It’s February 2012 and I am truly grateful for where the Industrial Division is now as compared to just over a year ago. Like many companies, the poor economy over the last couple of years really took a toll on all of us. We were forced to minimize, cut back, reduce our overhead, and all the other tactics necessary to survive in a slow economy. But, as 2010 came to an end and we moved into 2011, if felt as if there was some slight momentum starting to build. There were projects on the horizon and opportunities available. With a little patience and some good fortune, we were able to land some quality employees, at just the right time, that really helped us attack those opportunities and turn them into realities.

I always believed that if we could just get the work in the door, we could get things back on the right track. When we were able to land the “Big” project with TKS at Nissan – Smyrna, we had our first significant back log in over two years. Dredge and Marine was there too with several projects throughout the year and many of our local customers finally began to release the projects they had been holding off on. As the economy gradually rebounded, our customers responded. Industries such as Automotive/Paint Shop, Glass Furnace, Dredge Components, etc. provided the jump start. When they came to us, we were prepared with a team that was ready, willing and able to help them meet their needs.

As we move into 2012, we continue to adjust to the industry as needed. We continue to look for new opportunities or fields to explore that will help us expand our operations. Industries such as Dust/Fume Collection, Chemical Process, Steel/Foundry and Pulp, Paper & Wood will be critical to our progress, as we strive to continue our growth as a company in size, capacity and volume, and in doing so seek to build on the successful team that has been put together to get us to this point. With good fortune, the addition of good people and the help of a slowly rebounding economy, we have gotten back on the right path. Now we turn our attention to moving forward.

Our number of employees has come back and is close to our 2008 employment level. We have been able to take advantage of the down market and hire outstanding production workers as well as management positions.

With 2012 being an election year, the economy has seen a spike historically. As I stay very optimistic we plan to continue to grow at John W. McDougall Co., Inc. while we make capital investments in technology and “cutting edge” manufacturing. We will continue to try new markets and new products as we have always done. We will move forward into cyberspace as we continue to open communication and exchange ideas with customers and industry professionals on the direction of the construction industry in America and how we can do our part to make it better. We invite you to join us as we Facebook, Twitter, LinkedIn and blog our way into a year of hopeful growth and ingenuity for everyone.

May 2012 be a healthy and prosperous year for all.

Alec McDougall
President of John W. McDougall Co., Inc.

As I reflect it is amazing how our group of people pulled together as a team and pulled McDougall Company out from ruins. Nobody complained about the conditions or the multiple jobs they were performing as we still tried to conduct our daily business. Even though we did not per se have a crisis management plan we went into the crisis mode on Monday, May 3rd and did not let up until we were back in our offices eight weeks later. I can never thank our team at McDougall enough and would never have been able to accomplish what we did without our committed employees. Through this situation it opened my eyes as to the quality and strength of our team. Today we are a lot smarter and more prepared for any action that might cause an interruption in our workforce – hopefully that won’t happen again.

I was in Chattanooga that weekend celebrating my daughter’s graduation from college so I did not personally experience all of the torrential rains. Sunday night I started getting phone calls about what was happening in Nashville and to the McDougall property. The phone calls kept coming, and on Monday the theme of the phone calls was pretty much all the same; what are we going to do about payroll, and how are we going to get our people paid? We had an emergency meeting at Lewis’ store on Tuesday and laid out our plans. Then, to my wonder and amazement, my payroll department put on their hip waders, got in a boat and took the quarter mile boat ride to the office. We were able to get our network running using portable generators, and then Jackie, Shari and Jo-Ann proceeded to get the payroll entered, checks printed and sent out. Of course none of that would have been possible without my I.T. guru Daren and his well thought out disaster recovery plan. This is just one example of how the people here rose to the occasion and faced the problem head on. I’ve only mentioned a few people; there are numerous others that performed above and beyond what would be expected, and have similar tales of what happened that week. It makes me happy and proud to be part of this team.

Industrial Metal Shop Before & After

In the construction industry, sometimes you just don’t know what to expect. Everyday brings new and different challenges that have to be addressed and overcome. I think it is safe to say, that nobody at John W. McDougall Company “expected” what we encountered on May 2nd, 2010. Mother Nature gave us one of the biggest challenges the Company has ever had to face. I look back now, almost a year later, and try to remember how we got through a natural disaster that not only wreaked havoc on John W. McDougall Company, but many of its employees and an entire city. I don’t recall a lot of panic or self pity as to why this had to happen. I do recall a lot of people rolling up their sleeves and attacking the challenge we were faced with. The water was gone by Thursday. We were back up with limited fabrication capabilities by the following Thursday. The clean up continued. The remodeling continued. Through it all, everyone just kept working. Not only with the demands of their daily jobs, but also the additional tasks everyone took on with regards to getting operations back to normal. And before you know it, a year has gone by. The older I get, the faster time seems to slip by, but for a few days almost a year ago, it seemed to stand still. We didn’t know what to expect. Then we got busy getting back to work.

