Diamond Phoenix Corp - Quantum leaps in market and employee morale
By Michael A. Verespej
Industry Week Growing Companies
November 1999
When President Larry Strayhorn and CEO Tom Coyne bought Diamond Phoenix Corp. in March 1998, the manufacturer of materials-handling carousel systems was on an upward business swing after a tumultuous decade in which the company had slid into bankruptcy and had had three different owners.
But while the previous owner had resuscitated the Lewiston, Maine, business, he’d done just the opposite for workforce morale. His ownership terms had made the roughly 55 employees back then ‘new employees,’ causing them to lose, in some cases, as many as 30 years of seniority and four weeks of vacation. So when Strayhorn and Coyne – both long-time industry veterans – took over, their first order of business was to address workforce issues.
“We asked ourselves,” says Strayhorn, “how can we reward the employees” who remained during the ups-and-downs that began with the bankruptcy. “We decided to return to them their seniority,” whether it was three or 30 years, ” and their vacation time.”
Coyne and Strayhorn also instituted a personal time-off policy and a 401(k) savings plan. “There had been no sick-leave policy,” says Strayhorn. “If someone missed work, they didn’t get paid.” Now employees can miss time, he says, “without missing a paycheck” when, for example, they are ill, have medical appointments, or want to attend a child’s school event. He’s also pleased that educational programs have increased participation in the 401(k) plan from 20% initially to 98%. (There’s a company match of 50% to up to 6% of salary.) The two also added a summer picnic and a Christmas party for employees and their families. “We want to thank them and give them an opportunity to spend social time together,” says Strayhorn.
Those people investments have created for $19 million Diamond Phoenix – a 53-year-old company that once built production machinery for the shoe industry – an appreciative workforce responsive to customer needs. For example, the workforce, at the customer’s request, recently delivered a system in half the time the original contract specified.
Strayhorn and Coyne also have made much-needed capital investments. They added overhead cranes, upgraded automated equipment for spot-welding and for manufacturing wire baskets, and in December will begin moving into a new $6 million, 105,000-sq. ft. manufacturing plant in Lewiston, located a few miles from their current plant. That will more than double Diamond Phoenix’s current space.
Those investments have paid off in increased revenues, profits, market share, and jobs. Revenues are up 171% in the past two years and Coyne expects revenues of $42 million in 2000. He projects that operating profits – which rose from $500,000 in fiscal 1997 to $4 million in fiscal 1999 (which ended July 31) – will more than double to $9 million in 2000.
During the same time frame, the workforce has grown 40% to 105 people and an additional 50 to 75 people – many of them engineers – will be hired next year for the new plant. Diamond Phoenix’s market share of carousel systems – which increased from 8% to 18% under the previous owner, has climbed to over 30% and Coyne expects it to reach 40% within a year.
Diamond Phoenix has capitalized on three things: a reputation for quality, a management team that averages 20 years of experience, and the recent supply-chain shift – that is, more orders shipped more frequently and in smaller quantities. “E-commerce is driving the need for customer service and responsiveness to levels we have not seen in 20 years,” says Strayhorn.
In fact, that is one of the reasons Coyne and Strayhorn bought Diamond Phoenix. It has a technology that can “solve order-picking problems and lower operating cost,” says Coyne. “We have sold ourselves as a company that can solve operating problems with a turnkey solution.” A case in point: Husky Injection Molding Systems Inc.’s international parts distribution center in Buffalo — which stores over 850,000 parts with 22,000 different part numbers – was able to pick four times as many orders and improve its customer response time by 30% after it installed a Diamond Phoenix system.
