“You Can’t Sell It If You Don’t Have It”
Turning Mountains of Metal into a Bright Future at Yarde
by Mark Batterson
The shining, brassy future Yarde Metals Inc. of Southington faces has been polished from the foundation of success laid in the past few years. Several years ago when the company leaped forward to build its “mother ship,” a half-million-square-foot plant in Southington, it wasn’t a good time to be borrowing money, CEO Craig Yarde Sr. recalls. With the help of a $2 million loan guarantee from the Connecticut Development Authority, the company took the step necessary to insure its future.
In the two years since, the company has shot from annual sales of $100 million to over $200 million, and $260 million is the projection for the current year, Yarde says.
Add to that, Yarde Metals had projected hiring 30 new workers in the two-year period after securing the CDA loan. That figure is up to 130 and growing, bringing employment to more than 500, Yarde says. “It’s due to our aggressive position in the industry and our aggressive philosophy of inventory procurement,” Yarde concludes. “We believe if we turn it over, we stock it. We’ll buy a whole year’s supply of stock at a time. You can’t sell it, if you don’t have it.”
It was that “aggressive philosophy of inventory” that stepped up Yarde’s most recent growth spurt. After 9/11 in 2001, everything flattened out industry-wide. Distribution was shut off and operations were down, but because of its aggressive buying Yarde Metals had product coming in and others didn’t. “Our sales went up because we had metal and others didn’t. We caught the market as supply and demand was changing. That’s when we started to really shine,” says Yarde. “In essence, we built during recession and are ready to catch the next wave. We really didn’t plan it that way. We started planning in the 1990s and then the bubble burst.”
Yarde’s early years were spent dreaming of a professional baseball career spawned by his dad’s involvement in promoting appearances by sports figures throughout central Connecticut. Among his dad’s clients were New York Giants star defensive end Andy Robustelli and New York Yankees star centerfielder Mickey Mantle. However, chronic knee injuries waylaid his athletic options and it was on to school and then his career in the metal business, also facilitated by his dad who had an in at Millard.
He graduated from Bristol Central High School and went to college thinking of a pre-med major. After one year, he left college and got a job working third-shift in a warehouse in Quincy, Mass. Yarde eventually wound up in sales training for Millard Metals and after a year and a half transferred back home to that company’s Southington operation.
In the early 1970s as cheap Japanese stainless steel flooded the U.S. market and Millard began buying it directly off the docks from tankers and reselling at a profit, Yarde considered that simple strategy of buying the raw product directly from the foreign producer and reselling it was a concept he could embrace. It was 1976 when, “I said, ‘Hey, that’s something I can do myself,’” he remembers.
With $1,000 in his pocket, he hopped in his family station wagon and purchased a quantity of rod. He began selling it from his basement. With his wife answering the telephone, Yarde sold to the many customers he had developed while working for Millard. His sources would ship the product, he’d run down to the dock to pick it up “and I’d drop it at my client’s receiving dock and run around to the front door and deliver the invoice looking for payment,” he says.
It wasn’t long before his brother Mark joined the firm. “He came in as the driver because he had a vehicle bigger than my station wagon – a Chevy Suburban.” Then on came brother Bruce, who had expertise in the aluminum industry, and in 1980 brother George, who had worked for New Departure, joined. “George was the last because he was doing so well I couldn’t afford to pay him.” Today, the family business includes his son, Craig Jr., and daughter, Tracy.
In that short four years, Yarde Metals had developed a solid business in its limited southern New England region, buying, selling, and brokering metal goods (stainless steel, aluminum, carbon steel, brass and copper) and had forged a reputation for “excellent service and our can-do attitude,” Yarde recalls. “A customer would call us and say a Hartford firm had product, but it was a two-day delivery wait. We wouldn’t have the product, but we would call that supplier, buy the material, run right over, pick it up and deliver it to the customer, oftentimes at little or no profit. That servicing the customer, taking care of his needs was our reputation.”