Industrial Metal Shop Before & After

May 1^st of 2010 marked a shocking memory for Nashville and other Middle Tennessee residents that will never leave our minds. When we awoke to a dreary, rainy morning we had no idea that by afternoon we would turn on the TV to find a modular school building floating down Interstate 24 and a great many of our neighbors homeless. Many McDougall employees, including myself, began to think of our company as it’s located on the Cumberland River on a flood plain. I saw the photos of our company first on Facebook by our payroll manager who had gotten to the buildings by boat, retrieved some of her work and took it home so the employees would get paid for the previous week of work. And she wasn’t the only one who showed up to help. Each day saw progress in the receding of the water and by mid week a majority of our employees (and some spouses) were on site, tracking through the mud, carrying out what had been our furniture, boxes, documents, equipment, daily working necessities, to the awaiting dumpsters on the yard as the cleanup began.

About a month after the water receded, I was walking out the front door and noticed a small spot of bright purple on the ground. I looked closer and found it was one of the flowers that had been planted by the door before the flood and it was now growing back. All the rest were destroyed in the flood and I don’t know how this one survived in five days of filthy flood water, but it did. That’s the picture you see here…it’s not a great picture, but it stands for a lot in my memory. We were a very small spot in the devastation that occurred on that first weekend in May, but we survived.

As our one year anniversary of the flood approaches, we will be featuring a Grand Re-opening Series on The Fabricator. We’ll give you some insight from different points of view within our company on the devastation, the rebuilding, the lessons, and more. So join us on looking back as we move forward.

Tom Newhouse

Often the unsung heroes of an organization are the ones that aren’t on the front lines and in the spotlight. These people spend their days preparing the minute details of daily operations that seem to magically connect together in bits and pieces to form the big picture for years to come. We rarely hear publicly from the financial hub of the company, but John W. McDougall Company CFO Tom Newhouse recently sat down with me to discuss the economic struggles of the past few years and how the company has made it through.

John W. McDougall Co.: Regarding the economic downturn, did you see this coming before it hit us?

Tom Newhouse: Historically, our Company lags behind the economy in general by about three to six months in both downturns and upturns.  When the financial community had its crisis in late 2008, and the economy began showing signs of recession, we assumed that we would experience the same kind of slowdown in 2009, and that 2010 would be a real challenge.

JWM: How did you prepare the company?

TN: In lieu of the credit crisis and economic slowdown that we were going to face, we had to make hard choices to cut costs and preserve cash.  We reviewed all service contracts and eliminated those that were non-essential.  We put many projects that required capital expenditures on hold so we would have a cash reserve to fund daily operations, if needed.  Every position in the company was analyzed. Unfortunately some positions had to be eliminated, or laid off due to the slowdown.  Even though the Company was still profitable, year end bonuses were cut to save funds. 

JWM: Many companies didn’t make it through the economic struggles of the past two years– how have we survived?

TN: Business decisions made before the recession have left the Company financially sound and able to withstand the current downturn in the economy.  I think these difficult times have led us to refocus on being the best.  We have a great staff of people working for us that produce a quality product. Our people make this company great and every one of them has made sacrifices. They have also pitched in to help in any way possible to meet the challenges that we are facing today.

JWM: How are we preparing for the uncertainty of the rest of this year in our industries?

TN: We are constantly looking for new industries to work in, and new products to represent.  The more diversified we are, the better off we will be.  We are also always looking for ways to become more efficient in our production methods.   And, of course, we are continuing to look for cost reductions everywhere, to be as competitive as possible while producing the highest quality products.

JWM: How has this changed the way we do business, if at all?

TN: The fact that we have been in business for over 70 years speaks for itself.  The philosophy has always been to treat the customer right, and give them a superior job.  The McDougall name is well known because of our high level of customer service.  Our goal is to keep doing a superior job at an even more competitive price.

JWM: McDougall has a very low turnover rate, with many of our employees celebrating their 10, 20 and 30 year anniversaries. How does the company balance making the biggest profit possible and keeping good employees?

TN: The company is a collection of talented individuals, and has a family like atmosphere.  We try to hire only top notch employees who will reflect a positive image of the company.  We foster an environment of challenging our employees to succeed beyond what they think they can achieve, because when they are successful, the company is successful.

JWM: Has anyone ever told you that you look like Tom Selleck?

TN: Unfortunately, the only similarity between Tom Selleck and me is that we are both Detroit Tiger fans.  Now, if you had said Brad Pitt…….

