Members of the management team at Falls Fabricating believed so strongly in their Little Falls-based company that they purchased it in the midst of a global pandemic.
President Dan Ortloff and Vice President Jeff Knosalla, along with their four managing partners — Carmen Yasgar, director of human resources and administration; Sue Kramer, controller; John Sorenson, director of sales; and Sharon Hirschey, director of quality — purchased the company last January.
Falls Fabricating is among one of the largest corporations in Little Falls. The company offers a range of fabrication services in sheet metal, machined components, welded assemblies and tubular fabrications.
The company, initially called Deer Creek Fabricating, was founded in 1973 as a place to do repair work and light manufacturing. The company relocated to Little Falls in 1987 and changed the name to Falls Fabricating Inc. It was purchased by Al and Susie Williams in 1991, who further expanded the company.
Four years later, the new owners relocated Falls Fabricating to its current location on the northwest edge of town, where they constructed a 110,000-square-foot building.
Spell Family Equity acquired the company in 2007.
In early 2020, WIlliam Spell approached Ortloff, a small equity partner at the time, with the idea of selling the company to key managers.
“They were always throwing out the idea of selling the business,” Ortloff says. “They had a couple of opportunities in 2018 to sell, but those deals didn’t pan out and then COVID hit. I sat down with…this management team and threw out the idea that this was an opportunity. Everybody was interested and willing to do this.”
It took a village and six months to assemble the deal. The City of Little Falls assisted the management team with help from Morrison County Community Development, and the Initiative Foundation and Rural Development Authority provided gap funding. The Small Business Administration and Minnesota Business Finance Corporation assisted with a small business loan.
Knosalla, who’s been with the company since 2018, felt no doubt about doing the deal. “I wasn’t hesitant at all,” he says. “I was pretty excited to be involved in it. It’s something I hadn’t ever considered doing in my career. I’m getting close to retirement…but now I’m having so much fun I don’t want it to end.”
“I’ve always been kind of a people person,” Knosalla continues, “and trying to create an environment where everybody loves coming to work every day.”
Sorenson, who is going on his 34th year with the company, has done almost every job at Falls Fabricating.
“The opportunity to come in and be a part of this ownership group brings it full circle for me,” Sorenson says, from working the lowest level position to being an equity partner for the company.
Yasgar has been with Falls Fabricating for 10 years; Kramer is the newest member of the team, joining in February; and Hirschey joined in 2015 and never imagined she’d have the opportunity to be part owner of the company. She says a lot has changed since she first started.
“There has always been a lot of opportunity and potential here. And this really looked like something I wanted to be a part of. There are a lot of positive things happening at Falls Fabricating, and as we move forward, hopefully, we’ll continue that way.”
The company strives to create a positive environment centered around its employees. Employees are treated fairly, paid well, offered good benefits and even given a quarterly incentive plan.
The plan is based around four metric goals — safety, customer acceptance, on-time delivery and cost savings. For each of the goals achieved in the quarter, the company pays the employee a bonus amount per hour worked within that quarter. If the employee achieves all four goals, there is an additional amount per hour in the payout.
“Our goal is to continue sharing with employees as we meet the metrics and accomplish our quarterly financial goals,” the management team says. “This is our way of rewarding them for their hard work and dedication.”
The management team brings different opinions and backgrounds to the company, with each member contributing their own specialty to help the business succeed. Improving communication and learning what works and what doesn’t remain continuous efforts.
“We understand that building a great culture starts with leadership,” the management team says. “Many times, it is about having the right chemistry. We found out through a survey in 2018 that our employees felt strongly about upper management lacking good communication.”
“It took time, but by plugging in new leaders, we found a chemistry that works for us,” continues the management team, “and our employees felt listened to. We can now have healthy conflict and discussions as leaders. In the end, we all fully support the objectives and communicate a unified message. This process started long before we owned the company and has blossomed in the last six months.”
Falls Fabricating currently employs 77 people.
During the pandemic, the company lost 35% of its business, laid off 20% of its workforce, and is currently down about 26 employees. However, the business is having a solid year coming out of the 2020 pandemic and hopes to increase its workforce.
“When we budgeted for 2021, we really did not know what to expect with our economy and its ability to come back,” Knosalla says. “In January 2021 we started seeing sales increase like most businesses. Our new challenge was limited material availability and lack of skilled labor. We were and still are faced with cost increases that have a large impact on pricing for our customers. We are not yet back to pre-COVID sales levels, but we are hopefully headed in that direction despite these challenges.”
The company plans to update its equipment and technology in the coming years. “We’ve already begun the work of investigating some of these objectives,” the management team says. “In order to stay competitive and improve the business’ ability to grow, we place a priority on continuous improvement.”
“We are still one of the largest custom reservoir manufacturers in the Midwest,” continues the management team. “With COVID challenges we may not be the largest any longer, but we remain positioned near the top in providing this type of product.”
Featured story in the Fall 2021 issue of Enterprise Minnesota magazine.