Steve Peplin started working in 1977 and by 1986 had been involved in a number of companies – as a manufacturer’s rep, distributor, and installer in the roofing business, plus a bit of manufacturing.
Steve’s family owned Lakewood Manufacturing on the West Side. The company was a well-known and well-respected mid-size full-service manufacturing company primarily focused on high-quality, complex parts – high value-added, low-to-mid volume. Steve’s younger brother Rich also worked for Lakewood.
In 1986 Steve came to his father with a “deal” – a potential order from a prospective customer that he had pursued. Steve’s father decided that this job wasn’t really in Lakewood’s sweet spot, but Steve’s brother liked the idea and encouraged him to take the order – they would figure out how to get it done. Rich came up with a price, the customer agreed, and we were off to the races. Rich suggested the addition of John Talan as a partner. John owned Talan Machine and Tool and was well known to all of us as an excellent tool-and-die maker.
Rich, Steve, and John soon formed a company, and successfully completed the order (the company still has that customer!) Steve had been a computer science major in college, but his strengths were in sales and customer relations, so he became the “rainmaker.” John was the “in the plant” guy. Rich was essentially a silent partner, so they invited Pete Accorti, with whom we had grown up with on the West Side, to be the operations head. Pete was a geologist by education, but was known to be very disciplined and effective in everything he did. For the first year or two they were essentially a “virtual” company – although that term had yet to be used in business the way it is now. It really was “boot-strapping.”
John Talan sold his company two years later. At that point, the four divided up ownership of the new company called Talan Products. They rented a 3,000 square foot facility on Chatfield Avenue on the West Side of Cleveland, with a 10” X 10” office space (the size of a small trade show booth.) “The office space was so small that you literally would have to ask someone to ‘slide in’ in order to open the file drawer!” Steve recalls, adding “Our only “splurge” was $400 for a window! But we were turning out good work for a few customers. It was a different world technologically. We bragged about having a FAX machine…our delivery company’s trucks proudly displayed the term “radio-equipped.”
LESSON: Don’t bite off more than you can chew. We’re still lean—no waterfalls in the lobby. If it doesn’t add value for the customer, don’t do it.
At first John Talan ran the company, which bought the steel and contracted out the stamping, packaging, and shipping. Things progressed slowly but surely. In 1987 they obtained revenue from a customer that they still have today (International Diamond). In 1988 they landed GenCorp in Akron – also still a customer. They made a roofing product called a batten bar. Since Steve knew roofing well, he went to companies he knew that needed stamped parts.
Initially Talan offered three main processes: high volume progressive die stamping, aluminum extrusions supply and fabrication, and tube forming. “We no longer do tube forming – we have focused on the first two areas,” says Steve. “We used to produce short-run stampings, too, but no longer. On the other hand, we’ve been open to other areas that we could make money at, such as light assembly of components that we manufacture. The question is, is it a good fit for us and our core competencies.” Bill Gaskin, President of the Precision Metalforming Association, notes that some stampers became too reliant on one customer or failed to diversify processes when they might have.
LESSON: Focus on a niche -- or two -- and become experts. Constantly improve and expand core competencies within that space. The added value will be apparent to your customer, and to prospects with similar needs.
Soon came their first international order. It was a drop in the bucket for this $1 billion company, but the order for over $1 million was huge for the new company. (“Even now, $1MM gets my attention!” says Steve.) The specs were demanding, but they did it. (Interestingly, they were told at that time that ISO would never become important in the U.S….it of course did, and Talan was eventually ISO-certified…now ISO 9001-2008).
LESSON: You can never try too hard regarding quality. It’s everything.
Steve offers this additional insight into quality: “Last year we made 300 million pieces with an excellent PPM of 22 …meaning 6,600 or so pieces “escaped” that shouldn’t have. (We got them back and fixed them). Even very simple parts sometimes have close tolerance – especially those that go into “automatic” use, where no human eye sees the product and the user can discard an improperly made product before use. (Examples – roofing nails – roofers using hammers routinely discard imperfect nails. But with a roofing nail gun one bad nail can jam the entire gun and slow everything down big-time.”
