By Guest Bloggers Noa Simons and Luke Stangel, Upstate Capital Association of New York
Eric Armenat spent decades building a successful career in aerospace manufacturing before he began embarking on corporate turnarounds. After successfully turning around a family-run healthcare business, Armenat took on a large-scale incineration with a dysfunctional management team before landing in his current role as President and CEO of Buffalo-based Multisorb, a leading manufacturer of oxygen and moisture absorption products.
When he started at Multisorb, Eric found a long-running company that was well regarded by customers, despite its high costs and 8-week lead time on orders. From the outside, the company seemed stable, but behind the scenes, Multisorb was struggling financially, with a management team that insisted on building manufacturing plants in Alabama and the U.K., with plans to build a new facility in India.
That didn’t make sense to Armenat, who halted the company’s expansion plans and closed its ancillary plants, focusing instead on improving its manufacturing base in Buffalo. Within a year, Multisorb trimmed its global workforce from 678 to 470 people, while simultaneously growing its revenue by $14 million, Armenat says. He’s inspired by Amazon’s warehouse operations, which he called a “leaned out, wire-tight, cost-effective process.”
“What’s the gap? What’s preventing you from flowing information, or flowing a production process, so it doesn’t stop from the time it starts to the time it ends?” Armenat says. The company studied “how long it took at each step and why it took so long. So what we’re working on now is a three-day order cycle. If you call today, I’ll get it on my machines later today, and have it on that dock and ready to go on the third day. That’s the vision, and now you work on everything preventing you from achieving that.”
Summer Street Capital brought Eric into the business along with a private equity investment. Mike McQueeney, Managing Partner, shares that Summer Street’s hands-on approach to corporate turnarounds is somewhat unique among its peers, some of whom have earned a reputation for improving a company’s bottom line by slashing budgets and cutting headcount.
“We don’t want to do business with everybody,” McQueeney says. “We’ve learned this over time. There are people who want help and people who don’t want help. People who are open to learning and improving their businesses? Then that’s a great fit. But management teams that give us the Heisman [block]? Not a good fit for us.
“Having a cooperative partnership, which is what we have most of the time, is a great fit for us.”
Both Eric and Mike will talk about their experiences turning companies around on November 15 in Buffalo, NY at Upstate Capital’s “Under the Hood” event. Everyone is welcome to attend to learn more and network with investors and business leaders across Upstate New York.