling him to lead his 120-person team by example.
114
THE CANADIAN HEADQUARTERS IN BRADFORD, ONTARIO.
As Automated Building Components (the Miami-based parent of Gang-Nail) they were the first company in Canada to make connector plates under the Gang-Nail brand. A few years later, when the name was changed to Gang-Nail Canada, they operated out of a 4,500 sq. ft. facility in Toronto. Today they have a 100,000 sq. ft. facility on the outskirts of Toronto (Bradford, Ontario) from which they strive to meet the growing demands of their customers. Besides the Toronto-area facility–which is also the primary manufacturing facility for all of Canada–there are engineering and warehousing operations in Montreal (Quebec), Edmonton and Calgary (Alberta), and Vancouver (British Columbia). While the majority of the Canadian population resides within 100 miles of the United States-Canada border, it is the logistical issues of transporting material over such a broad area–often with very demanding climate and temperature changes–that presents the biggest challenges to the Toronto team. Add to that the intense snowfall, similar to what is seen in northern Europe, and one can see how this places further demands on the MiTek Canada Team as their designs are exposed to maximum load conditions on a frequent basis. Over the past several years, two key acquisitions were made which shored-up the product line while adding customers. The first, in 2003, was Pacific Automation, a machinery operation. The second, in 2006, was Jager Industries, a plate manufacturer. Jager’s plate history goes back to the early Hydro-Air days with Walter
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Moehlenpah. Since Moehlenpah had little interest in doing business in Canada directly, Jager became a licensee of their plates, selling the Hydro-Air brand across Canada. In 2006, Jager – and their customers – became part of the MiTek family. There is also another interesting story that arose out of the Jager acquisition. Jager had licensed software from Robbins for use in their operation. Toombs contacted Robbins to get permission for MiTek to continue to use the Robbins On-Line Plus software at Jager. After giving their approval, they asked Toombs: “Ok, that’s settled; so when do you want to buy Robbins?” Six weeks later, the Robbins acquisition was completed. With MiTek’s expertise, MiTek Canada plays a significant role when working with government organizations looking to establish or revise construction codes. In particular, MiTek has a number of staff on the Truss Plate Institute of Canada, which makes annual recommendations to the Canadian Wood Council on Codes and Standards. While the Canadian business continues to be successful, the geography of the country presents many opportunities for smaller producers to gain a foothold in select markets. Nevertheless, for MiTek Canada, it will continue to be the strength of the MiTek SAPPHIRE™ Software that will keep customers in the fold as they can rely upon MiTek to provide them with the most up-to-date products and solutions for their business.
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E UROPEAN O PERATIONS Like his Canadian counterpart, Syd Griffiths has been part of the truss industry for most of his adult life. Now entering his 37th year with MiTek, Syd can still recall his first meeting with Paul Cornelsen; it was in the tool room in 1984 during one of Cornelsen’s early visits to the United Kingdom. At the time, they were manufacturing plates under license to Hydro-Air, and were very well run and quite profitable. To quote Cornelsen: “The British operation was doing very well. In fact, they had embarked on a capital spending program to bolster their market presence. However, in the interest of the entire company, I asked
SYD GRIFFITHS GROUP MANAGING DIRECTOR EUROPE
them to hold off in order to shore up the rest of the Hydro-Air operations. Without this, Hydro-Air might have died!”
D IVESTITURE Following the Hydro-Air purchase by Cornelsen, and the subsequent merger in 1987 of Gang-Nail and Hydro-Air, the situation came under the watchful eye of the Monopolies and Mergers Commission (today the Competition Commission) in the United Kingdom (UK). In 1984, Hydro-Air maintained a 31% market share with Gang-Nail at 32% and three other companies making up the remaining 37%. However, the acquisition of BevPlate by Hydro-Air in 1985 grew their share to 47% by 1986, with Gang-Nail hovering around 30% and the others at 23%. With the 1987 proposed merger, the combined MiTek organization would have a 76% market share. This raised more than a few eyebrows. Those arguing the pros and cons of the merger presented interesting viewpoints. Competitors felt MiTek would lower prices THE EUROPEAN HEADQUARTERS IN WEST MIDLANDS, UNITED KINGDOM.
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in an attempt to drive them out of business. Customers felt the merger would give MiTek too much control, allowing them to raise prices at will. For their part, the Commission wanted MiTek to adopt a number of different business functions to keep the companies separate – in effect, eliminating the benefits of the merger. In the end, the Commission entered its order in July 1988, giving MiTek three months to divest the Gang-Nail UK group. In early 1989, Gang-Nail UK became part of Eleco, who recently divested the business.
Despite this initial setback, the MiTek business across the UK, Western Europe
HUGO DU PREEZ FORMER GROUP MANAGING DIRECTOR, EUROPE & AFRICA, ENDED HIS 25-YEAR CAREER WITH MITEK IN 2007.
and Scandinavia began to grow. However, there were several areas that needed to be addressed before it could establish itself as the industry leader. Following the 1987 merger, MiTek was looking for a way to better position Hydro-Air across the continent. As a result of the 1988 divestiture of Gang-Nail, the two organizations continued to compete furiously in Europe. One key advantage that Gang-Nail had was their software; it was significantly better than anything Hydro-Air had to offer at the time. However, on the positive side, the software was developed by an independent Swedish company, CSC (Construction Software Center), under license to Gang-Nail. CSC was founded in Skellefteå, Sweden in 1976 and specialized in software for truss producers. In 1991, they were the first to introduce software for the construction industry based upon the new Windows environment. After Hugo Du Preez was appointed Group Director over Europe and Africa, he believed that the acquisition of this company would be just the edge needed to take the lead. Over the next several years, Du Preez made a number of overtures to CSC attempting to purchase the business. His persistence paid off in 1998, when MiTek acquired the business. Yet, there did remain one issue; CSC remained under contract MITEK OFFICES IN RIIHIMÄKI, FINLAND
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to support the Gang-Nail software, which they continued
to do. However, when customers saw what had taken place, it convinced many of them to move from GangNail to Hydro-Air. At the same time, component manufacturers that had been on the fence regarding an acquisition made their decision and joined the MiTek family. This was a significant coup for the region as the MiTek dominance in the European market was now
MITEK FRANCE OFFICES IN CRETEIL, A PARIS SUBURB
taking hold.
M I T EK E UROPE T ODAY Today the European operation has 10 operating businesses in 8 different countries with 2 in Sweden. This includes units in France, UK, Germany, Finland, Scandinavia (Norway, Sweden and Denmark), Czech Republic, Poland, Romania and Russia. In addition, there are four manufacturing sites supporting customers from Great Britain to Russia. These are in the UK (supporting France and Germany), Sweden, Finland and the Czech Republic. To address the nationalistic situation present across Europe, MiTek has country-specific Managing Directors and customer service groups in each major country, consisting of technical support, sales for plates and machinery and warehouse. In addition, each location is staffed with local individuals, all the more capable of dealing with issues within that specific country. While MiTek has been focused for years on Western Europe, over the last decade it has made great inroads into many of the former Soviet Union states, as well as the Baltic States. A good example of this is the joint venture that has been in place in Romania over the past five years, as well as the work being done in Latvia, Lithuania, Estonia and other nations in that area. While there are certainly many challenges dealing across Europe–language, code differences, labor situations, national differences, just to name a few–MiTek has been quite successful in bridging these areas to maintain its position as the premier supplier in the wood truss component market.
