Last updated on May 13th, 2019 at 02:35 pm
David Tomczek and Steve Moyer, lifelong friends who decided to go into business together two years ago, believe that American manufacturing isn’t dead. They believe it so much that they’ve put their money where their mouths are. In August, Tomczek and Moyer purchased Federal Tool & Engineering, LLC, a Cedarburg metal manufacturing shop, from the Beverung family, who had owned it since 1925. Federal has 36 employees and about $6 million in annual revenues. Tomczek and Moyer believe that with some of the changes they’re making to the company, they will be able to grow its revenues to about $10 million by 2010. That growth will come through more sales and increased productivity without adding many more workers.
Federal was on the lower side of industry averages for sales per employee when it was purchased, Tomczek said. While that average has improved somewhat, he said it still needs to get better. "We want to drive sales per person up," Tomczek said. "We will add people in sales and engineering, but we won’t add them as fast as sales (increase)." Federal’s employees have improved efficiency after just a few months of new ownership. When Moyer and Tomczek were in negotiations to purchase the company, several employees presented them with a reorganization plan that hadn’t yet been implemented.
"They instinctively said, ‘We need to change the way things have been done,’" Tomczek said. Both Moyer and Tomczek said they have already started to see a culture change at Federal in recent months. Moyer pointed to a recent request from a new customer to produce 300 pieces of three different prototype parts with a two-week timeline. Just a few weeks before that, managers at Federal had put together a new feasibility review process, Tomczek said, designed to help them decide if the company is capable of taking jobs on and minimize its risk. Now that some changes have started to take hold, and employees are starting to come up with ideas to improve products and the facility, Moyer said he believes employees are starting to buy into the plans.
"I know at their roots they’re embracing the change in leadership," he said. The company’s existing workforce, which has an average of more than 20 years of experience at the firm, was part of what attracted Tomczek and Moyer to the company. "We have the luxury of not being on the Chinese or Indian radar screen," Tomczek said. "We’re able to do it with speed and economy in the lower- to middle-volume market." Because Federal is smaller than most of its competitors, it is able to adapt to changes more quickly and make adjustments to its physical layout to create custom-made pieces with little lead time, Moyer said. "We want to be more timely and a cost-effective alternative to foreign competition," he said. "We need to get things done more quickly and efficiently."
Federal is not planning to add any new employees now, the owners said, but the company is creating its strategic growth plan. "Steve will look to grow sales through contract sales staff," Tomczek said. "People will be added strategically, as they’re needed. Our human resources person will create a hiring plan based off our strategic plan." Both of the new owners said they aren’t jumping on the "lean bandwagon" but are working to adapt some of its principles at Federal. One of those techniques is the cellular manufacturing process, which minimizes inefficiencies by putting a series of machines or processes together in one place. They also say that by empowering their employees to make decisions, the company has already achieved some new efficiencies.
An important culture change at Federal, Tomczek said, has been giving employees and manager the right tools to make decisions themselves, allowing them to be self-directed in a controlled framework. "Now we’re taking on other projects and adding the feasibility tool," Moyer said. "We can see them embracing the tools and using that thought process." Another part of the culture change at Federal has been increased attention to safety. Moyer and Tomczek said they issued an employee a written warning for a safety violation on the first day they owned the company.
"That sent the right message since day one," Tomczek said. "Now we see people that are thrilled that ownership cares." Part of their goal as owners is to have Federal’s employees use a new thought process, looking for ways to add value to the company’s customers.
"We see our job as establishing what the vision is, developing the framework to allow others to be successful through coaching and our message," Tomczek said. "It gets into treating people as people. You have to remember that this is their life too. Tomczek and Moyer said they believe that manufacturing is still an important cog in southeastern Wisconsin’s economic machine. "Steve and I are in this to make a return on investment," Tomczek said. "But we’re also in this because we think we can make a difference in people’s lives, whether they are our employees or customers." The new owners also have given their employees several days off that they didn’t have before the purchase, including Christmas Eve, New Year’s Eve and Good Friday. Tomczek and Moyer said they wanted to make the change so employees could spend the time with their families. "You’ve got to celebrate that point of life," Moyer said.
Federal Tool & Engineering LLC
Location: N52 W5338 Portland Road, Cedarburg
Owners: Deb Teglia, president; Joe Teglia, vice president
Annual Revenue: $6 million
Product: Engineered metal components and assemblies
Web Site: www.federaltool.com