100 Years of Ulbrich: The Ulbrich Revolution Goes Abroad

To mark our historic 100th anniversary, this ninth installment of our Ulbrich history series takes us through the company's several expansions during the 1990s.

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
• In Need of Change

As the summer of 1989 progressed, it became clear that Ulbrich could not become profitable by shipping greater volumes at lower prices.

Each month, Ulbrich faced losses of $300,000, as the Strip Mill's equipment couldn't handle such large volumes and the staff lacked proper training. This made it challenging for Ulbrich to compete in the high-volume market. Consequently, Ulbrich refocused on proven niche areas where it could be successful. Training was improving, but significant success was expected to take time.

Fred Jr. and Dick were displeased with the losses Ulbrich was incurring but couldn't intervene in operations due to their agreement with Dana. Meanwhile, Dana took pride in the company's revamped organizational structure, advanced production equipment, comprehensive preventative maintenance programs, and enhanced training initiatives.

Ulbrich could ship more than a million pounds per month at good prices, but it didn’t add up to profitability.

Fred believed that there simply wasn’t enough time. Poor business conditions and vicious competition might cause staggering losses. The existence of Ulbrich would be in jeopardy, before all of the programs initiated by Dana were to result in profits. There was a fundamental difference in business philosophy between Dana and the Ulbrich family. Right or wrong, Fred Jr. made the ruling to assume control of the company again. Stanziale was let go in November of 1989. The next chapter of the Ulbrich story was critical — though nobody knew it at the time.

A concept that came to be known as The Ulbrich Revolution was presented at the Barbados Strategic Planning Meeting on November 17, 1989, by Spider Bulyk, Vice President of Corporate Development.

The internal training and synthesized the many thoughts and actions of Ulbrich and its employees into Four Tenets which were:

1) Total Customer Responsiveness 2) Total Company Involvement 3) Total Quality Commitment 4) Continuous Professional Development

This philosophy was intended to transform the culture — that had worked successfully for so many years -—into a professionalized team. There was plenty of resistance. The book, Thriving on Chaos by Tom Peters, became Ulbrich’s textbook. Many managers trained at Mr. Peter’s School “The Skunk Works” in California. The workforce read Quality Without Tears by Philip Crosby. One out of every nine of employees attended the Crosby Quality College in Florida. Every other Ulbrich employee trained under those who attended the course. The training taught on-the-job decision-making. Their success depended on two important factors:

1) Internal Factors: a. Acceptance by co-workers that there was a need for these programs; b. Effective teaching; and c. Continuous profitability of Ulbrich to fund intensive training. 2) External Factors: a. Profitable customers who made Ulbrich to be profitable; and b. training and ability of competitors' employees.

During the first half of 1989, business conditions had turned for the worse. Fred Jr. believed time was against the company and forced Dana to resign. When Fred Jr. and Dick took over as managing executives again, employees expected that the Ulbrich Revolution, together with its training and education, would immediately come to an end.

Many thought it was a management fad, and if they waited it out, things could go back to the good old days. As it turned out, the “Ulbrich Revolution” was here to stay. 1989 ended with a small profit. The profit made in the first five months of the year would be enough to sustain losses in the next two quarters.

The entire month of December was spent formulating plans to retrench the company’s historical, profitable and niche business.

Once again, Fred and Dick shook up the management team. Frank Best, an experienced metals salesman become General Manager of Ulbrich of New England; Greg Chase was made General Manager of Ulbrich Wire (soon renamed Ulbrich Shaped Wire). The retirement of John Thoma, an exemplary Service Center manager, led to Chris Ulbrich’s promotion to President of Service Centers and Executive Vice President. Mary Ulbrich Merlini, Dick’s daughter, assumed responsibilities for Education and Communication. Spider Bulyk transferred from training and education to corporate and international development.

These changes signaled a newer, younger and more resilient Ulbrich. Even though company sales in 1992 dropped by nearly 15% from sales in 1989, profitability had been restored and the company was stabilized. The Ulbrich family and the business achieved a heightened sense of self and belonging in the metals industry. The family now knew how to go about becoming a world-class workplace. It was as if the company had found its soul again.

None of this could have occurred without the years of cultural change which allowed us to target new markets. Only with the passage of time did members of the company reflect and realize that Ulbrich’s culture had improved and without much pain or deep frustration. It took two years to stabilize. The changes would be needed, especially to address the next phase of the company’s development - International Sales.

