100 Years of Ulbrich: In Need of Change

To mark our historic 100th anniversary, we continue our series of sharing stories from the past. In this eighth installment, we see many changes in the company throughout the 1980s, including the implementation of a new company President.

CATCH UP ON PREVIOUS ARTICLES:

• Our Founder’s Story
• Fred Sr.’s Dream
• 1929 & The Great Depression
• Another Great War & The Foundation Years
• The Biggest Little Mill
• Expansion, Stalemate, and The Death of Fred Ulbrich Sr.
• The Difficult Years

The entire expansion, starting in 1982, Ulbrich of Georgia's first coil was slit on June 7, 1983. lasted until December 29, 1986, when Ulbrich of California slit its first coil. Demand for steel with high threshold technical requirements were on the rise. These were hectic times. There were criticisms of Ulbrich over-expanding. The company had taken on more debt than ever but for good reason. With previous experience in expanding the company, Fred Jr. and Dick projected increased sales in the year after the capital investment. They also predicted an increase in year two, before purchase orders leveled off at a higher volume in year three. With so much expansion going on, sales increased significantly and fast.

Completing Building #2 in Wallingford gave Ulbrich a high-tech Service Center next to the Strip Mill. It was one of the most profitable investments of the company’s existence. Inside Building #2 were installed slitters of all sizes, levelers, skivers and various proprietary finishing machines. Production managed operations of the Strip Mill and Building #2, while Sales and Purchasing controlled incoming orders at Corporate Headquarters.

Ulbrich Shaped Wire served a dual purpose: for orders through the Strip Mill, Building #2 had to slit and ship products within three to twelve weeks. At the same time, with the same people and equipment, Building #2 was part of Ulbrich of New England — a Service Center that could slit and ship products between two days and two weeks.

This was a new concept that required changes on the part of the established employees. It was not an easy task but the need for change was evident. Customers were becoming incredibly diverse in terms of their industries and supply chain strategies. Because of the change, the company needed more detail-oriented people to fervently please customers and therefore achieve profit goals. Hiring the right people to fit the Ulbrich culture became a top priority. Personnel found new employees with varied backgrounds — many with experience at different mills or Service Centers.

Ulbrich became involved in titanium in the early 1980’s. During this time, our footing in the aerospace market helped Ulbrich enter the marketplace offering a small selection of special and limited grades. In 1988, Ulbrich developed a supply chain to purchase cold roll, and outsource titanium strip to fulfill a significant order for engine components. While challenges arose that revealed inexperience with this difficult alloy, thanks to the work of John Schmidt, Bill Donnithorne, Will Kennan, and George Woodhull.

New production capabilities and the continuation of Ulbrich’s growth and expansion created an influx of nearly a hundred new employees across five divisions caused some hesitation among longtime employees. Every person at Ulbrich was being exposed to new colleague and approaches. An adaptive workforce became invaluable. Those who vehemently refused to change, for whatever reason, found different jobs or opted for retirement. Fresh recruits were not perceived as better than existing personnel in Connecticut but mixing the two groups allowed Ulbrich to change for the better. The company established an “open door" policy to ensure a free flow of information between co-workers in team-oriented and supportive environment. If a division did well, then employees of that division would share in a new bonus system.

The family-run manufacturing business created a special bond between owners and co-workers — inside and outside of work. Since the summer of 1962, Ulbrich hosted a company picnic for every co-worker and their families. Each year management gave every employee a complementary turkey to celebrate Thanksgiving. Every December children of Ulbrich employees received gifts at the Children’s Christmas Party.

The Strip Mill averaged two accidents per week — almost always a few stitches, which carried a $500 "scarring" reimbursement. Back injuries occurred when employees opted not to use a crane. There existed no ongoing safety training, required education or attendance at seminars or trade shows. Skills at a machine, at a desk or on the road for a salesperson, were learned on-the-job. Ulbrich was known as a good place to work where career seekers could form long-lasting relationships.

Like many corporations, the culture at Ulbrich could be paternalistic. The best aspect of paternalism is mutual loyalty, but the problem with a top-down corporate approach is resistance to change. At Ulbrich, pitfalls came about when Corporate Headquarters introduced generated reports to track coils in Production. These reports indicated where the orders were in the Strip Mill.

They were dubbed "squeal sheets” by one superintendent and some of his subordinates. For the reports to be correct, accurate information had to come from each machine on the factory floor. Needless to say, the reports were mostly incorrect and would remain so until a positive change of attitude took place, or if different personnel were in charge.

