Cycling through a business transition

Maybe it's the fact Lori calls her sister "Trace," short for Traci. Maybe it's because they complete each other's sentences. Or that they live a block apart. Or that they had their first children (both girls) within two weeks of each other. Or that they both first went into finance: Lori was a CPA, Traci a banker specializing in international trade finance. Or that they left that life to join their father's company for the same reasons: a balanced life and a chance to engage with people who make real products. In fact, it probably wouldn't take all this background. Just meeting them and noting their mannerisms show an immutable fact: These sisters are close.

Leading the family business at Stacy, Minn., job shop Wyoming Machine Inc., the two even share a job title: co-president. They've headed Wyoming since 1997 and together, using a progressive management style, have transformed it into a lean enterprise. They've taken their process management expertise from the financial world and applied it to the shop floor. And they've led with grounded character and a determination to try new things. The result has been a firm with a diverse customer base and a sales record that, with a significant dip in 2001 aside, has grown about 6 percent a year.

What's in a Name?

Their father can be blamed for the company's name, which in 1974 wasn't so incongruous. That's when Tom Tapani launched the company as a machine shop in Wyoming, Minn., a few miles south of Stacy and about 30 miles north of the Twin Cities. A few years later he moved the company to its current industrial park location. By the mid-1980s he had reduced much of Wyoming's machining work and got into what was, at that time and place, the more lucrative field of metal fabrication.

Being an early technology adopter made the business especially lucrative. "In 1985 we were one of the first companies in the market to be offering laser cutting. By the early 1990s we were using lasers to cut heavy plate," Traci said. "At the time we were just competing with plasma cutting systems, and people really liked the precision that the laser brought."

Soon the company stopped machining altogether as more heavy-sheet metal work flowed in from major OEMs in the heavy-equipment arena and elsewhere. Those OEMs found Wyoming's precision-laser-cut parts eased their own welding, finishing, and assembly. In other words, the shop's laser services stood out in a crowd; it was an easy sell.

Evel Knievel Helmets

In the late 1990s Traci was pregnant, ready to go on maternity leave—only it was cut a tad short. When a customer's purchasing staff "found out I just had a baby, they had an absolute fit," Traci recalled. "They needed work on something involving a cost reduction, so I literally came back to work in one day."

Lori chimed in. "So she had the baby on Sunday at 7 p.m., and she was back in the office on Tuesday."

Several years later a major customer sent work out for bid to "reprice" a job. At this point Wyoming Machine had racked up an impressive track record, providing the customer with a quality rate of 99.8 percent and on-time delivery rate of 99 percent. "So even though we had been a vendor for many years," Lori recalled, "we had lost the work because we were not the lowest price. Our almost perfect quality and on-time delivery record didn't matter."

Despite retirement and having only a passing interest in the family business, Tom didn't like what was happening to his daughters. "For him, it was really important for us to do a really good job being moms, even if we were to run the business," Traci recalled.

Lori added, "Even though our father had started the company, we were always told that our mom, who didn't work outside the home, had the most important job in the family."

Taking these recollections at face value, it might seem odd that Tom had wanted his daughters to lead the family business. To understand it fully requires a bit of backstory.

It started with minibikes.

"Everyone in our family rides motorcycles," Lori said. "We have that passion as a group."

Lori and Traci—whom the family calls "the girls"—got their first minibikes when they were 6 and 7, respectively, complete with Evel Knievel helmets and harness boots. "He brought us up with the idea that we could do anything," said Traci.

And what better symbolizes that than an Evel Knievel helmet?

Traci laughed. "We had a different upbringing. He taught us things that not many kids do." As just one example, he invited the girls to help mix cement to make a concrete sidewalk. "His thinking was, 'You might get married, and your husband won't know how to mix cement, so you'll have to do it.'"

That you-can-do-anything self-reliance he instilled likely led Tom to handle the business succession the way he did. In the early 1990s his financial and insurance advisers stepped in with questions: Who would take on the business if something were to happen to him, and who would take over once he retired? He told them his dream was to have "the girls" succeed him. Did he discuss the idea with them? Of course not. Not only did the girls have good city jobs sitting in large granite buildings behind mahogany desks, but he had no wish to push them in any career direction. They could do anything they wanted; it wasn't for him to decide.

So Tom handled the transition with utmost tact. Traci and Lori met with their father's advisers, and Tom, not wanting to influence their decision, didn't attend. The sisters went home to think it over, and shortly thereafter the late-twentysomethings decided to join the family business. Not only did it give them a chance to work with people they had known since childhood, but it also allowed them a bit more flexibility over their schedule than the corporate world permitted. Besides, it gave them a chance to work for a company that made real things.

Their hands-on-work upbringing, it seemed, was calling them, and it was time for them to don those Evel Knievel motorcycle helmets, at least metaphorically. A flexible schedule didn't mean they worked less, of course. Their bulldog tenacity shone through during tough times. Not everyone, for instance, would go to work less than 48 hours after having a baby.

No More 80-20

A worker welds an assembly at Wyoming Machine. (Note the motorcycle calendar in the background-the Tapanis' passion.)

Earlier this decade the push toward lowest price was the new normal. Long-term relationships between OEMs and contract manufacturers changed. Job shops couldn't depend on work from just a few large customers. Instead, numerous accounts of low-volume work made for a stable, thriving whole.

"We met a [business owner] who bought into the 80-20 theory completely," Lori said. "[His company managers] sliced and diced their entire business on it."