In 1991 the company moved into a 15,000 square foot building on West 65th Street. It had housed a plating company and there had been a fire, so they got a good price.
In 1994, discussions began about selling the company. John wanted so sell. Pete and Steve bought the company, and added a third partner, the key manufacturing manager, Pat Parziale, who in some ways would take over what John had done. Steve wound up with a controlling interest, with Pete next and Pat with a smaller piece. Steve describes the process: “The whole thing took a couple of years. We were friends as well as partners; there was “real money” involved and families to feed, so it was very sensitive. But we all remain friends today. Chrysler was sold in 30 days…but I’m not sure all the partners are buddies. The payout was scheduled to be five years – and we did it exactly on schedule. It was a fairly creative buyout arrangement that made sure it was fair to everybody.”
LESSON: Treat everyone right – customers, partners, vendors – it pays dividends.
In 1996, with the new ownership, the company was up to about $7 million with 10 people. They added two offsite warehouse facilities on nearby Clark Avenue, to 58,000 square feet in total. They were early adaptors of integrated manufacturing software packages. “I remember working with CAMP (a precursor to MAGNET and WIRE-NET) in terms of developing an RFP,” says Pete. “We paid them $1200 to do so. Only one or two vendors out of 30 had a Windows-based system. The system we bought was Version 1.3B (B for Beta testing). It was a box of diskettes. The program needed a lot of work. (This was even before MRP.) We still use the company that we hired back then – Visual Manufacturing.”
LESSON: Look beyond yourself to embrace new technology. For us, that includes organizations like WIRE-NET and MAGNET and PMA (the national Precision Metalforming Association).. It’s more important now than ever. You also need vendor partners whom you trust and who can take you to the next level.
By the early 1990’s, Talan was ramping up and becoming a professionally managed company, upgrading management positions and incorporating strategic planning and an open book management philosophy. Other stamping companies were falling by the wayside. Talan had been early adaptors of technology, and they implemented ISO 9000…no easy chore. “We run lean re: SGA, with “no waterfalls in the lobby,” according to Pete. “ On the other hand, their growth required more space, so in 2005 they moved into a 145,000 square foot manufacturing and warehousing facility with 10,000 square feet of office space on Cochran Avenue in the Collinwood area of Cleveland’s East Side.
Talan’s growth spurt earned them a spot on the Inc. 100 list, and the Weatherhead 100 list nine times. In 2006, they celebrated their 20th anniversary by moving into a new 150,000 sq. foot space in Collinwood. In 2007 Talan entered into a joint venture to market their first-ever branded product – the Universal Stair Bracket – to the building construction industry under the name GoPro Construction Solutions LLC. The bracket is already in retail stores nationwide -- through Do it Best, Orgill, and Lumberman’s. Talan also won awards for inner-city support and sustainability.
Then came 2009. Steve recalls: “We hit the recession head-on, just like everybody else. We had grown to 50+ employees, and we had to cut way back in every area – for the first time ever. The plant was eerily silent too much of the time. We lost money for many consecutive months, which had never happened before. But we kept our customers, and their business came back, and so did ours. Luckily we entered that year with a strong balance sheet and had a great relationship with our bank, or we wouldn’t have made it. By the end of the year we had made a small profit…no small feat. We were back to our previous employee numbers. We had upgraded a couple of key management positions by finding outstanding people who had been displaced by the economy through no fault of their own.”
LESSON: The best way to succeed in business is to stay in business. Have a strong balance sheet and a solid, honest relationship with your bank, or suffer the consequences when the economy goes south. Again, it’s all about relationships.
In 2011, Talan celebrates its 25th anniversary. Steve says “The future looks exciting. We are getting involved with bigger jobs, bigger companies, in solar and LED…fascinating and important stuff.”