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P LANTING S EEDS
FOR THE
F UTURE
An example of how MiTek has been at the forefront of establishing building standards has been the initiative with a number of former Soviet Union states. Code and Compliance in these areas was virtually non-existent. Seizing this as an opportunity to get it right the first time, MiTek undertook a project to work with government, universities, architects, construction firms, distribution companies and trade schools to give back to the industry. From lecturing at universities and writing syllabuses, to hands-on-training, MiTek staff shares with these groups the knowledge gained regarding stress details, load bearing, wall-panel and truss construction, and a host of industry-specific knowledge. While this has certainly helped MiTek to grow the business, it has also proved beneficial for the recipients who enter the market better prepared to provide proven construction solutions. In addition, this group of individuals is also better equipped to influence government regulations, ensuring that homes and buildings will be constructed with the latest, most advanced and safest procedures available. However, like other MiTek Groups across the globe, the European efforts do not stop at their borders. Following the civil unrest in the former Soviet Republic of Georgia, MiTek supplied material for the
C OUNTRIES S UPPLIED
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FROM THE
E UROPEAN A REA
1)
Germany
15) United Kingdom
29) Kazakhstan
2)
Austria
16) Belgium
30) Ukraine
3)
Hungary
17) Spain
31) Belarus
4)
Greece
18) France
32) Slovakia
5)
Switzerland
19) Corsica
33) Czech
6)
Croatia
20) Guadeloupe
34) Poland
7)
Slovenia
21) Finland
35) Sweden
8)
Romania
22) Martinique
36) Norway
9)
Bulgaria
23) Reunion
37) Denmark
10) Moldavia
24) Ireland
38) Estonia
11) Bosnia
25) Latvia
39) Lithuania
12) Italy
26) Morocco
40) Guiana
13) Cypress
27) Netherlands
41) Mauritius
14) Georgia
28) Russian Federation
construction of over 300 homes. In early 2010, following the devastating earthquake in Haiti, MiTek worked with a German customer to supply products to rebuild a number of facilities in that country. More recently, there have also been inquiries from aid groups doing work in Afghanistan asking for MiTek support to build structures damaged by the war in that part of the world. This approach follows the well-used MiTek motto: we will MITEK-SUPPLIED TRUSS PLANT IN BUCURESTI, ROMANIA
support anyone, anywhere it is needed.
S OFTWARE Across Europe, the Eurocodes, developed in 1990 provide the basis for structural design. Eurocode 5 (EC5) is the section that addresses Timber buildings and their engineering. However, individual nations are free to adopt their own Annexes to the code, allowing for country-specific rules. This, of course, provides challenges when designing software to be used across an area such as Europe. Currently, MiTek’s TrussCon and RoofCon, developed by CSC, are the major products in use in Europe, with the exception of the UK and the Czech Republic, which are the primary users of MiTek 20/20. The European predisposition for products developed within its borders has clearly been a factor in the acceptance of the TrussCon and RoofCon products and MiTek 20/20. The 1998 acquisition of CSC, which is among the leading software development firms in Eurocode5 (EC5), continues to provide additional benefits to MiTek Europe as it is currently developing its latest product offering, the next generation software known as Pamir. Named for the mountain range in Asia, which is often referred to as “the roof of the world,” it is anticipated that Pamir will be the best 3D Layout Program, with integrated truss design, compliant with EC5, positioning it “on top of the world!”
T OPS
IN
C USTOMER S ERVICE
Most companies want to be good at servicing their customers. MiTek wants to be the industry’s best! An example of this approach took place in 2004, when there was a steel crisis in the UK. Griffiths met with Gene 121
Toombs to discuss what options they had to service their UK customers. The plan they came up with was not only bold, it was amazing. The staff began to contact transfer companies as part of a plan to use airplanes to transport steel from the US to the UK to satisfy customer needs. While the anticipated shortage never materialized, it shows the extent to which MiTek would go to keep customers happy.
G ROWTH Since 1994, MiTek Europe has made 16 key acquisitions across Europe to fill-out the product line. This includes companies in a variety of areas, all vital to MiTek’s goal of continuing to be a full-service provider to its customers. Despite the worldwide recession, the European Group continues to perform well. They maintain a strong market share in many key countries, while branching out to new nation-states in need of the variety of services available from the worldwide leader.
S UMMARY What is MiTek Europe about: •
It has a strong customer focus.
•
It wants to be known as a company that treats its employees as part of a team.
•
It has employees who give the company tremendous loyalty, many with the company over 25 years.
•
It is a company where “The Customer is King” is not just a slogan; it’s a way of doing business. Often a story says a lot about how a company conducts business. On one occasion, Gene Toombs was
visiting the UK and was in the middle of a meeting. The staff was gathered in the room, listening intently. Partway through the presentation the phone began to ring. No one moved. It rang again. Once more, no one moved. It rang an additional two times. Whereupon Gene stopped speaking and said to the collective group, “Well, I guess we just lost a customer!” From that moment on, the company has never let the phone ring more than three times before answering!
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M I T EK A SIA -PACIFIC
AND
A FRICA
A veteran of MiTek for more than two decades, Stephen Fray, Executive Chairman of MiTek Asia-Pacific and Africa, has seen many changes in the Asia-Pacific and African markets through the years. Today, as MiTek looks to expand further into developing nations in Asia ie: Vietnam, Thailand and China, it faces challenges specific to those countries. While continuing to make inroads into China and maintaining its strong ties to Japan, MiTek remains committed to its business relationships in Australia, New Zealand and South Africa,
STEPHEN FRAY EXECUTIVE CHAIRMAN MITEK ASIA-PACIFIC AND AFRICA
including some of the East African nations now eager to adopt new methods of construction, particularly steel-framed construction. Some of the inherent issues faced by MiTek in these regions relate to language, regulation, government, culture, and existing building methods, along with significant manufacturing and logistical concerns. Nevertheless, over the past decade each of these hurdles has been reviewed, a solution formulated, an approach put into place, with new customers and products resulting from the efforts. The population density in countries like China and India make them potentially very attractive markets for MiTek - but breaking into some of these has been far from easy. Prospects in the African continent are also very promising, but they too have unique needs that MiTek must address if they are to be successful in these markets. Typical of a strong MiTek team approach, existing customers have not suffered while new customers see the value brought to the table under the MiTek brand.
E ARLY O RGANIZATION - M I T EK A USTRALASIA : A N E DUCATION MiTek Australia had a somewhat disjointed beginning, with humble origins that would do little to herald the burgeoning success of the region today - and the future growth potential on its door step. From the beginning there was no history of prefabrication, no product champion, and no converts. Australian builders – and the people who lived in their buildings in the 1960s – had to be convinced that prefabrication was both sound and sensible since there was no precedent. Consequently, the early years were very much about growing 123
the market through education and changing perceptions. MiTek was originally formed by a consortium of Australian timber merchants in 1963 and began trading as Automated Building Components (Aust.) Pty. Ltd. providing Gang-Nail timber connectors and engineering design services to roof truss fabricators under license. In 1970, Automated Building Components (Aust.) Pty. Ltd. was acquired by Automated Building Components Inc. of Miami, Florida. Then, in the same year, the Australian company purchased a 75% interest in Timber JOHN TADICH FORMER TECHNICAL SERVICES MANAGER, PAUL CORNELSEN
Engineering Company Pty. Ltd. (TECO), which manufactured numerous timber connectors for supply to the building products industry. Later, in 1979, British-based
SELECTED HIM TO LEAD THE NEW
1987 STEPHEN FRAY JOINED MITEK. FOR THE NEXT 20-YEARS, HE WOULD HELP TO
Redland, PLC, acquired A.B.C., Inc. in Australia and changed its name to Gang-Nail
DEVELOP A NUMBER OF
presence through most of the 1980s. When Gang-Nail was acquired by MiTek in 1987,
ORGANIZATION AFTER THE MERGER UNTIL
Australia Ltd in 1987. The Gang-Nail organization continued to have a strong brand
INNOVATIVE PRODUCTS, SUCH AS
POSISTRUT, TRUSSSPACER, I-BEAM HANGER AND THE MITEK LINTEL.
it merged the Hydro-Air product line with Gang-Nail. However, the Gang-Nail brand was such a strong presence that it continued to be called Gang-Nail Australia until
2000, when it became MiTek Australia Ltd.
N EW
LEADERSHIP : A NEW ERA
Shortly after MiTek acquired Gang-Nail, Paul Cornelsen sought to find the right person to lead the new organization. While the early Hydro-Air organization had a presence in Australia, it was not the business model Cornelsen believed would enable it to succeed. After an extensive search for the new leader of the organization, Cornelsen interviewed Stephen Fray. Immediately, Cornelsen knew he had found his man. However, with the existing state of the organization, Fray also knew he had much work to do to set the business on the right path.
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THE ABBOTSFORD GANG-NAIL PRODUCTION MELBOURNE, AUSTRALIA, IN THE EARLY 1970S.
FACILITY, LOCATED IN
THE AUSTRALIAN HEADQUARTERS IN MELBOURNE, VICTORIA.