Yet the Ulbrich culture had accomplished the ultimate goal — to stay in business. During periods of poor earnings housekeeping and expansion projects were instated to keep everyone employed. If the recession was severe and long, then overtime was reduced. At that point in 1986, only once in 35 years was there a small layoff.

The Ulbrich's were proud of the culture, and Fred Jr. openly boasted that the company operated, “a benevolent and paternalistic dictatorship.” So why change? It was a matter of internal and external influences. Fred Ulbrich Jr. once wrote on these influences:

(1) Internal Influences

(a) Two Different Cultures: Abraham Lincoln once said, "A nation divided cannot survive." Paraphrasing that wise insight, Fred Jr. claimed, "A company divided by two cultures cannot survive." Ulbrich Steel had to take the best traits from the entrenched co-workers and from the new staff members (mostly younger folks) and fuse them together into a new culture.

(b) Open Company vs. Closed Company: According to Fred Jr. an "open company” is an organization without secrets. Goals and procedures are known to all. Co-workers meet to discuss quarterly revenue. Honest discussions and recommendations are encouraged and implemented. In a "closed company” management does not collaborate with employees on plans, goals or profits. The hourly and other salaried people are simply told what to do. Ulbrich Wire and the Strip Mill were closed companies, and the rest of the company was open, except for Corporate Headquarters, which was about half and half. Ulbrich had to change to a completely open company.

(c) Receptive vs. Static Attitudes: The marketplace, customers, technology and the entire way of doing business domestically and globally, had changed. That meant Ulbrich's employees had to continuously adapt - not half of them, or most of them - but all of them. Companywide training, meetings, hard work, explanations and patience would be required. Most of all, an attitude change was needed. These challenges were difficult enough, but the overriding influences were the external ones.

(2) External Influences

(a) Technological Changes: rolling and slitting steel had changed due to developments seen as impossible a few years earlier. Ulbrich had a 14" wide mill rolling coils of approximately 4,500 pounds from thicknesses of either one-eighth (.125”) or one-sixteenth (.062”) of an inch to lighter gauges. Tremendous pressure was exerted on the metal to make it thinner. Because of these pressures, machine rolls in contact with the metal flexed or bent. The flexing or bending made the metal thicker in the center than the edges. Differences in the middle as compared to the edges were measured in thousandths of an inch or ten thousandths of an inch depending on customer specifications. Ulbrich material was flatter and more consistent than its competitors. 14” wide rolling mills may have produced at slower speeds than competitors, but the product was more precise than 24", 36", or 48" wide mills could provide. Most competitors rolled large coils up to 18,000 pounds at greater speeds. Their rolls were over-flexed which flawed their gauge consistency. Ulbrich was able to charge more than competitors for a carefully crafted and superior product. Though in the late 1980s new technology prevented prevent flexing on 24", 36", and 48" mill. Ulbrich lost most of its competitive advantage and most of its leverage to charge higher prices.

(b) Slitting - The old way of slitting changed too. The old way was to position metal spacers and round knives onto two shafts of metal called arbors. Held in place by the arbors, the knives sheered steel coils into many strips. It was a demanding and difficult task to set the spacers, knives and plastic shims upon these arbors while insuring proper tolerances. When computer programs determined the allocation of spacers and knives, the plastic shims became obsolete. Calculations now relied on computer code and Ulbrich’s slitting product became even more exacting.

(c) Edging, Winding and Leveling - Ulbrich’s methods of edging and winding coils had been outmoded by competitors. Also, a stretch-bend leveler had been invented which made wavy material flat. Before, the company depended solely upon the skill and the experience of the operators. New methods came about to track order flow, work-in-process (WIP), costing, processes and temperatures. Computer data became the norm.

(d) World Sourcing - Ulbrich realized that a new concept known as world sourcing had become important to customers. It was nothing more than sending quotations to a variety of companies located in Japan, Germany, Brazil, Italy and others. Previously, a customer would use Ulbrich as a primary source, and a competitor for a secondary source or vice-versa. Repeat orders were mailed to Ulbrich routinely, as long as the previous order satisfied costs, delivery and quality. By 1985, world sourcing was the buzzword used by Ulbrich's best long-term customers. It meant that each order was considered a trial order, regardless of previous orders. Ulbrich was not equipped to handle this arrangement - these external concepts were alien to the Sales Department. Many large customers, who used to place orders throughout the year were sourcing their entire requirements at one time. This caused the easy and most lucrative items to be cherry-picked by foreign companies, and Ulbrich would end up with the least desirable alloys - the most difficult to make items at low prices, many of which were not profitable.