INVESTING IN THE CUSTOMER
For years, Talan had counted a major international fastener company in the building products arena as a small customer with great potential. Talan manufactured stampings and aluminum extrusions for the company, which also had its own in-house stamping operation, making 100 different parts. Talan felt the in-house operation wasn’t nearly as efficient as it could be, and recommended that Talan actually buy all the stamping equipment and tooling and relocate it to their manufacturing facility. Within three months it was done. Annual inventory turns went from 2 per year to 20, saving the customer 11% annually.
LESSON: Partner with your customers. Invest in them. Keep them.
There have been a number of situations when a prospect or customer needed things done on an extremely tight timetable…so tight that many of our competitors bowed out. We jumped in with both feet and made it happen. We got the other employees to buy in to the tough assignment. We made money, and we kept the customer. In that case, simply the “attitude” was a competitive advantage.
LESSON: You have to be hungry…you have to be smart about it, but attitude is everything.
OPEN BOOK MANAGEMENT.
In the late 90’s we introduced “open book management”. Our results on a daily basis are posted on the wall in the plant. There aren’t any secrets. Even individual results are there, when appropriate. If we’re doing well, we don’t hide it. If not, we are honest about that, too. It has made quite a difference in motivation, pride and performance. It’s no panacea, but now we can’t imagine not doing it that way. And the results speak for themselves.
LESSON: Partner with your employees….all of them. Make them part of the team. Let them know the score, and feel like they can all winners if they work well together.
By the late 90’s, the recognition of ongoing success started, and hasn’t stopped. The company was named one of Fortune’s Fastest Growing Small Businesses, won the prestigious local Weatherhead 100 award nine times; three Manny awards, three TEAM NEO awards, two national Inner City 100 awards, and ISO 9001 registration in 2008.
ADVICE FOR ENTREPRENEURS:
Find a niche and focus on it
Treat your customers like gold
Don’t ever skimp on quality
Don’t get overextended financially
We take it very seriously. We recently won the Inside Business magazine award for its sustainability efforts, and Pete Accorti won the “Green Lantern” award at the recent Crain’s Cleveland Business Emerald Award ceremony. Manufacturing is a noble profession that we are proud to be involved with, and with that comes an obligation to ourselves and to the rest of the world to constantly be reducing our carbon footprint.
DIVERSIFICATION AND FLEXIBILITY
Although we have always thought it important to focus on our niches, we have also aggressively pursued new customers and embraced new processes within that focus.
Our success has been in part because we found a couple of niches and became experts. It happened naturally – organically – because of our experience. Now we are beginning to see a couple of new, exciting niches…solar and LED lighting. The solar business is a natural outgrowth of our understanding commercial roofing systems…we understand how the solar collectors need to be interface with the building racking/mounting system. That’s an area we understand well – it’s called B.O.S. -- “Balance of System”. Secondly, we have worked with GE Lighting for years, and their LED lighting ventures are taking us into that area. In both cases, they are growth industries. That’s important, too.
We have always been contract stampers, making manufacturer’s products. In 2007 we began an effort to make AND market a branded product ourselves. The product is called the universal stair bracket. It’s a revolutionary way to build stairs – you don’t cut the stringers from a 2 X 12. We are marketing the system to the hardware/home center industry, which is obviously in a huge downturn, so we are managing that investment very carefully. But we have added a national customer every year for the past three years, and we are very optimistic.
We are always looking for acquisitions, but we are cautious about it. The organization needs to be a good fit culturally. We’ve worked too long building a great culture to undo that with a bad acquisition.
We’re still in our “young 50’s,” and still as engaged in the business as ever. There is no lack of opportunities – not to mention challenges – but we’re ready for both…as always.”
TALAN COMPANY TIMELINE
Company is founded____________________________1986______________Lands first customer (still active)
Lands second customer (still active)________________1987______________Buys their first Niagara OBI machine
Pete Accorti joins company______________________ 1998_____________ Acquires third customer (first 4 still active) _____________ Sales surpass $1 million
Moves from 3,000 sq. feet to 14,000 sq. ft. facility____ 1991
Purchases first Minster press_____________________ 1992 ________Initiates open book management
Pays out $100,000 in bonuses to employees__________1994 __First on-line move…Talanproducts.com