Manufacturers have long operated under the premise of not putting all their eggs in one basket. Many spread their business across multiple market sectors and customers in hopes of avoiding a slowdown when one of those revenue sources dries up. Although it’s a challenging business model to implement, requiring years of effort by an experienced, often extensive salesforce, the logic is sound and few in the industry would argue against it.
Except, that is, for Brian Steel. The chief executive officer at Tenere Inc., Steel came on board five years ago as vice president of sales and marketing and was soon promoted to CEO. Together with the company’s leadership team, he decided to break the “eggs in one basket” paradigm by parting ways with numerous customers, even those that had been with them for decades.
“We transitioned from being what I call a generalist fabricator and plastic injection molding house to a manufacturing company that’s focused on innovative customers and dynamic markets,” he says.
Headquartered in Dresser, Wis., this 75-year-old company has additional manufacturing facilities in nearby Osceola as well as Westminster, Colo. and Monterrey, Mexico. Tenere provides prototyping, design for manufacturability analyses, tooling, sheet metal fabrication, plastic injection molding, mechanical assembly, integration and testing, and supply chain solutions to companies “that connect and power our world through technology.”
This includes server racks and cabinets, cooling systems, network hardware such as chassis and switches, fiber optics, 5G towers and energy storage enclosures. These are all destined for customers in the information and communications technology and renewable energy industries.
Tenere was formed in 1993 through the purchase of two established metalworking companies – Hansman Industries and Progressive Tool and Die – and went on to acquire Denver Die and Molding. In 2012, the company was purchased by The
Watermill Group, a private investment firm in Boston. It has since experienced rapid and significant growth. That growth has accelerated under Steel’s leadership.
“When I started, we were serving everyone, including rail and farm, aerospace, medical devices, networking and light industrial,” he says. “If it was a part made of metal or plastic and it fit in our machines, we’d manufacture it. Over a two-year period, we pivoted completely away from that business model to our current and far more selective customer mix.”
The right decision
It wasn’t an easy transition. Aside from telling customers that they were no longer interested in doing business with them – some of whom with they’d done many millions of dollars’ worth over the years – Steel and the management team also cut back on face-t-to-face customer interactions.
“We went from 12 salespeople to just two, while our customer facing staff was eventually cut in half,” Steel says. “But we also added a lot of positions to our supply chain and engineering teams to better support our customers. We established a prototype team and workcenter dedicated to new product introduction , and started prioritizing technical expertise and that’s a huge reason customers want to work with us. As a result, we saw exponential efficiency gains.”
There’ve been huge efficiency gains on the production floor as well. Rather than tooling up and working on a huge assortment of parts for a disparate customer base, Steel notes that “everything we do now looks very similar.”
There’s no longer a need to manufacture clutch plates one day and HVAC ducts the next. Instead, most of the parts are thin-gage, close-tolerance enclosures or racks for a data center or an injection-molded enclosure for a 5G cell tower. The result? There are far fewer surprises, setup times are down, and the jobs flow more easily from start to finish.
“With our previous customer base, every year we’d receive a series of RFQs, and every year we’d play the game of figuring out how full we were, how much overhead we had to absorb and how low our margins had to be to win the work,” Steel says. “In most cases, we worked really hard and didn’t make a lot of money. Now, we still work really hard, but we do so in a very focused way. We have developed the ability to take a customer design, rapidly prototype it and then scale it into production. The competition is still fierce, but that’s how we’ve come to separate ourselves from our peers.”