The first few years in the Australian market were tumultuous in many ways. Structural changes, organizational changes – even a review of what MiTek was offering as a business and the products it delivered – all went under the microscope. From a national perspective, the company appeared disjointed, so one of the first steps Fray initiated was to introduce a Profit Center approach to MiTek's operations, with State Managers appointed to take responsibility for their own markets. Although populated by fewer people than the state of Texas, the geographical expanse of Australia is enormous in comparison. An obvious aspect of MiTek's core business is customer service. Handing responsibility over to State Managers - and establishing a dedicated team of Fabricator Support Managers (FSM) in each region – was pivotal to this process. While MiTek is the foremost supplier of connector plates, the company is also a software developer and a service-oriented business. This would become paramount as the company grew and prospered. In the end, Melbourne would remain the sole manufacturing facility and the main location for the Australian offices, as it is today. Another area of immediate concern was the product range offering - it had to be rationalized. There were product segments overlapping, and other products that were either not profitable or not consistent with the levels of quality MiTek espoused. These had to go, along with many of the retail hardware products of the business. The logistical implications of a country as expansive as Australia – in terms of delivery of products – can be daunting. In the early days there was no accurate method of tracking product placement or ensuring
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stock was consistently available. It was a case of either fix the retail builders hardware side of the business, or go back to what MiTek knew best. Fray made the decision to consolidate rather than confuse! The decision to focus on the prefabrication business was also made with MiTek’s fabricators in mind. Structural (engineered) building products were still very much in demand and with the distribution of these products coming primarily through MiTek's licensed fabricators it gave them another source of revenue, all the while promoting an early version of the “whole-house” concept that is in place today.
ANDREW BRICKNELL MANAGING DIRECTOR MITEK AUSTRALIA
In summary, the key changes made were: • Establish a profit-center mentality • Appoint and empower State Managers • Rationalize product range • Focus on the core business Fray’s impact on the business started to deliver positive results virtually from day one. Within a few years, the business had made a clear shift with MiTek now focusing the bulk of their efforts on truss fabricators, with an emphasis on connector plates, accessories and, more importantly, the outstanding MiTek software. Backed by a new emphasis on customer support and service MiTek now had the foundations in place for strong growth. While Fray’s impact on the building industry will continue to be pivotal, his growing international responsibilities illustrated the need to designate a new manager for the day to day operations of the Australian business. In 2010, Andrew Bricknell, formerly Manufacturing and Machinery Manager, was promoted to General Manager of MiTek
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THE AUSTRALIAN MANAGEMENT TEAM IN 1992.
Australia and subsequently to Managing Director in 2011. With his 25-years experience in production engineering and plant management, Bricknell is highly qualified to lead the Australian team in the future.
J APAN Japan has been a key market for years, but their highly regulated business environment has made growing the business difficult. One of MiTek greatest achievements was gaining regulatory approval for its products with certification by the Japanese Government's Ministry of Construction - the NINTEI recognition was a huge step forward.
M ALAYSIA &
THE
SE A SIAN
REGION
MiTek Asia Sdn. Bhd. has been supplying products and services into the region for over 30 years. An office was established in Kuala Lumpur (Malaysia) along with one in Singapore, which would enable further expansion into Asia. Whilst manufacturing of metal plates and engineered structural products was still based in Australia, having these satellite offices enabled sales and support staff to deal more easily with local customers. In 1996, MiTek received government approval to establish a wholly owned manufacturing facility in Malaysia after two years of negotiation with the Malaysian Government. At that time, Fray recruited Gan Poh Thuan, a very competent and experienced business manager to lead the Asian operations. Gan has played an integral role in developing the Asian operations from their modest beginnings to a well established foothold for MiTek in these markets. The company has grown strongly over the years and through its Licensed
GAN POH THUAN GENERAL MANAGER MITEK ASIA
Fabricators supplies around two-thirds of the prefabricated roof trusses used in the Malaysian market. Apart from Malaysia, the company also has a network of Licensed Fabricators in the Philippines, South Korea, China, Singapore, Brunei and Sri Lanka and exports from the Malaysian manufacturing operation represent an important part of its sales. Vietnam is also a growing region.
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C HINA With many of MiTek's prospective customers in developing countries like China having had little experience with timber engineering codes, a training facility was established in Shanghai to educate young engineers, designers and architects. Bringing in 50 participants at a time, the classes focus on wood construction, including timber engineering advances, floor and roof trusses. MITEK’S MALAYSIAN OFFICE
When countries such as China begin to establish more stringent
building codes, individuals with a solid foundation in what a company like MiTek can provide will be more knowledgeable about the timber construction process. Unlike most western countries, China's residential structures are dominated by concrete construction. In fact, China uses roughly 40% of the cement in the world. Timber engineering education is vital in the early days of establishing a market in countries where wood structures may not be perceived favorably. Exposing young designers, architects and engineers to the benefits
C OUNTRIES S UPPLIED MiTek South Africa • South Africa • Botswana • Kenya • Lesotho • Mauritius • Mozambique • Namibia • Nigeria • Swaziland • Zimbabwe • Zambia MiTek Australia • Australia • Japan (as well as MiTek Asia)
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BY THE
A SIA -PACIFIC G ROUP
MiTek New Zealand • New Zealand • Papua New Guinea • Fiji and other Pacific Islands MiTek Asia (Malaysian based) • Malaysia • Singapore • Thailand • Philippines • Thailand • Vietnam • China • Japan • South Korea • Taiwan • Sri Lanka
of wood construction will pay dividends in the future as they look to create more dynamically shaped structures.
S OUTH A FRICA & E AST A FRICAN N ATIONS There are several offices and warehouses in South Africa with the major regional operation in Cape Town and another (including manufacturing) in the South African Head Office in Johannesburg. Various neighboring countries are also beginning to embrace timber prefabrication - and MiTek is leading the way. However, a strong interest in steel framing in
STEWART MURRAY MANAGING DIRECTOR SOUTH AFRICA
recent years has led MiTek to provide steel solutions as well, and this segment of the business has grown quickly and is spreading to many of the East African countries particularly Kenya where MiTek has a joint venture with the SAFAL group of companies.
S OUTH A FRICA The history of the MiTek African operation was established via the pathways of two companies: GangNail and Hydro-Air. The first founding company, Gang-Nail, started out as Automated Building Components (ABC), the original name for the company which provided Gang-Nail connectors under license from early 1965. The founders - Mike Dryden and Gordon Tromp – formed the company with a loan from Calvin and Bill Jureit, who fronted the startup funds - without any security - and on the basis of a handshake. Dryden and Tromp would become the first two African Managing Directors of the original company – Gang-Nail. The company proved to be so successful that within the first two years of operation, the Jureit loan was repaid in full, providing a solid foundation for the start of this first African company.
2011 SOUTH AFRICAN MANAGEMENT TEAM BACK L-R: ELIAS MONARENG, ROLY ADAMS, STEPHEN FRAY, STEWART MURRAY, ANDRE BELCHER. FRONT: MIKE NEWHAM, SIMON CLARKE, HERMAN LOMBARD
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In July 1971, Alweca Timbers (Pty.) Ltd was established, becoming the founding company for what would become Hydro-Air. This new organization quickly established itself as an alternative to the Automated Building Components product offering. It was not long before the two companies dominated the African market. In 1974, Alweca Timbers was renamed H.P.A. Holdings (Pty.) Ltd. Then in 1981, H.P.A. was renamed HydroAir South Africa (Pty.) Ltd. In 1979, British-based Redland PLC acquired the Gang-Nail business. However, this did little to stop the growth of the Gang-Nail business as Hydro-Air and Gang-Nail continued to control the market for the next several years. In 1987, when Paul Cornelsen orchestrated the acquisition of Gang-Nail from Redland, the merger of Hydro-Air and Gang-Nail began. In 1973, when Gordon Tromp visited the Chevy Chase, Maryland, based Timber Engineering Company (Pty.) Ltd, he negotiated an arrangement that established the South African Agency. This culminated in the introduction in South Africa of the Builders Suite of products, following the Gang-Nail-Australia model, which occurred around the same time that Gang-Nail-Rhodesia (today Zimbabwe) was established.
T RANSITION Under the guidance of Managing Directors Martin Venter, and his successor Hugo Du Preez, Hydro-Air grew very quickly, establishing itself as a capable alternative to Gang-Nail. Following the 1987 merger both organizations continued to dominate the market until the formation of MiTek South Africa (Pty.) Ltd in 1988. Following the untimely death of Venter in 1984, Du Preez was appointed Managing Director of the South African organization. He later began to rationalize operations under the MiTek banner, eliminating the competition between the two market brands that were each fighting to establish their separate credos. He was able to successfully join the strengths of the two different camps into an all-for-one strategy. Du Preez’s success was rewarded with his promotion as head of the combined European and African companies, becoming Group Managing Director of Europe and Africa and relocating to Birmingham, England in 1996.
