EMMCO Focuses on Profitability with Help from Andy Birol Case Studies
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Typical entrepreneurs share a set of qualities crucial to their success. They are passionate about the work they do. They are self-motivated and independent. And they are tenacious—so much so, sometimes, that they can get in their own way. If the pop-culture definition of insanity is doing the same things over and over and expecting different results, entrepreneurs may be a mad lot indeed. In other words, when does persistence turn into stagnation?
This was the question facing Gene Mitocky, president of EMMCO, Inc., a manufacturer specializing in fluid power, in 2004. Well into its second decade, his company wasn’t growing and Mitocky was tired of waiting. “I was the typical entrepreneur who had a skill and started a business thinking if I just did my craft well, the business would grow,” he admitted. “I was very frustrated.”
Mitocky had been perfecting his craft since the mid-80s, when he started building hydraulics power units in his garage after a long day working for a press manufacturer. These humble beginnings led to the founding of EMMCO, which was incorporated in 1988 and originally located in downtown Cleveland. The company focused on power units and press work, and after three years Mitocky moved the business to its current location in Maple Heights. By 1998, EMMCO was out of the press business. “The contracts were large,” said Mitocky, “but so were the costs. Engineering alone ate away at the profits.” Instead, the company found a profitable niche in outside service work, installing “clean piping”—piping without welding—for hydraulic systems. Based on 30-year old GS Hydro technology, clean piping provided a beneficial alternative to traditional welded pipe, which is dirty and prone to breaking and leaking. In 2001, EMMCO became the only clean pipe installer in the region, yet the company’s sales remained flat for the next few years. EMMCO’s sales had dipped in 1998, when the press business was dropped, and six years later they still hadn’t recovered. “For 17 years, we never really got over the hump,” said Mitocky.
THE BGC SOLUTION:
When Gene Mitocky attended a seminar on sales growth in 2004, he was looking for ways to grow his business; he found Andy Birol. Hiring Andy was an easy decision. “I was so close to the situation I couldn’t see the forest for the trees,” said Mitocky. “I needed an objective perspective on what was happening with the business.” Andy encouraged Mitocky to look at the hard truth: EMMCO’s sales had hit a plateau because of the nature of its work. “Our core business, hydraulics, had primarily revolved around a single customer,” said Mitocky, “and even though it’s a big customer, the work wasn’t as profitable as we needed it to be.” To grow, EMMCO would have to supplement the core business with something that could boost profits.
The good news was that EMMCO didn’t have to reinvent the wheel. “Andy quickly saw the potential for outside installation to become a bigger part of our business,” said Mitocky. “We were already doing some outside service work, so we didn’t have to change our entire focus.” In order to concentrate on growing the service side, however, Mitocky needed to be free of many of his daily responsibilities running the company. Andy saw the experienced staff at EMMCO as a true asset. “We made an effort to get everyone involved, from guys on the shop floor to office workers,” Mitocky noted. “It was a big change to the way we ran things.” And a productive one. In less than a year, EMMCO has boosted sales and profitability. “Hydraulic units are still our core business,” said Mitocky, “but we have really built up momentum for outside service work.”
The most pronounced change at EMMCO is seen in the culture of the company. Each day starts with a 10-minute morning meeting where staff members discuss and plan the day’s work. Since most employees have been with the company for many years, they are able to coordinate work smoothly and keep the business humming. “They handle the inside business,” said Mitocky, “and it’s working really well. Everyone contributes, and they like the higher level of involvement.” In addition, higher profits have allowed EMMCO to reinvest in new equipment, improved maintenance, and a reorganization of the shop floors to make better use of space.
Most importantly, EMMCO has branched out and gained new business. “We are on pace to double our business this year,” said Mitocky, “and our biggest area of growth is in the market Andy helped us identify. He’s the one who urged us to go for it.” In addition, he said, working with Andy was a lot of fun. “He’s down to earth, he’s funny, and he tells you exactly what he thinks, which I appreciate.” Mitocky isn’t shy about returning the favor. “I like to tell him my business has doubled but I’m not sure what he’s done for me,” he said with a laugh. “[Except for] the part where he was a driving force to get us on track.” But, Mitocky asserted, “At first I was reluctant to commit to his fee, but looking back on the investment, it has paid for itself tenfold!”
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