The company established its International Sales Department in the early 1990’s. International Sales responded to inquiries from outside of the continental United States, and they were tasked with turning these inquiries into orders. Existing international orders were concentrated in Canada, Mexico, Puerto Rico, England, France, Germany and Japan. The companies placing the orders were mainly subsidiaries of multinational corporations headquartered in the United States.

Ulbrich supplied foreign subsidiaries through a department consisting of four people; Chris Durlach, who supervised the International Sales Department and spent more than half his time outside of the United States; Vic Artaiz, who led Inside Sales in Connecticut as well as two rotating customer service administrators. International sales was defined as selling and shipping metal to a company located outside of the continental United States. At that time, American corporations averaged 17% of sales as international exports, while Ulbrich was only at 5%.

Purchases of metal from foreign suppliers were also about 5%. A reluctance to seek out foreign suppliers was ingrained into the old culture of the company. Ulbrich had one foreign stocking distributor, Stainless S.A. located in the outskirts of Paris, France. The partnership, lasting for more than thirty years, was arranged by Fred Jr. on a trip to the Paris Air Show.

Ulbrich had participated in hundreds of trade shows domestically but only attended international venues on occasion. Directors and General Managers rarely traveled outside of the United States. Yes, Ulbrich was an International company in 1993, but it was not behaving like one. The question was, “How would Ulbrich become aware of international opportunities, quality expectations, pricing and distribution?

The Paris Air Show turned out to be critical for Ulbrich’s international success. Several customers had exhibitions at the show.

Ulbrich’s presence grew in the American Pavilion at the show in 1993 when Fred Jr. sent ten additional Ulbrich attendees to take turns manning the booth. The following year, forty Ulbrich employees had a passport. Around the same number of representatives had visited a customer, a supplier or a trade show.

Eventually Ulbrich metal ended up in more jet engines, aircraft frames and aerospace components crisscrossing the world. But as sales grew, so did frustrations with meeting international quality standards. Miscommunications transpired far too often and therefore orders were not produced to the customer’s specifications. Ramping up exports created challenges. Tolerances in the metric system versus the decimal system, incorrect certificates of analysis, shipments either over or under weight, packaging standards, payment terms, packing slips and shipping instructions varied widely from customer to customer and from nation to nation.

How could Ulbrich become sensitive to global requirements? The answer was to find out what competitors were offering and to supply a higher quality product at a premium. The light gauge steel sector was comprised of competition from every part of the globe. The developing world in places like China had finally developed re-roll industries comparable to those in the United States. A competitor need not be a domestic competitor, and their location could be anywhere in an industrialized country, such as Malaysia, Singapore or Brazil.

Ulbrich needed to expand further into the global arena. In the mid-1990’s a major company initiative was to acquire a Service Center in the North American Free Trade Association (NAFTA) countries of Mexico and Canada in order to complement the Service Center in the United Kingdom. Ulbrich purchased Diversified Stainless of Canada, which had a company located in Montreal and another in Toronto. Modern plate processing equipment was purchased and installed in the Diversified facilities. Their share of the steel plate and tube market continued to grow, and to this day, Diversified Ulbrich remains an important player in Canada’s stainless distribution network.

Ulbrich had made another major decision to create a Service Center in Mexico as well. First, prospective companies were evaluated. The prospects were contacted by Ulbrich’s acquisition consultant, Marvin Adler, but either the prospects were not interested in selling, or Ulbrich was not interested in buying.

Instead, the company ended up building a plant from the ground up similar in square footage and style to Ulbrich of Illinois.

After multiple trips to Mexico, a committee led by Fred Jr., Vic Artaiz and Al Toscano, Ulbrich's consultant, narrowed the possible locations to Monterrey, Mexico City, and Querétaro (a city in Mexico). The location chosen was Querétaro because a great majority of the metalworking companies, and foreign companies, especially in the automotive market segment, were building plants near Querétaro. It was a bustling suburb located about 200 miles north of Mexico City.

Land was purchased in a government-owned industrial park, and warehouse blueprints were modified by Sam Sargeant of Lazarus & Sargeant — an architectural firm in Wallingford. In conjunction with a Querétaro engineering firm, plans were finalized. And construction began.

The entire project was under the supervision of Al Toscano. He proudly reported in 1994 that Ulbrich's Querétaro plant was finished on schedule and below budget.