Yarde Metals soon moved out of the basement of his Bristol home and began storing inventory in an old abandoned railroad station in Forestville. That too was a family link. His dad had had a small manufacturing company nearby, when in the early 1970s Yarde’s employer, Millard Metals, needed a central Connecticut storage facility. His dad arranged for Millard to use the 30-by-40-foot old rail siding for $100 a month. Millard was out of the business, so it was a natural when Yarde’s growing business needed it. “It was old and dilapidated, but it kept stuff dry,” he says now.
Next came the 9,000-square-foot central office on South Street in Bristol, followed in 1986 by a 65,000-square-foot warehouse and processing facility, the first facility built in the Bristol Industrial Park. Today, Yarde Metals boasts its 500,000-square-foot headquarters opened in 2003 on Newell Street in Southington, another 80,000-square-feet leased in the former Pratt & Whitney plant across the street there as well as its original Bristol plant.
While Yarde Metals began as a broker – buying raw metals and selling it to end-process users – today, in keeping with its dedication to customer service and “can-do attitude,” the company not only supplies end-users with raw metals, but provides them with first-level cutting and processing. Its Southington facility is equipped with the latest in metal-processing technology that can turn raw rods, bars, sheets, and angles with precision cuts, moldings and shapes to target a customer’s specific need.
“We can meet exacting tolerances to one-hundreds of an inch. Our customers can take what we supply and put it directly onto their machines for final production. It saves our customers time and money by us doing the processing,” Yarde says proudly.
And Yarde continues to service the small clients. “We are like a big job shop. We can provide one piece of that, two sticks of that and give them next-day delivery too,” he says.
“Growth here began to take off when big distributors in the 1980s began to refer smaller clients to us. As they got bigger, we grew with them,” Yarde notes. “All the big guys eventually went overseas and a lot of the small guys stayed here to our advantage.”
A typical customer for Yarde Metals is an automated machine equipped milling center whether it be in the semiconductor, aerospace or automation industries serving a prime original equipment manufacturer (OEM). “Our clients put the blank [metal product] in their machine and its cutting tools fabricate the part they sell,” Yarde says.
There are now 95 Yarde Metals trucks on the road daily servicing points from all over New England to as far west as Cleveland and as far south as North Carolina.
“We have a hub and spoke operation. The mother ship, the hub, is right here in Southington and Bristol, where we began, and 95 percent of our inventory is stocked here,” he says, and the spokes are service centers in New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and overseas. As those spokes grow, as with the impending opening of a Richmond, Va., shipping center, so will the firm’s distribution area, eventually spanning from Maine to the Great Lakes to Florida. Yarde also sees an expansion into the marine trades industry for his metals.
The key to the company’s success, Yarde says, is “next day, next day, next day!” Yarde Metals can provide the service it does because of its centralized inventory and its established trucking system. The order is taken in Southington, the first-cut processing is done there (some 2,000 pieces daily), and two large shuttle trucks leave each plant nightly carrying product to the hubs where they are transferred to smaller 20-foot straight trucks for delivery. “We can keep inventory to a minimum because it is centralized and we can get product to the customer quickly because our trucking infrastructure allows it,” he says.
But central to Yarde Metals’ ability to supply machine-ready product on a day’s notice is its people, Yarde insists. The company cuts no corners in human relations: From the open-book management model to its variable compensation program to its leisure-time activities roster.
It began in 1996, as Yarde Metals hit a wall despite tremendous growth, Yarde says. “Employees had no trust for management, they weren’t getting bonuses and they weren’t happy. I call it ‘compensation chatter’ – you know, ‘I’m getting screwed.’ I’m not an MBA, so there was no structure in place to resolve the problems.”
His management team began reading books to uncover a solution. A key tome was Open Book Management by John Case, which espouses the benefits of employees knowing the inner-workings of the company.