The strategy didn't work for Wyoming's situation. A large heavy- equipment OEM customer projected huge expansion in 2000, but orders plummeted by year's end as work was sent across the ocean. At the same time, a large telecom firm was growing like wildfire, acquiring companies and sending out RFQs worth millions. "We did $1 million worth of work [with the company] during the first six months," Traci recalled.

Lori added, "That doesn't normally happen with a brand-new customer."

They knew something wasn't right. Growing up around their father's business, they knew the company started with business relationships that began small and grew over time. This in turn nurtured trust between business partners, and that trust wasn't built over just a few months.

Sure enough, by 2001 much of the telecom work, among other contracts, dried up. But the company survived in part, they said, because of some of the changes that started taking root in the late 1990s. Over time Wyoming diversified its base and now serves a range of industries producing everything from playground systems to store fixtures.

String Art

Getting into the playground market had an added benefit: The company worked with a customer that was well down the lean path. Lean manufacturing is contagious, and the partnership with Delano, Minn.-based Landscape Structures proved it, the sisters said. Landscape Structures was meeting demand for skateboard parks popping up in city parks and recreation areas across the country, and beginning in 2002 Wyoming partnered with the company to turn thick-gauge, 60- by 120-inch sheet into skateboard ramps. Together the companies developed radiused fixtures that could support large, rolled sheets during welding.

"The company was really great to work with," Traci said. "They were already into lean and doing kaizen events. We would have our team visit their shop, and they had people visit ours."

Although Lori and Traci didn't dwell on lean's terminology, early on they knew the philosophy, with roots in a product line environment, had potential in the job shop. Through working with Landscape Structures and others, they knew the philosophy dealt with people first, technology second. In 1997 Lori and Traci distributed copies of The Seven Habits of Highly Effective People. Engineering consultants came in to discuss lean basics, and over time the company adapted lean to its culture.

Part flow topped the list during the first kaizen sessions. Employees developed what they called "string art." Using a corkboard and colored string, they mapped out how certain product groups flowed through the shop. With no product line, the shop grouped parts based on gauge and processes. For instance, they put materials of similar thicknesses that required only laser cutting into one group, represented by a certain colored string; materials that required cutting and bending went into another group, represented by another string; and so on. Where strings crossed in a tangled mess represented bottlenecks.

Both Lori and Traci, coming from finance, had process-based backgrounds. Every financial transaction had a specific process attached to it, and at Wyoming they used this same process thinking. They integrated process codes into enterprise resource planning (ERP) software that would signify what processes each part would go through. For instance, a part would be assigned a "P10" code if it needed to be cut, bent, and welded. "P11" signified a part needing all that plus outside finishing. Not only did this streamline work flow (a worker knows exactly where a part must flow just by looking at a code), it also helped with quoting. By analyzing work history, including these assigned codes, the software would reveal the overall cost of making those parts, including the labor-hours.

(Lori, with her accounting background, has spearheaded the part- and labor-tracking effort. Employees, genuine and appreciative, poke a little fun too. "They call me Roz from [the movie] 'Monsters Inc.' 'You didn't turn in your paperwork,'" she said, imitating the character's nicotine-charred, gravelly voice.)

All this led to a dramatic reduction in inventory and work-in-process (WIP). But to truly eliminate bottlenecks in such a job shop environment, the shop began cross training. "If you're working in welding, and there isn't something for you to weld in your area, you may be working in forming," Lori said. "It's just a given in our environment."

Throughput is the name of the game. In the past some orders arrived 12 weeks early and, to keep machines running, were manufactured on the floor ahead of schedule. Meanwhile rush orders sloshed through a shop floor cluttered with WIP and finished inventory. Today nothing hits the floor until it needs to in order to meet the delivery date.

Building Respect

Finished-goods inventory once filled this entire space. Thanks to lean processes, the company has freed up space for future growth.

During tours many industry colleagues ask if the co-presidents have frequent disputes as to who has final say. And with all the business changes over the past decade, does their father step in at all? They answer no to both questions.

"We work very closely together, and I know things she's better at than I am, and when push comes to shove, I let her make the final decision on those," Lori said, and vice versa.

As for the second question, Traci continued, "We're lucky. We have a dad who was ready to move on from the business when we took over. So there's never been a power struggle. Dad has moved on."

In 1997 Tom had started to take off work for weeks at a time, and by the next year he stopped coming to work at all. As Traci recalled, "Two years passed and we were ready to start the new millennium, and Dad still had the title of president. So Lori and I met and said, 'We've got to ask him: Did you want to retire?' When we did, Dad said, 'What are you talking about? I retired two years ago.'"

It was their dad's way, they said. They kept a close relationship throughout, but work rarely entered the conversation. Tom saw "the girls" take charge, and he faded quietly into the background.

After their father's subtle handoff, the business continued to thrive. Today the shop has minimal WIP and finished-goods inventory. And it has 55 employees producing just about the same revenue as 85 employees generated in 1999.

The company continues investing in training; everyone on the floor has expertise in multiple processes. But is this training investment worth it? Does it encourage employees to find other jobs for 50 cents more an hour?

"We don't have a fear of that, really," Traci said. "If someone wants to go somewhere else, we tell them they should, even if they're extremely talented. We don't want to hold people back from another opportunity. A few people have left for a competitor for a few years but then came back, because of our culture here."

How do you define that culture? Lori boiled it down to a phrase: "We have respect for people," she said. "It's that simple."

Wyoming Machine Inc., 30680 Forest Blvd., Stacy, MN 55079, 651-462-4156, www.wyomingmachine.com