By Donald R. McNeeley, Ph.D.
PVF and economics specialist
Often when I write it is from personal experience. During that process, I usually experience the epiphany that I’m not only expressing my own industry’s journey, but that of many of you as well.
When discussing how we got where we are, the old adage “came here by chance but stayed by choice” is apropos. Many in our industry were born into the family business. I’ve always admired those generational successes, which are more difficult to navigate than most realize. However, this particular adage aptly describes how the rest of us got here.
My academic background could have taken me to Wall Street, to investment banking, to consulting, or dare I even say, politics. However, relevance was important to me. Not to suggest that the aforementioned are not worthy, but I wanted a noble pursuit. I wanted to make something, build something, fabricate something.
My validation is the smell of cutting oil in a shop or exhaust fumes in the dock, the loud noise of an overhead crane or the clanging of steel being processed. As I’ve written previously, the only route to legitimate, sustainable wealth in a nation is to grow something, mine something or build something; in other words, all the markets that the pipe, valve and fitting industry serve.
We at Chicago Tube and Iron (CT&I) have just concluded our centennial, an achievement that 99 out of every 100 business launches find elusive. Yes, that is correct, only one of every 100 business launches makes it to its centennial.
In the case of CT&I, that also includes 100 years of consecutive profitability. Quite a feat when one considers that our 100-year history includes 17 recessions, two depressions, WWI, WWII, Korea, Vietnam and numerous other wars.
While not lauded in the headlines, sound financial capitalistic principles are still alive and well. The embracement of such still works better than the alternative of a subsidized life. We still post business success in this great country notwithstanding the increasing government involvement through empowered, or should I say “over empowered” agencies with a vested interest in expanding regulations.
Today 14% of our nation’s GDP is exhausted in regulatory compliance from the IRS, Sarbanes Oxley, Dodd-Frank and OSHA, and the burden continues to increase. Just think: it takes 14% of our GDP to comply, and that’s 14% of a $16-trillion GDP! The cost of regulatory compliance in America could be an economy unto itself.
Some say the key to sustainable success is to remain true to your principles, and I agree. Maintain an unwavering commitment and adherence to your philosophy, ethics and integrity, and continue to embrace the golden rule of doing unto others as you would have them do unto you.
You must recognize that in any successful evolutionary organizational journey, you will encounter periodic points of inflection, but typically only three or four throughout a 40-year career. These are those critical defining moments when your organization is most vulnerable. It is at these critical junctures when the wheat gets separated from the chaff or, in effect, leadership must emerge as distinct and different from management.
Think of General Electric. Had they said Thomas Edison loved light bulbs, and we loved Thomas Edison, therefore, we are a light bulb-maker and nothing more. Enter Jack Welch, who understood the responsibility and had the vision to navigate these points of inflection. While in 1914—the year of our founding—value-added may have been simply breaking bundles, today such a narrow definition is a prescription for death.
The ones who survive are those who can most readily adapt to a changing environment. This is why, notwithstanding all the consolidation, there will always be a place at the table for the independents, the family owned, the closely held smaller firms. These are the niche players who serve a vital role in our industry and are every bit as important as the big boys.
From JIT (Just In Time) to TQM (Total Quality Management) to Six Sigma, to the ISO 9000s, to E&T (Earns And Turns) inventory management, to ROSI (Return On Stock Investment), to supply chain perfection, and more specifically, to valve actuation, cutting, threading, and grooving to today’s sophisticated SIXAXIS laser fabrication utilizing quantum physics, it has been indeed a transformative journey, a metamorphosis, if you will. Those in the pipe, valve and fitting business today understand this journey. They not only understood what was needed to be done but actually did what needed to be done. They may not have premeditated their transitional moves through a Harvard Business School model but, even better, their leadership came through intuition.
Think of the pinnacle of 2008 followed by the free fall of 2009. The people entering our industry in January ’08, in just 24 months experienced the highest of the highs and the lowest of lows of what we industry veterans have experienced in our lifetime. It is good to celebrate the survivors. It is better to celebrate those who not only survived but prospered.
I am honored to sit at the helm of a 100-year-old institution. I am proud of the jobs that we created and the dormant industrial facilities we have reconstituted. I am proud of the taxes we paid which funded the nation’s defense and infrastructure and, in turn, created jobs. I am proud of the pensions and profit sharing and 401Ks we have provided. I am proud of the healthcare we have made available to employees and beneficiaries. I am certainly proud of the academic scholarships we have provided to those in need. These are pleasant reflections as we embark upon our second century.
I am comforted by the fact we were not alone. Many in our industry navigate the very same track record, and have shouldered the opportunities and obligations for job creation.
Yes, indeed it is good to be proud of your own company, but it is equally comforting to know you didn’t need to “go it alone” as you had an entire industry supporting the weight of that world. Some of you have already passed your own centennials while many, many more in our industry certainly will.
For what do we exist if not to make a difference in this world? I suggest we, as in my company, your company and our collective industry certainly have made a difference in this great nation. Thus, if you want to build a century old business, just remember the words of Sir Terence Pratchett concerning the pyramids of Egypt: “Seven thousand years is just one day at a time…”
Dr. Donald McNeeley is president and CEO of Chicago Tube and Iron Co., as well as a Professor of Engineering at Northwestern University. Founded in 1914, CT&I is one of the largest steel service centers in the U.S., with 10 subsidiaries throughout the Midwest. It has a 90+ year history of consecutive profitability that has provided the necessary capital resources for growth. Headquartered in Romeoville, Ill., you can contact Dr. McNeeley at 800-972-0217, or visit the company’s website at www.chicagotube.com. View the original article here at The Wholesaler.