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Summer 2016 - Pathways to Growth
Pathways to Growth
An ambitious demonstration project enables significant gains for participants
By Kate Peterson
May 2016

Five years ago Enterprise Minnesota embarked on an ambitious program to give select manufacturers in the state the tools to achieve profitable growth by working with business advisors in areas from strategic planning and marketing to leadership development and process improvement. The Pathways to Business Growth program was funded by a $515,000 grant from the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST/MEP).

The one-of-a-kind national demonstration project explicitly targeted leading manufacturers, aiming to help them achieve measurable business growth. Organizations were selected because of solid leadership, forward thinking, and innovative cultures that emulated characteristics of an organization best positioned for growth. The goal of the program was to provide access to a broad breadth of integrated growth services, specifically intended to help organizations significantly improve earnings over two to three years through a spectrum of services. 

“Pathways was a drink from the fire hose of our services,” explains Mary Connor, an Enterprise Minnesota business development consultant who worked with several companies through the Pathways Program. “We would team as a group, particularly on the growth side, to help companies realize their growth initiatives. We would feed them as much as they could digest. Some really took it on,” Connor says.

Below are profiles of three companies that used the grant in particularly effective ways.

PEQUOT TOOL: TRAINING
Pequot Tool and Manufacturing took charge of its technical training years ago, effectively filling a gap left when secondary schools stopped providing technical education to students.  The machining and fabrication company based in Pequot Lakes counts clients in a broad range of industries, from aerospace and gun and rifle components, to retail electronic fixtures and medical equipment. Its 162 employees need these advanced technical skills to take advantage of growing market opportunities. Still, despite its expertise in training employees in technical skills, because of the company’s promote-from-within approach, it sought the help of Enterprise Minnesota to help develop leadership skills within its employee base.

Karlo Goerges, CEO and Mark Shervey, president, Pequot Tool in Pequot Lakes, Minnesota
Karlo Goerges, CEO and Mark Shervey, president, Pequot Tool

“As a company, we’re investing a lot of money into training, and we do that because we don’t have the trained technical people coming out of school anymore,” says Mark Shervey, the company’s president. 

“We’ve actually got an accredited apprenticeship program going on internally. So that’s basically our best avenue for bringing up the skill level of our people,” Shervey says. “What it doesn’t address are the soft skills and the supervision and the teamwork and things like that. The Pathways grant project was one that we looked at that gave us the opportunity to do that training.”

Pequot Tool and Manufacturing’s steady growth over the years has made leadership training particularly critical. “Fifteen years ago we were under 50 employees,” says Shervey. “That’s a lot of growth, and lot of people have advanced to leadership positions. They’ve never held them before, so the Training Within Industry (TWI) that we used, and quite a bit of our training with the Pathways grant was done with that process. It gave us the ability to get some common tools in these people’s toolbox, basically, on how to deal with employees, how to train.”

Harry Larson, the Enterprise Minnesota business development consultant who worked with Pequot Tool and Manufacturing through the Pathways grant, says the company identified the need for building its leadership during early strategy development sessions. The Pathways grant helped the company undertake some lean training efforts, but centered primarily on Training Within Industry sessions. 

“They were looking more for their leadership group than anything. They were looking at building their team and their supervisors and their higher employees, and enhancing their skills, so that’s the direction we went with them,” says Larson. 

“A lot of our folks were technical people who were moved into supervision, or lead positions,” says Shervey, noting that some employees went through the training simply to improve their ability to work in teams. “It’s not necessarily that they have to be leading, but they have to know how to be part of a team; that isn’t a skill that’s always prevalent.”

Shervey admits it’s difficult to measure the results of program with hard numbers, but says the effects are apparent nonetheless. “You definitely can see people stepping up to the plate and doing a better job. It shows up in how they handle conflicts and different kinds of things, how many times they have to go to their leadership and get help—it’s less,” he says. “They handle things themselves and do a good job of it. We’ve increased our sales considerably, we’ve increased our workforce considerably and in my mind, we’ve done that with minimal pain.”

HARMONY ENTERPRISES: STRATEGY
When Steve Cremer, president of Harmony Enterprises, first got involved with the Pathways Grant program four years ago, his goals were clear. “We have a lot of really smart, talented people working for us, and we could see all kinds of opportunities out there. We didn’t want to be just a manufacturer trying to sell our equipment based on price,” he explains. Using the resources provided by the Pathways grant, Cremer and Harmony Enterprises undertook a thorough strategic planning initiative to figure out “how to be the best we can really be and find those opportunities.”

With 78 employees, Harmony Enterprises, which manufactures waste management equipment such as cardboard balers, trash compactors and automated recycling bins, is the largest employer in tiny Harmony, Minnesota. It’s a family owned company; Cremer is in the third generation of owners, and his stepson, who works for the company now, represents the fourth.

Cremer’s initial goal five years ago was to double revenues in five years. The strategic planning process Harmony Enterprises embarked on helped the company double sales in just three years. During this time, the company expanded its operations to provide more complete service to customers, including maintenance and repair of all their waste management equipment; obtained ISO certification to ensure more consistent processes in production, administration, sales and engineering;  and created a process to provide ongoing engagement with employees.

When Cremer began the process, he knew the potential pitfalls of typical strategic planning efforts. “A lot of times, you all get together on a day, write down these notes about what you’re going to do, and three weeks later you’re so busy that the piece of paper is gone and those thoughts are gone,” he says. Admitting that has happened at Harmony Enterprises in the past, Cremer didn’t want to repeat the process.

