Even before the downturn, the prospects for growth in America’s industrial heartland were grim. Now, with the troubles faced by the auto industry and its numerous offshoots, you might think that a CFO for a packaging and machine-parts manufacturer in Bloomfield Hills, Michigan — about 20 miles from the meltdown’s epicenter in Detroit — might be reserved in his optimism. But that would be before you met Mark Zeffiro, the finance chief of TriMas Corp.
After nearly 15 years at General Electric and 4 years at Black & Decker, Zeffiro came to TriMas in June 2008 fully steeped in Six Sigma and raring to make the diversified holding company more efficient. What he found was a company with five businesses running pretty much on their own steam under a loose holding-company structure. It includes an aerospace and defense unit that Zeffiro has come to regard as a prime growth engine; its Cequent segment, a complex maker of various transportation that took in 42% of the company’s 2008 revenue, which the finance chief thinks of as a “cash cow”; and energy, packaging, and engineered-components units.
Along with the other top executives, Zeffiro set about changing the company from a holding-company mentality to an operating-company mind set. That has meant instituting a paint-by-the-numbers compensation system that rewards the wringing out of material costs; quarterly rolling forecasts that enable the company to quickly decide which projects to scrap and which to invest in; and looking at five metrics — cash, inventory, orders, sales, and production — from each of the businesses every day.
As part of the effort, the company has stripped out a layer of management, according to the CFO. All the divisional finance officers now report directly to Zeffiro, who’s in the midst of reducing the U.S. component of his 150-person finance staff to accommodate the addition of 30 to 35 employees in India. The delayering of management has driven him and company chief executive David Wathen to talk with each one of the company’s divisions “with intensity” — a phrase that Zeffiro uses a lot to refer to the effort the company is making to focus on operational speed and lowering its cost in order to compete in a tough economic environment.
“What we have to do is to drive operating principles and efficiencies and productivity in those businesses that have been the mainstay of most of Corporate America for many years.”
— TriMas CFO Mark Zeffiro
On the cost front, the finance chief says, the company is on pace to meet the goal of its “profit-improvement plan” and save $30 million in 2009. That has involved looking under many rocks for excess costs and included such actions as changing the company’s listing from the New York Stock Exchange to Nasdaq, lengthening its payment terms, and gently reminding its customers if their bills are overdue.
Much of the cutting, however, has involved payroll. In terms of layoffs, the toll has been “pretty drastic,” Zeffiro acknowledges. Overall, the company has laid off about 20% of its workforce in the past five months. Further, TriMas has invoked a hiring freeze on salaried employees, merit-pay deferrals, and mandatory four-day work weeks, and required weeks off without pay.