The plant was dedicated with a Catholic blessing; a morning mass was celebrated in the plant with the new employees, subcontractors, Ulbrich personnel and friends. A formal dedication took place in the afternoon and was attended by the Governor of the State of Querétaro, the Mayor and officials of the City of Querétaro. It was a delightful day of speeches, food, margaritas, plant tours, and a talented mariachi band.

The object of Ulbrich being in Mexico was twofold: 1. To grow with the Mexican economy; and 2. To truly be a Mexican company, managed and operated by Mexican citizens.

With these objectives in mind, “Ulbrich of Mexico" or "Ulbrich of Querétaro," were in the mix as names for the new division. But Fred Jr. wanted a name that fit the Spanish language. He was in fact, taking Spanish classes at the Spanish Community of Wallingford, a nonprofit organization back in his hometown. In Spanish, the phrase, "acero inoxidable" is translated to "stainless steel.” The prefix "inox" means "not oxidized." What makes metal rust is oxidized iron. In stainless steel, iron elements do not easily oxidize or rust. Therefore, "Ulbrich" was combined with "inox" to form the name “Ulbrinox" - which implied stainless steel, and it was easy to say.

Ulbrinox was equipped with slitters, cut-to-length, edging, finishing and other specialized equipment.

It was a successful company from the start with Ernesto Alvarado as General Manager reporting to Ed Brandt, Vice President at Ulbrich of Georgia. The division supplied small quantities of stainless steel, as well as carbon, copper and beryllium copper to Central and South American customers. Fred Jr. predicted Ulbrinox to have a bright future due to these emerging steel markets. He also commended the personnel of Ulbrinox who were involved in opening the division - they transformed a plot of desert land into a benchmark Ulbrich company.

As mentioned, Ulbrich already had a Service Center located in Sheffield, England, named Ulbrich of U.K. Ltd. It was composed of two small buildings across the street from each other. Slitting, edging and finishing equipment customized steel and other alloys. The division began in February of 1994 with aims at supplying customers in England and Ireland. Prior to then, Ulbrich had about twenty customers in England and Ireland. Material was shipped from the Strip Mill in Wallingford and the Wire Mill in North Haven. A few customers required Just-In-Time (JIT) delivery — an impossibility if the material had to come from the United States (at that time). Ulbrich of U.K. arranged consignment orders and the division supplied customers as needed.

Compared to Service Centers in Illinois, Georgia, and California operating with great success, Ulbrich of U.K. had growing pains. Judging from experiences, Fred Jr. expected losses in the first three years. It wasn’t until the fifth year that an Ulbrich Service Center would make a profit — 5 cents on every dollar shipped. Although sales increased yearly, losses were incurred. Losses were inflicted by established competition, supplier problems and personnel turnover. English business practices were atypical for Ulbrich, so one of its most trusted managers, Vic Artaiz and a small team from Connecticut were transferred to England for nearly two years.

The progressing Ulbrich of U.K. projected a profit for the year. Their facility needed more room so Ulbrich of U.K. moved into a modern 25,000 square foot building, located less than two miles away. Great emphasis was placed on profitable European sales, and for the time being, Ulbrich of U.K. appeared perfectly situated to fulfill each order. In 1995, Ulbrich’s sales to companies located outside of the United States were $9,800,000 and accounted for only 6.2% of total sales. In three short years, international sales tripled. The efforts abroad amounted to $33,800,000 for a 17.2% rise in sales. The coveted goal of 17% had been attained!

Projected international sales in 1999 were $36,600,000 - an increase of nearly $3,000,000 — even though total sales were projected to fall by $14,000,000. Ulbrich's total percentage of overseas sales versus domestic sales for 1999 was 20.0%. By 2000, a whopping 40% of sales would be exported to Europe and Eastern Europe. International deals, limited partnerships and joint ventures were ongoing and persistent. Attempts to form a partnership with one or more Asian companies were unsuccessful. Though there were deals that died on the vine, Ulbrich's sales abroad had been prosperous.

It is important to understand that Ulbrich's companies in Canada, Mexico, and England were not started with the idea of offshoring production to capitalize on cheap labor.

The companies were starting to gain market share outside of the United States. Starting these divisions and buying Diversified Stainless in Canada accomplished this. Increased international sales resulted in more orders for domestic divisions. Exports amounted to millions of dollars. International divisions would change and evolve over time, but Ulbrich going abroad has been a definite game changer.

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

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