Mike Beacom, VP of Industrial Metals at John W. McDougall Company

The past couple of years for John W. McDougall Company have been challenging, to say the least. The bread and butter of our Industrial Metals Division, the U.S. Automotive and Glass Furnace Industries, spiraled toward near extinction as we watched in amazement. Just when we thought the industries had hit bottom, daily reminders of closing dealerships and record losses for manufacturers kept rolling in. On the local front, two of our biggest automotive customers, Nissan’s Smyrna plant and Saturn’s Spring Hill plant, drastically reduced projects, limiting the amount of work available to us. But through the mess and muck of a constant economic battlefield, we’re still here. Recently, I sat down with John W. McDougall Company’s VP of Industrial Metals, Mike Beacom, to ask some questions about the industry and our place in it.

Kim Taylor: Your division, the Industrial Metals Division, is the foundation of John W. McDougall Company. How have you seen the industry and McDougall’s part in it change over the time that you’ve been with the company?

Mike Beacom: The Industrial Metals Division has remained fairly consistent over my 18 years. The Glass Furnace and Automotive Paint Shop Industries have always been a big part of our annual sales. Of course, we have ventured out on several occasions to see if other industries could support our type of custom metal fabrication and installation capabilities, such as dust collection systems, paper mill industry, environmental systems, foundry industry, and so on – as with most ventures, some were successful and others were not so successful. One of the biggest challenges in our industry is in meeting increasingly challenging customer requirements. We are constantly faced with trying to reduce costs, improve quality and decrease turnaround time. In that regard, I think John W. McDougall Co. is a valuable asset on any project.

KT: What are some of the catalysts of change that you’ve witnessed in the slowing of the metals market?

MB: Wylie McDougall [former President of McDougall] cautioned us when the Housing market took a big down turn, that our Industry typically followed suit. He was correct. As the economy has gone downhill, so has our Industry. When consumers aren’t spending money on new cars, houses, etc., the industries we serve get really conservative with their projects. Our customers aren’t willing to spend their money when the end consumer isn’t investing it in their products. Projects have been put on hold or cancelled out right, which in turn limits the opportunities we have. We are looking for the Housing and Automotive markets to rebound as a potential sign that our industry is starting to fight its way back.

KT: How has the drastic rise in material prices during the last few years affected McDougall?

MB: It presents a challenge, but fortunately it presents the same challenge to our competitors. Unfortunately, the end user is the one that is most affected by increases in material costs. The only way to combat that is to look at alternative or less expensive materials than what might have been originally specified. In some instances though, that’s just not an option. We are always more than willing to work with our customers to ensure we are giving them the most cost effective options when they are available.

KT: A big part of McDougall’s business is repeat customers, some of whom have been working with us for decades. How do you maintain such good relationships with customers over that span of time?

MB: That’s the easy part. Do it right the first time. The customers that have been with us the longest know what we are capable of and the level of quality we adhere to. They also understand the value of our experience in the industry. We know what to do and how to do it, and for our customers, that’s one less thing they have to worry about.

KT: How do you find your new customers? Is the social aspect of acquiring customers/jobs as big now as it was in the days of the founder, John McDougall, Sr.?

MB: That may be our biggest challenge we face today. We are well known in our market, but outside of that the demand for our capabilities drops off pretty quick. It is out there and we have to find new ways to bring them to us or take ourselves to them. The company has evolved so much in the 70 plus years since Mr. McDougall, Sr. founded it, that it’s hard to say how they brought in work. But with the way every competitor is fighting for work these days, we have to take full advantage of any opportunity to get our name in front of customers. Social networks, multimedia, word of mouth, door to door sales, etc. are all valuable tools to be used to generate the much needed opportunities for work.

With our current economic volatility, 2009 has been a very challenging year. With a large portion of our “niche” products related to the automotive market, we have seen a slow-down in production. As the credit markets experienced setbacks, we saw jobs delayed and even cancelled. After experiencing a strong and productive year in 2008, our 2009 has been quite humbling. However, it has given us a chance to evaluate our business and make changes where needed.

We are leaner and more versatile as we prepare for the economy to get some upward momentum. We feel strongly that Aluminum Composite Material is more popular and readily used in the architectural community more than ever before and will continue to grow. ACM is now a prime product in Corporate Identity Programs and ever so popular in institutional applications.

Through three generations and over 70 years of our family-owned business, McDougall has a strong history of ebbing and flowing with the changing markets and economy. While continuing to grow with the ever-evolving ACM, we will be announcing new products and systems in the coming few months and are excited about the possibilities those will bring. Whatever the future holds we are well positioned and ready for growth.

–Alec McDougall, President