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Hugo decided to retire from the business in 2007. Following Du Preez’s departure, General Manager Stewart Murray was promoted to Managing Director. A fifteen-year employee, Murray had a strong, well-balanced background with the company, making him exceedingly well qualified for his new role. The South African company became part of the Asia-Pacific group as a mature, wellestablished company that continues to enjoy significant market share.
MITEK PLANT IN GAUTENG, SOUTH AFRICA
M ANAGING C HANGE The major challenge faced through the 1990s was the emergence of new competitors, and the retention of market share. The obstacles to this approach came from existing customers looking to protect their product brand and not wanting to allow competitors access to the MiTek 20/20 software and services provided by the MiTek South Africa (Pty.) Ltd. group of software professionals. One way of overcoming this challenge was put forth by Gene Toombs and the MiTek international management team. This involved the evaluation and acquisition of competitors that were deemed to be useful and productive to the MiTek team. Using this approach, three acquisitions, Trussdata, Twinaplate and HiTech Nail Plate, were successfully completed over a nine-year period, helping to keep MiTek’s significant market share for years to follow. The problem of a sustainable and reliable timber supply in South Africa came shortly after the muchpublicized Crickmay Report, warning that there was a problem in the near term with structural timber access. In response to this, MiTek South Africa launched the Ultra-Span light gauge steel (LGS) range of product as a solution to the pending South African structural timber shortage on the back of MiTek (U.S.), which had already established the product in the U.S. market. Despite initial skepticism, and the slow pace with which it was accepted, many African countries eventually adopted the Ultra-Span product as an alternative to standard timbers. Eventually, this generated entry into over 16 different countries by MiTek South Africa, while creating the opportunity for a joint venture with the SAFAL group of companies in Nairobi, Kenya.
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With the MiTek 20/20 program providing a solution for both Timber and Light Gauge Steel, and the acceptance of alternative material like LGS, the African migration to the more comprehensive SAPPHIRE™ software solution has been slow. Nevertheless, SAPPHIRE™ is viewed as the future direction for MiTek South Africa.
N EW Z EALAND Gang-Nail was established in New Zealand in 1967 under a joint venture agreement between a local businessman and Gang-Nail Systems Inc. in the United States. By the mid-1970s, the Lumberlok Builders Hardware product line was added, followed by Bowmac, which supplied heavy galvanized steel hardware products, in 1985. In 2001, MiTek acquired the remaining portion of the business, bringing the entire organization into the MiTek family as part of the Asia-Pacific group reporting to Stephen Fray. MiTek enjoys a strong market share in New Zealand, with major customers in both the trade and retail sides of the business. Today, the MiTek portion of the business represents one-third of the total, with Builders Hardware representing the remaining two-thirds. One reason for this is the strong presence of both the Lumberlok and Bowmac brands being specified on most building plans for Building Code Compliance. New Zealand is a large timber provider and exporter with the use of timber in RICHARD POOLE MANAGING DIRECTOR NEW ZEALAND
construction throughout New Zealand quite widespread. Consequently, MiTek is focused on providing total solutions to designers and engineers, a key driver and
success formula for the New Zealand business. The training and education success for designers has been achieved through the wide distribution of high quality technical literature, in conjunction with training seminars and engineering support from the Auckland and Christchurch offices. Another aspect of this success has been the performance of the MiTek 20/20 software. The combination of these factors has enabled MiTek to capture much of the connector business, firmly entrenching MiTek in the residential construction market.
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In addition, with the New Zealand Building Code (standard) requiring many on-site timber jointing solutions, MiTek took a leadership position by providing
a number of very
successful solutions with innovative new products, coupled with engineering design loadings and clear installation instructions. The end result has been a rapid rise in the Builders
THE NEW ZEALAND OFFICES IN AUCKLAND
Hardware side of the business, particularly in the stainless steel product range, a requirement in high corrosion areas such as exposure to sea salt. To ensure that MiTek products continually meet and exceed quality standards, MiTek’s New Zealand team works closely with local authorities (councils) whose job it is to ensure that what is built on site is what is presented on the plans and specifications. It is this attention to detail that will continue to keep MiTek products as those most frequently specified when high-quality solutions are needed. Another area that has shown significant improvement for MiTek has been in the Farm Building Sector. With New Zealand being a world leader in dairy exports, there is a growing need for covered yards and other farm buildings to increase the use of the already precious available land, and MiTek stepped forward with innovative solutions. Following several years of experimentation with a range of cost effective timber buildings using cantilevered poles and rafters or trusses to form roof supports, MiTek has seen significant growth in this sector and has become the “go to” organization in this market. MiTek’s New Zealand fabricators now enjoy the very best business tools available, keeping them a step ahead of the competition. The full release of MiTek SAPPHIRE™ is eagerly awaited by MiTek’s customers as they look to widen the gap even further with their competitors. Although New Zealand is a relatively small market, the significant market penetration achieved by the MiTek organization is second to none. This speaks to the Kiwi business way; no matter what the odds, the pioneering spirit within the country will find a way to achieve success. 133
S OFTWARE
AND BEYOND
Over the years the MiTek Australian engineers and software developers have played a crucial on-going role in the development of software – and software customization – for particular markets. More recently many of the Australian developers have also been heavily involved in the new generation software suite of programs called MiTek SAPPHIRE™, and MiTek 20/20 before that. This is very important as MiTek ventures into a new era of software leadership. Software will continue to drive nearly every aspect of a prefabrication plant in the future - so SAPPHIRE™ is a huge step forward. The introduction of Building Information Modeling (BIM), full 3D Viewing and closer software ties to the building industry are all part of the future for MiTek software and a critical development path for the MiTek Group. As part of Warren Buffett's Berkshire Hathaway group, MiTek in the Asia Pacific and African region is a global leader and will continue to show leadership in all aspects of design and construction in the building industry.
B USINESS G ROWTH While Australia, New Zealand and South Africa are heavily dominated by MiTek products, the growth potential in the other areas is high. The Group sees two main paths for growth in the future: 1. Organic • Growing market share in existing markets • Development of new products • The expansion of MiTek metal products used in housing construction 2. Through Geographic expansion • China • India • Other Asian and African developing countries
China and India promise the most potential for growth, given their population and the present state of their housing markets. However, this will require a long term strategy so patience is paramount. Unlike other areas, acquisitions have not been a significant part of the strategy. While there have been some acquisitions in
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the past, local competition laws make this growth option difficult. Growth in new products and the emphasis to maximize the number of MiTek products in every housing start is a major emphasis. These include products designed to improve on-site safety as this as become a popular focus for the building industry. The MiTek TrussSpacer is one such product, earning the coveted Housing Industry Association (HIA) Jim Sweeney Industry Innovation Award for 2003. Marketed as a “safety first product” it THE HOUSING INDUSTRY ASSOCIATION JIM SWEENEY INNOVATION AWARD FOR 2003 FOR THE TRUSSSPACER PRODUCT.
has gained wide acceptance by the trade in the Australian market. The aim is to see more innovative products such as this in the future.
A YOUNG STEPHEN FRAY WITH THE 1994 MOST INNOVATIVE NEW PRODUCT AWARD FOR POSISTRUT, PRESENTED BY THE HOUSING INDUSTRY ASSOCIATION.
STAFF CELEBRATING THE LAST DAY IN MITEK AUSTRALIA’S MELBOURNE KNOXFIELD OFFICE IN 2002, BEFORE MOVING TO NEW FACILITIES IN DANDENONG.
MITEK AUSTRALIA’S MANAGEMENT GROUP, WITH THEIR PARTNERS, CELEBRATING THE RETIREMENT OF BARRY HULCOMBE, JOHN TADICH AND ROGER HUTTON IN 2007.
