MAXimizing Coating Opportunities

Every normal business sense told Chuck Gault to turn around and walk away from an offer he had in 2011 to expand his Birmingham, Ala., company, Max Coating, to a second location more than 140 miles away in the heart of Atlanta.

He remembered vividly just a few short years earlier when he had to let go nearly all his staff after the recession hit, leaving him wondering day-by-day— make that hour-by-hour—what bills he could pay, what creditors could be put off or even what new business might walk through the door.

“I looked back to when our business was cut in half, and it basically felt like it happened overnight,” Gault says. “It hit us hard. I would just sit there and think about making it through that day and nothing else.”

Max Coatings offers electrocoating, powder coating, blasting and even light assembly. The Birmingham plant was 55,000 sq ft, and Gault was asked to bid on taking over a shuttered e-coat and powder coat line in a 75,000-sq-ft plant in Atlanta—one that he indirectly had some ties to. After starting Max Coating in 2003, Gault purchased an e-coat line from an Atlanta coater that had gone out of business. This plant on Selig Drive that he was asked to bid on was also once owned by that same coater. Several other companies had tried and failed to make a go of it at this location, and the plant had been sitting idle for some time.

No Interest in Expansion

“I had no interest whatsoever in expanding when the broker called me in 2011 and asked me to come look at the e-coat line,” Gault recalls. “We had been putting all our emphasis and revenues into getting new customers and business, and it just didn’t make sense to me to expand.”

Still, Gault made a courtesy visit to the Atlanta plant to see the line, if only to satisfy the persistent broker and to quench his own curiosity about what it had to offer. The line was idle, having been through three different owners in five years, all of whom had tweaked the mechanisms, added their own tastes as to how a line should run and then left it standing like a horse put out to pasture.

 

When Gault came back to Birmingham, he was ready to dive back into increasing his customer base in the automotive-heavy Alabama region where manufacturing plants for Toyota, Honda, Hyundai and Mercedes-Benz had popped up, and Lockheed Martin, Boeing, Northrop Grumman, Raytheon and Thyssen Krupp had added facilities. A new Airbus manufacturing plant also was set to open soon.

Something strange happened when Gault met with his staff to discuss routine plant operations, however. Many of the same employees who had helped Gault scrape by just three short years earlier were now asking serious questions about the possibility of expansion. They peppered Gault with questions, prodded him for data and expressed optimism that it could be done.

“I sat there and realized that these people were actually in favor of us looking to expand,” Gault says. “It was a surprise. The more we talked, the more they convinced me that we all could pull this off together. I saw a risk, and yet they saw an opportunity to grow and expand the business.”

Change of Heart

With a change of heart and the backing of his original partner and brother-in-law, Barry Bridges, Gault started negotiating to acquire the assets and lease of the Atlanta plant. The brokers also offered up a unique scenario: another person had shown interest in acquiring the plant and wanted to talk to Gault about possibly becoming a partner and running the Atlanta plant for Max Coating.

Gault and Bridges met with Jack Phillips, a finance executive with 20+ years of manufacturing experience, and talked about a partnership. Phillips had little experience with coatings, but neither had Gault when he started Max Coating with just an engineering background, nor Bridges, whose expertise was brick and clay tile manufacturing.

The three continued discussions and agreed that Phillips would be general manager of the Atlanta plant as well as vice president of finance and chief financial officer for Max Coating. Gault would continue in his role as president and CEO with an eye towards business development, and Bridges would stay focused on operations.

 

“It’s like three legs of stool: sales, operations and finance,” Bridges says. “The partnership has all bases covered.”

“It came together pretty quickly,” Phillips says. “We had a sense that we could make this plant work. There were a lot of things that had not gone right with this facility in the past, but the three of us felt that we had an opportunity here to build something and keep it going.”

In June 2012, Max Coating signed the papers to purchase the equipment and lease the facility. That also started a due-diligence process to get the machinery, equipment and coating line inspected and brought up to specifications before the company started coating parts there.