(e) World Auditing (ISO 9002) - Ulbrich had long operated according to United States manufacturing standards such as those utilized by Pratt & Whitney, General Electric, Rohr Aircraft, as well as subcontractors to Ford, General Motors, and Chrysler. Industry specifications like Aerospace Material Specifications (ASM) and American Iron and Steel Institute (AISI); and to Department of Defense specifications (QQS). Then an international body, known as the International Standards Organization (ISO) 9000 (ISO 9002 applied to Ulbrich) became a prerequisite for buying and selling steel internationally. ISO 9002 required documentation of all processes both in the offices and mills. Any repeat orders would be made exactly the same way. Documentation of processes and equipment was crucial. It meant, for example, that a metallurgist could not - on the spot - change the temperature of a furnace on a repeat order; that the maintenance department could not postpone planned maintenance on a particular piece of equipment; that a rolling mill operator could decide to change a rolling pass schedule. It was a new world and the entire Ulbrich workforce needed new training to achieve the new standards.

By 1986, total annual sales were $74,428,000 — approaching the goal of $100 million before 1990. To finance this ambitious project required a top-notch financial analyst. In June of 1981, Dana Stanziale was selected as Vice President of Finance. He knew the company inside and out after working in Connecticut for five years and in Illinois for five years. Dana's talents had proven ideal for negotiating with attorneys, banks and various state governments to obtain industrial revenue bonds.

This time, the Ulbrich family decided that the best way to strengthen the business was to install a non-family member as President. Fred Jr. and Dick had been instrumental in molding the culture through various trials, tribulations, successes and failures. The company was profitable and progressing technologically, but how could Fred Jr. and Dick change a culture that they spent their lifetimes creating? How could primary or secondary management develop if only family members made decisions? Both Fred Jr. and Dick were burned out, and they opted to step away from day-to-day operations.

Picking the right person for President was crucial. The candidate had to take the best from the old and the new then mesh them together to create a better organization. The next president needed the full confidence of the Ulbrich family and their banks. That left one logical choice; one where Ulbrich didn’t even have to hire an executive recruiting firm to help find. He was on board already as Vice President of Finance - Dana Stanziale an affable Certified Public Accountant. Dana was in our Ulbrich of Illinois plant as Treasury. He moved to Connecticut to become the only non-family member to ever be President of Ulbrich Stainless Steels & Special Metals.

A New President

Dana Stanziale had a straightforward agreement with Fred Jr., Dick and Chris: as President, Dana would run day-to-day operations while Fred Jr. and Dick were in charge of strategic planning. Hiring, promotions, transfers and terminations of employees were operational issues, along with pricing of products, developing budgets, profit and loss statements and scheduling meetings or conferences. Strategic planning included the organizational structure, expansion decisions, managing bank loans, vetting suppliers and approving new products. 1985 Fred Ulbrich Jr.

As part of the agreement, Fred Jr. who was Chairman of the Board, Chief Executive Officer (CEO) and President, would cede the president role to Dana. Fred Jr. would only utilize the CEO title and responsibilities in strategic planning and issues or in extraordinary circumstances. Fred Jr.’s plan was to spend less time in the office, and more time with family at his discretion — a semi-retirement of sorts. Dick, who was Vice Chairman, devoted energy toward interests in mechanical engineering by overseeing equipment and selection of equipment suppliers.

Both would attend, and be prepare for monthly profit and loss meetings, as well as budget meetings, national sales meetings and strategic planning meetings. Chris would be promoted to Executive Vice President of Ulbrich Specialty Strip Mill, reporting to Dana, and benefit from mentoring from Dana. Chris was being trained to be Dana’s successor with special emphasis on profit and loss statements, balance sheets and profitability. The timeframe discussed was about twelve years — which would make Chris president in his mid-forties. This was how it was supposed to work out, but things rarely go the way they’re planned.

Unsure of the plans, Fred Jr. and Dick interviewed noncompany candidates for the Presidency and for the Vice President of Manufacturing positions during the summer of 1986. There were excellent candidates, but if hired, they would have to learn about the organization before implementing cultural changes. Ulbrich could not wait — it needed immediate corrections in order to serve customers. So Fred Jr. and Dick agreed to the Dana’s requests and realized that the first change that had to occur was their own entrenched perspectives.

Dana predicted the eight-point plan would take three years. The better part of 1986 would be used to solidify his team. Then it would take another year to test his team. One of the more promising additions to the Ulbrich sales group that was made in 1986 was bringing on Gregg Boucher as a new Outside Sales Representative for the greater Georgia area.

On Monday, September 15, 1986, Fred Jr. resigned has President of Ulbrich, and Dana Stanziale assumed the role. There was plenty of scuttlebutt during the summer and few people believed there would be a change of any magnitude. When Dana handed out the annual Thanksgiving turkeys, when he addressed the hourly and salaried workers regarding quarterly results and when he handed out bonuses, only then did co-workers believe they were experiencing a new Ulbrich.