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C H A P T E R
N I N E
9 T HE F UTURE
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As I write this, the new housing construction market in the U.S. is at its lowest point in more than 65 years. To say our industry and our customers have and continue to face unprecedented challenges is a gross understatement. Since the housing industry began its decline in late 2006, MiTek under the leadership of Gene Toombs has made the necessary changes and investments to keep MiTek well-positioned as we continue to navigate our way through this period and prepare for the future. MiTek has not mortgaged its future. In fact, we have been intentional in the development and deployment of key products, systems and services for our core businesses while diversifying where it has made sense. We stand at the ready to weather the climate and remain prepared for the inevitable turnaround…whenever that should occur. The key is our people. We have smart, creative folks who are dedicated to their work. They love customers and take pride in turning out quality products. As we go about our daily routines it’s important that we all embody MiTek’s core values: Integrity…first and foremost, demonstrating a Passion for our Customers, Teamwork throughout the organization, being and acting as Empowered People, always displaying a Passion for Excellence, staying Relationship-Driven both internally and externally, and being Ownership-Minded when it comes to our roles within MiTek. When asked what my vision is for MiTek, I simply answer that our customers need to feel beyond a shadow of doubt that they simply love doing business with MiTek. Period. In addition, we need for our own people to feel the same way…that they love working here, and are fully engaged day in and day out to serve our customers. I’m bullish about our future…as a company, as an economy and as a nation. To quote the man who wrote the foreword to this book, “The best is yet to come”. With that in mind I’m thankful to my predecessors who are responsible for MiTek’s success to this point and I’m excited for all MiTek Associates as I have the privilege to lead them into the future.
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C H A P T E R
T E N
10 A CQUISITIONS & C ORPORATE M ANAGEMENT
S IGNIFICANT B USINESS A CTIVITY / A CQUISITIONS - 1953-2011 August 1953
Formation of Hydro-Air, Inc.
September 1954
Name change from Hydro-Air, Inc. to Hydro-Air Engineering, Inc.
June 1978
Formation of Moehlenpah Industries, Inc. (new corporate parent)
March 1979
Merger of Hydro-Air Engineering, Inc. with and into Moehlenpah Industries, Inc.
June 1982
Paul Cornelsen purchases stock of Moehlenpah Industries, Inc. (parent of HydroAir Engineering, Inc.) and becomes President and Chief Executive Officer.
April 1986
Name change from Moehlenpah Industries, Inc. to MiTek Industries, Inc.
July 1986
The Panel Clip Company
November 1987
MiTek Industries, Inc. and Bowater Industries PLC purchase Gang-Nail Systems Inc. with Bowater acquiring option to purchase MiTek’s ownership interest in five years.
February 1989
Sale of Lumberlok Corporation to Desco Corporation
July 1990
Sale of MiTek Wood Products, Inc. to Louisiana Pacific Corporation
December 1990
Merger of Hydro-Air Engineering, Inc. into Gang-Nail Systems, Inc., with name change of Gang-Nail Systems, Inc. to MiTek Industries, Inc. (First use of MiTek for operating company)
April 1991
The Bemax Companies, including Advanced Computer Engineering Specialties, Inc. (A.C.E.S.)
October 1991
Interlock Steel Company
December 1992
Truss Connectors of America
January 1993
Rexam Inc. (former Bowater Industries PLC) exercises option and acquires sole ownership of MiTek, Inc., (and subs). Paul Cornelsen resigns.
February 1994
Diamond Machinery Corporation
March 1996
Trussdata
July 1998
Hughes Manufacturing, Inc.
January 1999
Twinaplate
March 2000
Rexam New Zealand (was Gang-Nail Building Systems)
April 2000
B&Z Technology, Ltd.
March 2001
Hardy Frame, LLC
July 2001
Berkshire Hathaway Inc. purchases MiTek, Inc. (and subsidiaries) from Rexam Inc.
November 2001
Formation of Optiframe Software, LLC, joint venture with Weyerhaeuser Co.
January 2002
Tee-Lok (Metal Plate Connectors and software)
April 2002
Formation of Aegis Metal Framing, LLC, joint venture by MiTek and W.D. Ventures, Inc. (Dietrich)
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January 2003
Production Conveyor Systems, Inc.
February 2003
WalPlus, LLC
June 2003
TBS Engineering
June 2003
Pacific Automation, Ltd.
June 2004
Castor Products S.A.R.L.
January 2004
Tekmax, Inc.
January 2004
Soro Stansewerk
December 2004
The Koskovich Company
August 2005
Sale of MiTek Zimbabwe (Private) Ltd.
March 2006
Erup-Trus Aps
March 2006
Morgan Sheet Metal, Inc.
May 2006
Jager Building Systems
June 2006
Robbins Engineering, Inc.
December 2006
SiteStream Software Limited
April 2008
Wolff Systems Ltd. (Hitech Nailplate Ltd.)
May 2008
Hohmann & Barnard, Inc.
July 2008
Buildsoft
July 2008
Aginco
August 2008
Simpad LLC
October 2008
Blok-Lok, Ltd.
October 2008
TMI Custom Air Systems/Miller Sage, Inc.
January 2009
Aegis (60% not owned)
January 2009
CompuTrus
March 2009
NexCoil (50% not owned)
April 2009
SAFAL MiTek joint venture formed
April 2009
SidePlate Systems, Inc.
October 2009
Zone Four
November 2009
Heat Pipe Technologies
April 2010
Dur-O-Wal Division of Dayton Superior Corp. by Hohmann &Barnard.
June 2010
Eleco Bauprodukte GmBH
August 2010
Dissolution of OptiFrame Software LLC
October 2010
Rush Air
October 2010
Gang-Nail Brazil (South America)
March 2011
Battery Technology Group (Under TBS Engineering)
March 2011
United Steel Products Inc.
April 2011
Sandell Industries, Inc. acquired by Hohmann & Barnard, Inc.
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M I T EK E XECUTIVE T EAM - 2011 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gene Toombs III President and Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tom Manenti Executive Vice President and Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . .Ron Burkhardt Vice President and General Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Joe Carr Vice President of Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonnie Daniels Corporate Vice President of Strategy and Business Development . . . . . . . . . . . . . . . .Chris Hollander Senior Vice President Global Software & Technology . . . . . . . . . . . . . . . . . . . . . . . . .Terry Nicholson Senior Vice President of MiTek, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gene Toombs IV President of MiTek U.S.A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dick Marriott President of United Steel Products and Hardy Frame . . . . . . . . . . . . . . . . . . . . . . . . . .Maged Diab President of MiTek Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mike Sandbrook President of Aegis Metal Framing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tom Valvo Executive Chairman of MiTek Asia-Pacific and Africa . . . . . . . . . . . . . . . . . . . . . . . .Stephen Fray Group Managing Director of MiTek Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Syd Griffiths Managing Director of TBS Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Lawrence Gardiner
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M I T EK L OCATIONS C ORPORATE MiTek Industries Inc. 14515 North Outer Forty Suite 300 Chesterfield, MO 63017 314-434-1200
A SIA -PACIFIC MiTek Australia Ltd. Head Office 46 Monash Drive, Dandenong South, 3175 Melbourne, Victoria PO Box 4336 Dandenong South, Victoria 3164 Phone : (03) 8795 8888
C ANADA Canadian Head Office 100 Industrial Rd. Bradford, ON L3Z 3G7 800-268-3434 905-952-2900
E UROPE MiTek Industries Ltd Grazebrook Industrial Park Peartree Lane, Dudley, West Midlands, UK DY2 0XW Tel: (01384) 451400
M I T EK S UBSIDIARIES /D IVISIONS • Aegis Metal Framing • Blok-Lok, Ltd. • Buildsoft • CompuTrus, Inc. • Hardy Frame • Heat Pipe Technology • Hohmann and Barnard • SidePlate® Systems • TBS Engineering, LTD • TMI • United Steel Products
W ORLDWIDE M I T EK O PERATIONS Australia Brazil Canada Czech Republic Finland France Germany Malaysia New Zealand Poland Romania Russia South Africa Sweden Turkey United Kingdom United States
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WARREN BUFFETT CELEBRATING THE TENTH ANNIVERSARY OF THE MITEK ACQUISITION ON AUGUST 1, 2011 AT MITEK’S CHESTERFIELD OFFICES. KNEELING: LAURIE GARDINER, CHRIS HOLLANDER, DICK MARRIOTT. STANDING (L-R): TOM MILLER, JOE CARR, TERRY NICHOLSON, BONNIE DANIELS, GENE TOOMBS IV, RON HOHMANN SR., SYD GRIFFITHS, STEPHEN FRAY, TOM MANENTI, WARREN BUFFETT, JOE KANNAPELL, GENE TOOMBS, BOB LEPOIRE, MAGED DIAB, TOM VALVO, RON BURKHARDT, MIKE SANDBROOK, JULIE RING.
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C H A P T E R
E L E V E N
11 T EN -Y EAR B ERKSHIRE H ATHAWAY A NNIVERSARY PARTY
WARREN BUFFETT MAKES A POINT DURING DINNER AS GENE TOOMBS (LEFT) AND OTHERS LISTEN INTENTLY.
WARREN BUFFETT (CENTER) FLANKED BY GENE TOOMBS IV (LEFT) AND GENE TOOMBS.
