Springfield, Mo.--Remanufacturing is becoming sexy.
That remanufacturing is becoming "sexy" is the forthright observation of John P. "Jack" Stack, president and CEO of SRC Holdings Corp., which, among other things, manufactures gasoline and diesel engines for the automotive and off-highway markets, distributes engine kits, and manufactures power units and electrical components.
Today, SRC, which Stack said he and his colleagues founded as the Springfield Remanufacturing Corp. (SRC) in 1983 as a way of preserving their jobs, records sales of more than $300 million annually and employs more than 1,000 people. Inc. magazine has called the employee-owned business one of America's most competitive small companies. It also has been named as one of the top 100 companies to work for in America.
The firm also teaches people how to implement open-book management practices.
A long-time leader in the remanufacturing business, Stack will speak to the second annual Heavy Duty Remanufacturing Group Summit on Jan. 21 in Las Vegas.
Formed in 2004 as an affinity group of the Automotive Parts Remanufacturers Association, the Heavy Duty Remanufacturing Group represents the interests of heavy-duty remanufacturers in the commercial-vehicle marketplace and works to solve problems common to its members.
When Stack said remanufacturing is becoming "sexy," he wasn't speaking about Hollywood; he said he's referring to New York, and to Wall Street specifically.
"I think that after a hundred years. it's finally becoming a sexy business," Stack said.
Stack said the new reputation is due to several factors. He pointed to the efforts of Caterpillar to educate people about the business and also to a growing awareness that remanufacturing can be an environmentally friendly process.
Stack said that Caterpillar has made a tremendous commitment to educate "the Merrill Lynches of the world" and to explain to stockholders how remanufacturing contributes to the economy and society.
"They've done a phenomenal job of elevating remanufacturing to a very respectable industry and business. It's just taken a long time," he said.
Stack said that SRC itself is evidence that the interest in remanufacturing is growing. "There are a lot of people calling up now, wanting to buy the business or just look at the business," he said.
From an environmental perspective, Stack said that remanufacturing, because it recycles products, can make important contributions to our quality of life. "It's probably one of the best-kept secrets in America," he said.
Stack said he is also optimistic about the future of the remanufacturing industry because of the likely shortage of mechanics and parts people in the coming years. Those labor shortages may mean that more dealers and customers will rely on remanufactured units to serve their clients.
Stack also said the industry is growing in its ability to deliver product and that it is becoming more service-conscious. "I think that people are beginning to understand that remanufacturing is tremendously different than just the parts business. It is a business all to itself," he said.
Like any industry, remanufacturing will have to attract young people to succeed, Stack said. He said the key is appealing to their entrepreneurial side.
"If you're trying to appeal to their skill side, you're dead," he said. "But if you can figure out how to appeal to their innovative, entrepreneurial, creative side, then you're going to get players. Then you're going to create excitement. Kids today want to make a difference. They don't really care if it's sweeping the floor or discovering the next great cure for cancer. They really, truly want to make a difference. So we have to create the kind of environment that allows them to win."
Stack, the author of two highly regarded books about business, a national and world judge for Ernst & Young's Entrepreneur of the Year Awards, and the recipient of numerous honors, said he made the switch from plant manager to business owner in the middle of International Harvester's business troubles in the late 1970s and early 1980s.
Acquiring the business from International Harvester was an eye-opening experience, Stack said. He had spent 14 years "busting my butt building engines and tractors, and it wasn't good enough," he said, "the company failed."
When he and his colleagues tried to borrow money to buy Springfield Remanufacturing, the bankers they approached never once asked about building engines or tractors, Stack said.
"I had spent 14 years on the metrics of manufacturing," he said, "and believe me, we had metrics on manufacturing you cannot believe, but when I went out to borrow money to save 300 jobs, the bankers never once asked me about the metrics of manufacturing, they asked me about the metrics of business."
That was his ah-ha moment, Stack said. "I had been dumbed down for 14 years. Not once in 14 years did somebody ask me what it took to make a great company. The investment community was talking about metrics, but they weren't the metrics of a tractor, they were the metrics of a business."
Stack said it was at that point he realized that if he could master the metrics of a tractor, he could also master the metrics of business.
"That's how the very wealthy people were doing it," he said. "The difference between the haves and the have-nots was right there. I felt very strongly that if I could teach people the tricks of how to succeed in business and convince them that they had to keep one eye on those metrics, we could succeed."
One result of that ah-ha moment was Stack's first book, The Great Game of Business." Now part of SRC Holdings, the book teaches companies how to implement open-book management practices.
"There are a lot of really good business models out there, patterns that create successful companies," Stack said. "Open-book management is just one pattern. It's one system. In the competitive environment we're in, and especially as a competition grows, every detail we can provide our associates, or our employees, in order for them to be more competitive is a competitive edge."
Stack said that putting financial information in the hands of employees differentiates your business by differentiating your employees. "When you get smarter people on your shop floors, you are going to be more competitive. You are going to be more profitable," he said.
Stack said there are two reasons people are reluctant to embrace open-book management. One, they're afraid their people are going to ask for more money, and, two, they're afraid their competition is going to acquire information "they already have."
Stack said such people fail to appreciate the benefits of a high-performance work force.
"You cannot have a high-performance work force unless they have the financial numbers to be achieved, because at the end of the day that's what you want out of the company. You want to get those financial numbers, and if you don't align everybody in the organization, the chances are that you will miss the opportunity to get them."
Photo caption:
Jack Stack, president and CEO of SRC Holdings Corp., will be the keynote speaker at the Heavy Duty Remanufacturing Group Summit on Jan. 21 in Las Vegas.