Another path towards maximal earnings was to scrutinize quality internally. Every Ulbrich employee was challenged to do their jobs to perfection. Ulbrich had to exceed customer expectations by making a superior product on the very first try.

Quality had to become more than simply avoiding customer rejections. Before finished coils were shipped to customers, internal quality procedures flagged any imperfections. Internally rejected coils had to be relayed out — meaning they had to be started over again. The combined external and internal rejection rate at the time was about 20%. Almost all rejections became internal. Most quality issues were addressed before coils were shipped to customers. (Imagine if weekly paychecks were incorrect once every fives times, daily life would, no doubt, would become frustrating, and so it was at Ulbrich Specialty Strip Mill in the late 1980’s.) The customer almost always received quality metal, but every fifth coil was internally rejected without the customer ever knowing. Orders were reprocessed and reprocessed again if necessary.

Solving the rejection conundrum would result in a significant increase in pounds shipped. Ulbrich had tried various techniques to reduce the internal rejection rate. The Strip Mill had more than a thousand orders at any given time. Each order had a minimum of eight machine processes. The task was more difficult than it may seem.

Attending to machine sequence changes was a complicated endeavor.

Ulbrich Specialty Strip Mill was already at capacity in personnel, equipment and computerization. To perform an overhaul of layout sequences in a relatively short period of time was asking a lot. After nine months of the new presidency, great strides in processes were made, but not enough to attain the goals originally set by Fred Jr. and Dick. Therefore, the time came to change course.

Though the company had changed, there was no joy at the Biggest Little Mill. The confusing aspect of this period was that sales and shipments were sky high and constantly rising. 1987 sales were over $8 million more than 1986. Ulbrich was on its way to a $100 million by 1990. On paper it was a great year, even an excellent year, and progress was being made. Yet many co-workers felt uneasy and even disrespected by an exorbitant amount of change.

The increased workload and cultural transformation had taken a toll on the Strip Mill, its people and its machines. Meanwhile in the marketplace, there was a national nickel shortage. The price of nickel in December of 1987 was $1.80 per pound and within a month it was $10.00 per pound. Most stainless steels contain at least 8% nickel. About 30% of Ulbrich's business was in high-temperature alloys, having more than 30% nickel. Ulbrich also sold pure nickel products. With millions and millions of pounds in inventory, Ulbrich as a company was suddenly worth millions of dollars more.

With rampant demand for nickel, business became exceptionally good. Due to nickel prices, the major melting mills decided to forego small quantity orders that they had supplied in the past. Ulbrich solicited and received many of these orders, but at premium prices, not at commodity prices. Ulbrich had more orders, at exceptionally high prices, than it could produce. Some quotations went from 3 to 12 weeks to a 20 to 40 week lead time. Hourly employees could work as much overtime as they wished.

By the end of 1988, sales were over $111,000,000.

The goal of $100,000,000 for 1990 was already surpassed. The workforce was generally overjoyed. Profits were the greatest in the history of the company. On paper it was a superb year, and progress was being made — but nobody predicted that the next six months would be marginally profitable. Ulbrich had depleted its inventory, and new stock had to be purchased at higher prices. Margins were being squeezed due to incoming material costs and profitability was reduced.

That same year, three Operational Review Meetings were held by Ulbrich ownership and Management. They were three-day meetings held outside of Connecticut, and were designed to identify, discuss and make recommendations for each participant so that Ulbrich’s goals could be achieved by the required time frame. They were held in Manchester, Vermont, in May of 1988, Galina, Illinois, in August, and Barbados in November. The May meeting occurred at a high point; the August took place when the market leveled off; and the November meeting occurred when profits began to sink downward.

The meetings were facilitated by Spider Bulyk, owner of a consulting company in New York. Bulyk had performed several consulting engagements for Ulbrich since 1983. The May meeting, held during the best of times was predictably upbeat. When the market started to level off, meeting participants were enthusiastic but cautious. When business trended downward, the participants were deflated and defensive. Even so, Ulbrich had a huge backlog of orders which kept morale afloat. Dana had focused on cutting prices for volume. While this kept everyone busy, Fred Jr. saw the writing on the wall. In this business, any reduction in price required a disproportionate increase in volume to maintain profit margins.

As prices were now being reduced by more than 10%, and Ulbrich began to lose money on a monthly basis. It was impossible to ship the increased volume necessary to make a profit.

Want to learn more about Ulbrich’s century of excellence?

Visit our Centennial website for a company timeline, treasured memories, and more!