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WARREN BUFFETT (WITH KNIFE) SLICES THE ANNIVERSARY CAKE, MARKING THE 10TH ANNIVERSARY OF THE BERKSHIRE HATHAWAY ACQUISITION OF MITEK.
(L-R) GENE TOOMBS, WARREN BUFFETT, TOM MANENTI
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WITH
WARREN BUFFETT, AS IS HIS CUSTOM, WHISPERS “SWEET STOCK TIPS” TO HUMAN RESOURCES VICE-PRESIDENT BONNIE DANIELS.
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WARREN BUFFETT CFO RON BURKHARDT.
AND TIME FOR A LITTLE FUN A FEW MONTHS LATER ...
AN AVID LOVER OF BASEBALL, BUFFETT RETURNED TO ST. LOUIS IN OCTOBER AND JOINED TWO OF HIS FAVORITE TEAMMATES AS THE CARDINALS WON THEIR 11TH WORLD CHAMPIONSHIP.
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T W E LV E
12 I NDUSTRY C HRONOLOGY
C HRONOLOGY The truss shape has been in use since man has used pieces of logs and then, centuries later, sawn lumber. In modern times, the first light wood frame trusses were built on the construction site using nailed boards or plywood gusset plates at the joints. Use of these early trusses offered longer spans, more cheaply, than untrussed lumber, but took a long time to build on the construction site. However, joining trusses together to provide strength and reliability continued to be an issue until midway of the twentieth century. Ultimately, it was left to men like Cal Jureit, and then Walter Moehlenpah, to use their skill and creativity to develop solutions, which would spawn our industry. 1943
Walter Moehlenpah founds Hydro-Air Engineering in his garage. It produced connector plates not related to the wood truss industry.
1952
A. Carroll Sanford, founder of Sanford Industries, invented the metal truss plate with integral teeth called the Gri-P-Late. This plate required supplementary nailing. This marked the beginning of the wood roof truss industry.
1955
Sanford’s Gri-P-Late issued the first Engineered Bulletin for his product by the Architectural Standards Division of the Federal Housing Administration on July 13. J. Calvin Jureit, founder of Gang-Nail Systems Inc., creates and patents the Gang-Nail plate, the first metal punch-tooth connector plate for trusses that did not need supplemental nail fastening. The plates were pressed with a massive concrete-filled vertical hydraulic press onto lumber positioned into precision jigs on steel tables.
1958
Klaisler Manufacturing Co. opened its doors as one of the first truss roller manufacturers. Walter Moehlenpah founds Moehlenpah Engineering Inc., a Vickers hydraulics distributor located at 1210 South Vandeventer in mid-town St. Louis
1959
One of the first franchise truss plants, Gang-Nail Truss Company, is founded by A.V. Munson in Visalia, CA. Gang-Nail franchises are established across the United States, typically at familyowned lumber yards.
1961
Patent #3,011,226, for a Toothed Gussett Plate is awarded to Philip Menge, and assigned to Troy Steel Corporation.
1962
Hydro-Air Engineering, Inc. is formed by Walter Moehlenpah to market machinery to the emerging truss market. The name reflected the machinery roots of the company: Hydro, from “hydraulic” and Air, from “pneumatic” or air-operated machinery.
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1966
While calling on a local Boise Cascade operation, Moehlenpah has the idea to enter the truss plate business.
1968
Gang-Nail Company becomes Automated Building Components, Inc. (ABC) and is publicly traded on the American Stock Exchange. Walter Moehlenpah’s Hydro-Nail plate breaks the Jureit (GangNail) patent in a risky courtroom strength test using fishing weights. Patent #3,417,651 issued to Walter G. Moehlenpah for a Connector Plate.
1972
Both Hydro-Air and Gang-Nail provide truss manufacturers with truss design services using teletype terminals and computer time sharing services. On-Line Data, Inc., created by truss plant owner and operator Dan Hurwitz, P.E., is one early example of this timesharing service. ABC acquires Idaco Engineering Co., a saw company based in Oakland, CA.
1973
Carlos Rionda develops the “hinge plate” for Gang-Nail Systems solving the transportation height limitations and allowing for hi-pitch roofs for modular applications.
1975
Patent to Moehlenpah for the “Apparatus for Fabricating Wood Structures” #3,866,530
1977
Mike Conforti hired as President of Hydro-Air.
1978
ABC sold to British firm Redland-Brass Corporation for $27 Million. Bill Jureit, Cal’s brother, leads the Gang-Nail business until his retirement in 1985. Redland concentrates on large-scale growth in the United States.
1980
Gang-Nail acquires the Bowman Company, based in Seattle, Washington.
1980s
Gang-Nail makes several Canadian acquisitions.
1982
Paul Cornelsen, Chairman and CEO, acquires Hydro-Air Engineering from the Moehlenpah family. He forms the parent company, MiTek Industries, Inc. MiTek acquires DePauw Saw Company. MiTek takes a 42% interest in software company On-Line Data, Inc.
1984
Gang-Nail enters the Engineered Wood Products business (EWP), manufacturing I-joists at its former Charlottesville, VA truss plant and importing LVL from Finland.
1985
Upon the retirement of Bill Jureit, Carlos Rionda named president of Gang-Nail. Jerry Koskovich introduced the first automated component saw to the industry.
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Gang-Nail establishes a manufacturing facility in Wilmington, NC for its engineered wood products business. 1986
Hydro-Air acquires The Panel Clip Company, from Robert J. Lytle of Birmingham, MI.
1987
MiTek forms a joint venture with Bowater, PLC, a British company, for the acquisition of GangNail. Bowater has a 49% stake in the Joint Venture. However, Cornelsen has a 51% voting right in the venture.
1988
MiTek positions the Wood Products division as a separate company with Carlos Rionda as President. Tom Manenti succeeds Carlos Rionda at Gang-Nail as VP & General Manager.
1989
Gene Toombs hired as President of MiTek Wood Products, Inc., succeeding Carlos Rionda. With the MiTek Wood Products company struggling, Toombs is given the choice to either turn the Wood Products Company around or find a buyer. Tom Manenti succeeds Carlos Rionda as president of Gang-Nail Systems. Stephen Fray hired as Group Managing Director of MiTek Australia. MiTek sells its 42% interest in On-Line Data, Inc. back to the original owners.
1990
Toombs negotiates a deal with Louisiana-Pacific Corporation for them to acquire the MiTek Wood Products Company.
1991
Hydro-Air and Gang-Nail operating companies merged and renamed as MiTek Industries, Inc. In a reorganization, Dick Marriott is named Vice President of the Western Division, Tom Manenti Vice President of the Eastern Division and Mike Conforti as Sr. Vice President of Specialty Division. Cornelsen names Gene Toombs President & Chief Operating Officer of MiTek Industries, Inc. MiTek acquires Bemax Corporation and its A.C.E.S. layout software. A.C.E.S. is an engineering and software company associated with Bemax. MiTek acquires Interlock Steel Company in Hermitage, PA.
1993
Per a prior agreement, Cornelsen sells his interest in MiTek to Bowater. Gene Toombs becomes Chairman, President and Chief Executive Officer of MiTek, Inc. Walter G. Moehlenpah dies at age 85.
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1994
MiTek acquires Diamond Machinery Company in Lansing, Mi, a manufacturer of roller gantry systems. Bob LePoire is the owner. Mike Conforti was inducted into the WTCA Hall of Fame in 1994.
1997
MiTek’s Australian subsidiary, Gang-Nail Australia Ltd., acquires the truss connector division of Stanley-Bostitch Pty Ltd. Engineering Services Company (ESCO) is renamed The Koskovich Company.
1998
Mike Conforti retires. Ron Burkhardt joins MiTek as Vice President and Chief Financial Officer.
2000
Tom Manenti appointed Executive Vice President of MiTek Industries, Inc. In addition, he is inducted into the WTCA Hall of Fame. During his acceptance speech, Manenti dedicated the award to Mike Conforti who is gravely ill. Conforti passes away during Thanksgiving weekend. Hugo Du Preez is promoted to Group Managing Director over MiTek’s Europe and Africa businesses.