Six-Month Process

It wasn’t a simple process, though, taking the better part of six months. Phillips and Bridges tracked down the e-coat line’s original manufacturers and installers and brought them in to go over each piece of equipment and determine its readiness for operation. Some things need spit and polish; others need a major cleaning, overhaul or replacement.

“We wanted to do this the right way,” Phillips says. “It couldn’t be rushed if we wanted this line working properly and for years to come. We couldn’t afford to bring a customer on board and then have this line go down. We needed to look at and inspect everything.”

By September 2012, they were starting to e-coat in small quantities at the Atlanta plant. With Phillips’ and Bridges’ processing and manufacturing backgrounds, coupled with Gault’s engineering perspectives and experience in the coating field, they were able to fine-tune the line and get it ready for full production by the end of the year.

“There’s a big difference between having an indexing line coat a batch of parts every two and half minutes and a monorail line coat with continuous racks at 10 feet per minute,” says Phillips in comparing the Birmingham and Atlanta operations.

 

With the equipment in place and running well, Gault set out to expand the customer base. What he lacked in experience when starting Max Coating in 2003 he hoped to make up for in the way the Max Coating team treated its customers and their parts.

Outstanding Service

“Our goal is to revolutionize the metal finishing industry with new techniques and outstanding customer service,” says Gault, who knows the location of almost every one of the more than 350 automotive-related manufacturers in Alabama.

Still feeling the effects of the 2009 recession, Gault and his team knew they had to operate differently from other coaters, and they followed that belief from the beginning when they expanded to Atlanta.

“The new norm for us soon became quick turnaround and customer service,” he says.  “But often it is about more than that.  Our work has to be packaged right, and the box has to have the right label with the right count.  Accuracy, attention to detail and good communication practices are all critical to meeting our customers’ needs, day in and day out.” 

Boost in Car Manufacturing

The resurgence in the auto and manufacturing industries, as well the explosive growth in aerospace by Boeing and Airbus, has led to optimism amongst coaters in Alabama and along the Southern Coast. A publication that targets site consultants and economic developers recently ranked Alabama as No. 2 in its annual state “Automotive Manufacturing Strength” ranking, up from its No. 7 in 2012.

Alabama officials say the state’s auto industry had a record year in 2012, manufacturing more than 880,000 vehicles. Officials expect 2013 to be even better, possibly at a five-percent growth clip or higher.

Gault believes he has Max Coating (named after his son) positioned to succeed with the two plants that now employ more than 75 people and offer more than 130,000 sq ft to work with. He is also happy the expansion brought him to Phillips, too.

“It’s been a really good fit,” Gault says. “We are so glad we found Jack. We have been just thrilled with his performance so far. He has been better than advertised, which is huge.”

A year ago, Gault also asked his management team to establish a list of core values to guide their decision-making processes. The team came up with honesty, respect, empowered team members and continuous improvement. This summer, Gault asked his employees to grade how the company is being managed based on those values.

“I was pleasantly surprised,” he says. “We got lots of 9s and 10s, though we did get the occasional 7.”

Change the 7

Gault used the lower grade as a discussion point: Why was it a 7, and how could they change that?

“And because we stopped and talked about it, right then and there it probably turned into an 8,” he says. “I think everyone really placed some value on simply having those core values in place and us talking about them.”

Getting feedback from his employees—including encouragement to expand when Gault didn’t think it was the right thing to do—has been a big factor in Max Coating’s success.

“Establishing the company values was the easy part,” Gault says. “Eventually grading ourselves on the implementation of these values was what worried me the most. But in the end, it was refreshing to know that this thing that was important to me—that I thought they had forgotten about—they had clearly remembered and placed value on. And as the president of the company, that felt good.”

For information on Max Coating, please call 205-849-2737 or visit maxcoating.com