It became readily apparent to Yarde during interviews with each shift that his associates needed to know the company’s financial state in order to establish a trusting environment. “I asked them how much they thought our after-tax profits were. The replies went from 10 to 40 percent. If our sales were up say to $1 million at the time, by their figures they were looking at $400,000,” Yarde recalls from those interviews. “They thought I was stuffing my pockets. We operate on low margins off of high volume, and the real figures were closer to 2 to 8 percent.”
“I figured I’ve got nothing to gain by keeping my books closed,” he says.
So a consultant was brought on for a year who formed five study teams involving nearly 60 percent of the firm’s 200 employees at the time. The end result, Yarde says, was a structure that educated every employee on finances and operations and framed a compensation model that answered the question “What’s in it for me?”
Everyone in the corporation is taught to read and interpret a balance sheet with refresher courses offered annually.
The model, which Yarde labels “a variable compensation plan,” shares the company’s good fortunes and spreads culpability in bad times. The company keeps about two-thirds of after-tax profits with the other third going to all employees on a sliding scale. It amounted to about 27 percent of pay in the past six months, he says. The education of employees also continues on a regular basis.
The books are open every month and all employees screen a professionally made video explaining the numbers and setting the strategy for the immediate future. “It’s the perfect compensation program because it rewards superior performance as a percentage of pay. We celebrate as a team,” Yarde says proudly. “We have virtually no [staff] turnover and people are dying to get in here. If we have someone who doesn’t want to work, other employees tell them to do it or jump right in to serve as mentors.
“Everyone is thinking like an owner. Everyone is a bean counter – from shutting off lights and preserving pens and pencils to constructively thinking about how to make our machines better. They’re fired up because they know if we do better, they’ll have more money in their pockets at year’s end.”
The management transformation involved more than just opening the books and sharing compensation, as important as that was, he adds. The company culture also sank roots into what Yarde calls “leveling.”
“Everyone treats everyone else with respect, equality, and compassion. There is no screaming or yelling or belittling people here,” he says. “People are paid different amounts because of the requirements of their job, but we all come through the same front door.” Once the new management model was in place, Yarde found he had to clear some managers out because they didn’t buy into the new mentality. “You can’t allow one person to contaminate your environment.”
And he maintains a constant course of “wowing our associates,” he says. “They are taking care of our best customers, so my only goal is take care of my employees. Another way: If I don’t take care of my employees, they won’t take care of my customers. And customers can read that quick; the more I give them, the more I get back.”
That “wowing associates” concept is wide-ranging and it is obvious all about the Yarde Metals plant.
Parking, except for a few up-front customer spots, is first-come, first-served for all employees. Outdoors on one side of the plant is half a basketball court, horseshoe and bocce pits, as well as a picnic gazebo. Outdoors on the other side is a dog kennel run. Indoors there are a golf driving range and 9-hole putting course, a game room with pool and foosball tables and dartboards. “It’s now almost to the point with all the lunch- and break-time tournaments that we need a full-time recreation director,” Yarde says.
And then there’s the complete physical training room with access to personal trainers, a massage therapy facility by appointment, and a full kitchen with three cooks, and a coffee roasting center where Yarde Metals offers its own special blends. The company even allows employees to bring their children to work in emergency day-care situations. “We investigated opening our own facility, but we’d need 50 or more kids to make it go and we only have about 20,” he says.
And new, but as yet unused, is Yarde’s offer of his Justice of the Peace services for free for any employee who wishes to be married on the company’s Main Street food court. “We’ll even donate the food for the occasion,” he adds.
Through his company’s home-grown approach to OBM and the resulting financial and employee successes, Yarde finds it hard to see anyone operating any other way. “Every job out there (nodding his head toward the offices and warehouse), I’ve done it,” Yarde says. “I have a hard time understanding how business owners in three-piece suits and vests expect to walk into their shop and communicate with their workers.
“I can’t imagine how a business can operate any other way. You have unions fighting management and vice versa. That’s ineffective at making money for anyone. After all, money is money, and it still drives everyone’s behavior.”