2001
MiTek acquires the 50% of Gang-Nail New Zealand it did not own. MiTek acquires Hardy Frame of Ventura, CA. Berkshire Hathaway acquires a 90% equity stake in MiTek. Claude Lacasse retires and Mike Sandbrook is promoted to President of MiTek Canada. Stephen Fray promoted to Group Managing Director over MiTek Asia-Pacific businesses. Optiframe Software, LLC becomes a joint venture of Trus Joist (Division of Weyerhaeuser) and MiTek, Inc. Optiframe is formed to create a fully integrated whole-house design package. The MiTek eFrame Layout program marks the beginning of a new era in component design layout software. The objective is to provide MiTek customers with the industry's best solution to wholehouse software. The MiTek eFrame layout program is the first step in this process.
2002
MiTek acquires Tee-Lok Corporation of Edenton, NC., a high-volume connector plate stamping operation. Aegis Metal Framing, LLC is formed as a joint venture of Dietrich Metal Framing and MiTek. Aegis markets a complete line of metal framing products, including the Ultra-Span® truss system, a full line of TradeReady® products, and a full range of structural wall framing products and accessories.
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2003
MiTek acquires WalPlus+ Software. MiTek acquires Production Conveyor Systems, LLC. Production Conveyor Systems engineers machine solutions for applications involving all makes and models of component manufacturing production equipment. It also offers complete wall panel manufacturing systems. As part of a diversification strategy, MiTek acquires TBS Engineering, LTD, located in the UK. TBS manufactures equipment used to make lead-acid batteries. MiTek acquires Pacific Automation, LTD, a company located in Calgary, Canada, that designs and manufactures truss assembly equipment.
2004
Tom Manenti promoted to President of MiTek Industries, Inc., U.S.A. MiTek acquires long-time equipment competitor, The Koskovich Company. Continuing its diversification efforts, MiTek acquires Tekmax, Inc., a company that expands TBS Engineering’s product line.
2005
The 50th Anniversary of the Gang-Nail connector plate is celebrated. Cal Jureit (inventor of the Gang-Nail connector plate) passes away at the age of 87. He assisted in the development of the Truss Plate Industry and held over 60 patents in his lifetime. MiTek now has operations on five continents, employing over 2000 associates, with over 350 in the St. Louis area.
2006
Tom Manenti receives the Bowman Industry Enthusiast Award for his service to the industry. Hardy Frame acquires Morgan Sheet Metal, Inc. the manufacturer of the Hardy Frame product line. MiTek Canada, Inc. acquires the connector plate division of Jager Building Systems, a Calgarybased manufacturer and distributor of connector plates and engineered wood products. MiTek acquires Robbins Engineering of Tampa, FL. Robbins offers a complete line of connector products, truss manufacturing and material handling equipment, truss design and plant management software, and also provides licensed professional engineering services. MiTek opens a 177,600 square foot multi-use facility in St. Charles, MO. It will serve as a Manufacturing, R&D and Training Center. It will be known as the Fountain Lakes Facility.
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2007
Hugo Du Preez retires and is replaced by Syd Griffiths as Managing Director MiTek Europe. Dick Marriott is promoted to Executive Vice President of MiTek Industries, Inc., with responsibility for the field sales force and the machinery business. Joe Kannapell is promoted to Senior Vice President, with responsibility for a number of MiTek’s sales managers. Gregg Renner is promoted to Vice President of Marketing. His responsibilities include management of the Sales Services Group.
2008
Tom Manenti retires to devote time to volunteer organizations. Terry Nicholson joins MiTek as Vice President of Software Operations. The OptiFrame joint venture with Weyerhaeuser is dissolved. Expanding the company’s diversification efforts, MiTek acquires Hohmann & Barnard, Inc. A company headquartered in Long Island, N.Y., H&B designs, markets and manufacturers connector products for the masonry industry. MiTek Australia acquires Buildsoft Pty Ltd, a software company that provides estimating and material take-off programs. MiTek France acquires Aginco, a direct competitor in the connector products business and the manufacturer of a line of builder’s products. Hohmann & Barnard acquires Blok-Lok, a Canadian competitor located in Toronto. MiTek acquires TMI Custom Air Systems and Miller Sage, companies located in Flint, MI. TMI designs and manufacturers large custom air handling systems while Miller Sage provides installation service. Dick Marriott promoted to President of MiTek Industries, Inc. Ron Burkhardt promoted to Executive Vice President of MiTek, Inc.
2009
MiTek Industries, Inc. acquires CompuTrus, a competitor located in California. Computrus develops truss design software and manufactures connector plates. MiTek acquires full ownership of Aegis Metal Framing LLC from joint venture partner Dietrich Metal Framing. Aegis becomes a wholly owned division of MiTek. SAFAL MiTek Ltd. joint venture formed to provide cost effective roof building solutions in Kenya.
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Expanding its diversification efforts, MiTek acquired SidePlate, an engineering company located in California that designs steel frame construction products; Zone Four, another company located in California that holds patents on hold-down products; and Heat Pipe Technologies, a company based in Florida involved in passive heat technologies. Gene Toombs brings Tom Manenti out of retirement to become President and COO of MiTek, Inc. 2010
Hohmann & Barnard acquires their competitor, Dur-O-Wall. MiTek Germany acquires Eleco Bauprodukte GmbH, a subsidiary of Eleco, Plc. Eleco Bauprodukte GmbH is a competitor of MiTek Germany. TMI Custom Air acquires Rush Air, Inc., thereby expanding their air-handling product line. MiTek enters into a joint venture with Gang-Nail Do Brasil Industraia E Commercio Ltda whereby MiTek acquires a 70% ownership interest in the company. With this investment, MiTek expands its global operations to six continents.
2011
Gene Toombs steps down as President and CEO and is followed by Tom Manenti. MiTek SAPPHIRE™ Suite beta process begins. TBS Engineering expands its product line with the acquisition of Battery Technology Group (BTG) from Teck Metals Ltd. BTG is located in Toronto, Canada, and changes its name to Battery Technology Solutions. Andrew Bricknell is promoted to Managing Director, MiTek Australia Ltd. Hohmann & Barnard acquires Sandell Industries, located in Schenectady, New York. Sandell has a product line comparable to H&B’s. In March, MiTek acquires United Steel Products, a leading manufacturer of structural connectors primarily for residential construction. In July, MiTek celebrated its 10th Anniversary as a Berkshire Hathaway company. Paul Cornelsen passes away at the age of 88 on December 27.
2012
Gene Toombs becomes Chairman Emeritus and Senior Advisor. Tom Manenti succeeds him as Chairman and CEO.