The multistep exercise Harmony Enterprises undertook involved creating a team of employees to evaluate the company’s core values and vision. “We spent a lot of time—several months—just working on four things: our core values, our strengths, our weaknesses and where we want to go,” Cremer says.

The next step was to set aside a full day to present these findings to key company stakeholders: employees, customers, vendors and business advisors. Everyone who attended wrote out notes in reaction to the presentations, and the team went through the notes, more than 700 total, to develop areas of action.

From that process came the idea to expand beyond just manufacturing into customer service, to embark on ISO certification, and to convert a 9,000 square foot building next to the manufacturing facility into a high quality early childhood learning center for the children of employees and others in the town of Harmony. 

Concerning ISO certification, Cremer says, “We always talk about quality being really important to us so after going through that quality one, we decided we really need to be ISO-certified not because our customers want it, but just because as an organization we want to make sure we are truly doing the best we can and being consistent in our quality.”

Through the strategic planning process the company also considered customer service. “From that process we  decided to see how we could change our customer service department from a cost center into a profit center,” Cremer says. The result: using a network of service providers around the country and world, Harmony Enterprises now provides technical, maintenance and repair services to companies for all of their waste management equipment, even those machines not produced by the company itself.

Steve Cremer, president, Harmony Enterprises, Harmony, Minnesota
Steve Cremer, president, Harmony Enterprises

The idea of creating the learning center next to the manufacturing facility came directly from the strategic planning process. “We are fortunate as we’ve been growing, to find a lot of younger people to come and work for us,” says Cremer.

One issue those younger employees repeatedly identified as a concern was quality day care. But Cremer says there are sure to be others. “That generation of the 20-23 year olds thinks differently than me at 60 years old,” he says. “Engaging our employees is an ongoing thing.”

Dick Pedersen, the Enterprise Minnesota business development consultant who worked with Harmony Enterprises through the Pathways grant, says Cremer is an ideal leader for a process such as this. “Someone like Steve is willing to take some risks to get growth,” Pedersen says. “You normally don’t see a high growth company built around a CEO who is very conservative and wants to have a 95 percent probability before he makes an investment,” Pedersen says. “Steve is willing to make that investment and take that risk, and that’s why the company is growing.”

AKKERMAN: PROCESS IMPROVEMENT
Maynard Akkerman doesn’t recall a time when he wasn’t involved in his family business, Brownsdale-based Akkerman. “I remember as a small child watching and working with my dad in the shop,” he says.

In the 1960s Akkerman’s father, a construction contractor, used conventional digging methods—backhoes and front end loaders, for example—to complete projects that involved installing pipes or other utility lines. When he had a project that required going under a highway or a railroad, he would hire a national company that specialize in the type of work. However, the technology they utilized was poor. That’s when his father began developing his own equipment for boring and tunneling. After ten years of perfecting the technology with his construction company, his accountant recommended that his father manufacture and sell the equipment to other contractors. That’s when, in 1973,  the manufacturing arm of his dad’s business was born.

When Akkerman finished high school, he went to work in his father’s construction company, which specialized in projects that required the proprietary tunneling equipment the manufacturing side of the business made. For 14 years Akkerman worked throughout the seven state region and Canada doing pipe jacking and tunneling work. When not out in the field, he worked in the manufacturing plant.

In 1987 Akkerman’s parents offered him the opportunity to buy either the construction business or the manufacturing business; Akkerman chose the manufacturing business and he continues to run it today. The company now employs about 70 people, and its equipment is sold around the world because of its quality and precision. Recently, for example, one of Akkerman’s customers used its remote controlled tunneling equipment to push a six foot concrete pipe three-eighths of a mile from one side of the Toronto airport to another, under an active runway and two taxiways.

For years, Akkerman has been participating in Enterprise Minnesota’s Manufacturing Peer Council and professional business advisor group. “I think I’ve been, or my company’s been involved with it for about fifteen years, right from the inception of it,” says Akkerman. “I would just say overall, in general, it’s been a great tool for my company and myself personally, not having any formal education in running a company. I’ve grown as a professional immensely just listening to other company owners, their philosophies, their thoughts, the speakers, and some of the projects we’ve been involved in.”

Through the Manufacturing Peer Council, Akkerman learned about the Pathways grant. Dick Pedersen, who has worked with Akkerman over the years through the peer group and other Enterprise Minnesota projects, thought Akkerman and his company would be a perfect fit for Pathways. “He is so willing to listen to the ideas and suggestions of others,” says Pedersen of Akkerman.

Through the grant, Akkerman completed a strategic planning process which in turn led to improved quality and consistency through various process improvements. “We’ve never had a formal product development process. It was like ‘Hey, one of the customers was asking me if we could do this. Should we do that? Okay, let’s do this,’” Akkerman says.

The new process is more thoughtful. “We’re sitting down and weighing everything, what the market potential could be, if it’s something we could actually build efficiently here, all of those things,” Akkerman says. 

In addition, a Pathways-supported analysis led Akkerman to seek ISO certification. The analysis showed the company doing well in all areas but documentation and repeatability, which were weaker elements of the business. “We decided to embark on the ISO process not because our customers were asking for it, but because we recognized we needed more consistency,” Akkerman says, adding, “My son, who has a civil engineering background and had recently hired on, could see the need for more discipline and the Pathways analysis confirmed that and led us to ISO certification.”

While the new process is a change for the company leadership, Pedersen says it fits with what he has come to expect from Akkerman, who has consistently shown his willingness to consider new approaches. “He might have an idea of something that might work, or something to try, and then bounce it off his peers. With that kind of motivation, thoughtfulness and openness, you end up making better decisions quicker,” Pedersen says. “That’s the kind of openness it takes to grow a company.” 

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