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I NDEX Buffett, Warren: 7, 70-77, 93, 146-151, 161
A
Buffett’s Six Investment Principles in 2001: 72 A.C.E.S.: 16, 47-49, 51, 62, 64, 91-93, 101, 142, 156
Burkhardt, Ron: 66, 70-71, 73-74, 144, 146, 150, 157,
Adams, Roly: 129
159, 166
Aegis Metal Framing: 56, 74, 81-82, 108, 111, 142-145, 157-159 Alweca Timbers (Pty.) Ltd: 130
C
Andrade, Jose: 103, 105
Cabler, Steve: 35, 36, 166
Andrews, Paul: 77
Carr, Joe: 144, 146, 166
Asche, Todd: 106-107
Carroll, Jim: 105
Automated Building Components: 115, 124, 129-130,
Carter Jr., Gordon: 106-107
155
Carter Sr., Gordon: 106
Automated Building Components (Aust.) Pty. Ltd.: 124
Casper, Jack: 41, 44, 47-48
AutoTruss: 42, 49, 101
Clarke, Simon: 129 Conforti, Mike: 31, 39, 44, 48-49, 155-157 Connector plate sent to Warren Buffett: 70
B
Construction Software Center (CSC): 96, 101,118, 121 Baer, Jack: 106
Cook, Ryan: 107
Ballmer, Steve: 77
Cornelsen, Floy: 30, 43, 54-55
Banded Pack: 111
Cornelsen, Paul: 7, 10, 12, 28-29, 31, 43, 55, 64, 88, 103,
BCMC Show: 65
117, 124, 142, 155, 166
Beckel, Dave: 107
Customer Summit Events: 65
Belcher, Andre: 129
Cyber Saw: 88, 103, 104, 105
Bemax: 16, 47-48, 62, 91-93, 101, 142, 156 Berkshire Hathaway: 56, 70-77, 80-85, 134, 142, 147, 149, 157, 160
162
D
Blok-Lok: 81, 143, 145, 159
Daniels, Bonnie: 144, 146, 150
Boozer Lumber: 92-93
Dapron, Gene: 30, 39
Borjesson, Rolf: 70, 71
Diab, Maged: 144, 146
Bowater: 16, 39-40, 43, 54-55, 65, 142, 156
Diamond Machinery: 56, 64, 102-103, 142, 157
Bowmac: 132
Dietrich: 80, 82, 142, 157, 159
Brandon, Don: 28
Du Preez, Hugo: 31, 60, 118, 130-131, 157, 159, 166
Bricknell, Andrew: 126-127, 160, 166
Dur-O-Wall: 81, 143, 160
Howard, Bill: 105
E
Huff, Jim: 107 Early Software Timeline: 51
Hurwitz, Dan and Camilla: 35, 155, 166
Easy Set: 102
Hyde, Andy: 60
EasySet3000: 110
Hydro-Air: 12, 16, 18-19, 21-24, 28-42, 46-51, 63,
EasySet4000: 110
88-90, 101-103, 114-119, 142, 154-156
eFrame: 93-95, 100-101, 110, 157
Hydro-Air Engineering: 21-23, 41, 142, 154-155
Emsley, Peter: 94
I
F
Ibarra, Jose: 106, 107 Finland: 118-120, 155
Interlock Steel Company: 62, 64, 142, 156
Finn, Greg: 106-107 France: 32, 91, 105, 119-120, 145, 159 Fray, Stephen: 60, 123-126, 129, 132, 135, 144, 146,
J Jager Building Systems: 115, 143, 158
157, 166
Javelin: 96 Jureit, Bill: 129, 155
G
Jureit, J. Calvin: 20-21, 129, 154 Gang-Nail: 16, 20-24, 38-46, 51, 54, 63, 89-90, 101-
Jurgensmeyer, Ken: 107
103, 114-119, 124, 142-143, 154-160 Gang-Nail Australia: 124 Gang-Nail-Rhodesia: 130
K
Gardiner, Laurie: 144, 146
Kannapell, Joe: 146, 159, 166
Gates, Bill: 77, 90
Kelley, Rodger: 105
Griffin, Barry: 31, 44, 47
Klein, Mike: 166
Griffiths, Syd: 117, 144, 146, 159, 166
Knolle, Skip: 107 Koskovich Company, The: 56, 107, 143, 155-158
H Hardy Frame: 72, 81, 111, 142, 144, 145, 157, 158
L
Heat Pipe Technology: 81, 82, 84, 145
Lacasse, Claude: 39, 60, 157
HiTech Nail Plate: 131
LePoire, Bob: 102-106, 146, 157, 166
Hohmann & Barnard: 81, 83, 143, 159-160
Lombard, Herman: 129
Hohmann Sr., Ron: 146
Louisiana Pacific: 45, 142
Hollander, Chris: 144, 146
Lumberlok Builders Hardware: 132, 142 Lyon, David: 39-40, 90 163
On-Line Plus: 116
M
Optiframe Software: 94-97, 101, 142-143, 157, 159 Manenti, Tom: 16, 39, 43, 49, 56, 60, 139, 144, 146, 149, 151, 156-161, 166 Marriott, Dick: 49-50, 56, 60, 144, 146, 156, 159, 166
P
Martinez, Marcelino: 106
Phelps, Mark: 107
McCurdy, Herb: 31-32
Pinsky, Paul: 88, 90, 96-98
McMahon, Mike: 93
PLANX: 108, 111
McManus, Mike: 40
Ponko, Ed: 82
McQuinn, Dave: 36-38, 41-44, 48, 90, 92, 166
Poole, Richard: 60, 132
Miller, Tom: 146
PowerCalc: 37-38, 42, 47, 49, 51, 101
MiTek 20/20: 93-94, 100-101, 105, 111, 121, 131-132
Powers, Fred: 107
MiTek 2000: 37, 43-44, 47, 49, 89-92, 101, 103
Priestley, Eric: 43
MiTek South Africa (Pty.) Ltd.: 131 MiTek Wood Products: 45, 50, 142, 156, 161
R
MiTek's Business Application (MBA): 91-92, 97, 100-101,
RealStructure: 96
110
Redland PLC: 38-40, 124, 130, 155
MiTek's Name: 33
Reichensperger, Scott: 166
MiTek's Virtual Plant (MVP): 92-93, 100-101, 111
Renner, Gregg: 159, 166
Moehlenpah Engineering Inc.: 20, 34, 154
Renouf, Michael: 166
Moehlenpah, Walter: 12, 20, 23, 28-32, 34, 38, 55, 88,
Rexam: 43, 56, 64-66, 70-73, 80, 83, 142
115, 154-155
Ring, Julie: 146
Munger, Charlie: 72, 75
Rionda, Carlos: 16, 39, 44, 155-156
Murray, Stewart: 129, 131, 166
Robbins Engineering: 107, 116, 143, 158 RoofCon: 100, 121
N
RoofGlider: 104 Neil, Justin: 107
RoofTracker: 111
New Zealand: 56, 60, 64, 101, 114, 123, 128, 132-134,
Rush Air, Inc.: 81, 83, 143
142, 145, 157 Newham, Mike: 129 Nicholson, Terry: 5, 88, 91, 96, 144, 146, 159, 166
SAFAL: 129, 131 Sandbrook, Mike: 114, 144, 146, 157, 166
O
Sanford, A. Carroll: 20, 154 On-Line Data: 16, 35, 39, 89-90, 101, 155, 156
164
S
SAPPHIRE™: 56, 91, 95, 97-101, 111, 132-134, 160
Schieffer, Dennis: 107
V
Schroeder, Judy: 33, 48 Valvo, Tom: 82, 144, 146, 166
ShopNet: 100, 111
Venter, Martin: 130
SidePlate Systems: 81, 84, 143
Vickers hydraulics: 20, 32, 154
Simpad: 81, 143
Virtek: 108, 110
Sordo, Art: 39, 44, 47, 49, 60, 92-93, 103 South Africa: 60, 101, 123, 128-132, 134 Stieglitz, Brian: 104-105
W Wacker, Fred: 29, 30
T
WalPlus+: 143, 158 Watson, Bill: 103, 166
Tadich, John: 124, 135
Wyman, Steve: 94
TBS Engineering: 66, 80-81, 83, 143-145, 158, 160 Tee-Lok: 56, 66, 74, 80, 101, 106, 142, 157 Tekmax, Inc.: 81, 143, 158 Tekset Puck: 108
Z Zone Four: 81, 143, 160
Thuan, Gan Poh: 127 Timber Engineering Company Pty. Ltd.: 124, 130 TMI Custom Air Systems: 81, 83, 143, 145, 159 Toombs IV, Gene: 103, 107, 144, 146, 148, 166 Toombs, Gene: 5, 10-13, 16, 43-51, 56, 60-68, 70-77, 80, 88, 90, 103, 107, 116, 121-122, 131, 139, 144, 146, 148-149, 151, 156, 160-161, 166 Tromp, Gordon: 129, 130 Truss Connectors of America: 62 TrussCon: 100, 121 Trussdata: 131, 142 TrussFramer: 90, 95, 96, 101, 111 Twinaplate: 131, 142
U United Kingdom: 96, 117, 120, 145 United Steel Products: 81, 84, 143, 144-145, 160
165
A CKNOWLEDGMENTS I would like to thank the following individuals who contributed to the success of this book. For some, it was recalling events decades-old. For others, it was assisting to locate key information required to provide complete and accurate information. First, to Tom Manenti and Terry Nicholson for their leadership and vision to put this history together. Next, to Gene Toombs III, the driving force behind the reason MiTek is where it is today. My thanks to Paul Cornelsen, Dave McQuinn, Steve Cabler, Gregg Renner, Mike Klein, Gene Toombs IV, Bob LePoire, Joe Kannapell, Dick Marriott, Joe Carr, Ron Burkhardt, Hugo Du Preez, Stewart Murray, Stephen Fray, Mike Sandbrook, Andrew Bricknell, Scott Reichensperger, Syd Griffiths, Michael Renouf, Dan Hurwitz, Tom Valvo and Bill Watson. Each shared their own unique perspective on MiTek, providing a balanced view of the company’s history. On a more personal note, when dealing with the individuals above, as well as the entire support team throughout MiTek’s offices with which I had contact, it is easy to see why MiTek is not only such a great organization, but one in which the employees at each level of the organization work hard to keep it the best in the industry. My hat goes off to each of you. Obviously, the untimely passing of Terry Nicholson near the end of this project was most distressing. Terry’s leadership throughout the project was a key factor in its overall success. He will be missed professionally and personally by many at MiTek, and by the author as well.
Jim Healey
166
2012 © MiTek Printed in Canada
