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SMART. POWERFUL. BUSINESS IN SOUTHEAST MISSOURI.

The Secrecy of Business Success

Thursday, October 25, 2018

It’s not exactly cloak and dagger with lives at risk, but the preference of many successful businesses in Southeast Missouri is to avoid the limelight, innovate and keep their success secret. This story delves into some of the reasons why, sharing the thoughts of prominent local business owners and CEOs (some recently retired), most of whom insist to be unnamed in order to speak freely. In common between the leaders, their businesses have been hiring — or, in some cases, struggling to hire — a lot. Many of their companies would be readily identified just by opening up the local newspaper to the jobs section — or through a quick search online for local manufacturing jobs.

While most of the executives requested anonymity, others like Tim Simmers, VP and GM of Select Plastics LLC, based in Texas with a production plant in Scott City, Missouri, were happy to talk on the record — but only so far.

“We prefer not to talk publicly,” Simmers says. “The primary reason is because with competition paying attention, we don’t like to tip our hand. With operational ideas, equipment, definitely not. Hiring is kind of out there already, so I can comment on that.”

Others don’t even want to talk about hiring — and certainly not the strategic reasons for hiring — even if it’s clear their company is on a hiring binge. Linda Greaser, public affairs officer and industrial engineer at Procter & Gamble in Cape Girardeau, says, “Anything I say has to go through several layers of management in Cincinnati for approval.”

Meanwhile, even the most opaque of comments — or bit of information gleaned and reported by the local newspaper — can lead to heated phone calls. As publisher of the Southeast Missourian, the largest newspaper in Southeast Missouri, I know, as I’ve been on the receiving end of such calls when an economic developer wondered where a reporter learned certain information.

According to one business owner, who has had his hand in a portfolio of industries over the years, “Why share information if you don’t need to, especially if you’re a private company?”

This individual lays out his thoughts: “If publicity helps you attract talent, for example, then that’s an argument in favor of promoting your growth, even if you’re a private company. But from a marketplace point-of-view, unless your customers benefit from knowing your progress, I don’t know what it gets you.

“If you’re B2C (in a business-to-consumer market), like a restaurant or retailer, of course there’s a benefit. Your customers need to know your products,” he continues. “And consumers like to go with winners, the place that’s growing or hot. Hospitals definitely need to promote, too. Health care consumers draw conclusions about service quality according to marketing and marketing volume, let alone positive news stories. If you’re B2B (focused on business-to-business sales), though, where is your customer? If it isn’t local, too much local publicity can lead to wage pressure, union interest, competitive counterattacks or other challenges. What’s the gain for the risk?”

Competition

Simmers, who is with Select Plastics, identifies concern about competition as one reason to be reticent. That theme was echoed by several I spoke with.

An executive at one fast-growing local manufacturer explains, “We’re a private company with a lot of quiet progress, and we prefer it that way, flying under the radar. We actually had a chance to hire an executive from a public company, but we didn’t hire him, although he was a fantastic talent. It was too much risk. If you hire from a competitor, if they’re much bigger, they could come back and target us and our customers. The little guy, the gnat on the butt of the elephant, needs to be careful.”

Most of the concern, though, was about signaling proprietary information about internal processes or future market moves.

“We don’t want to share about adding a new production line, because it reveals too much about our future plans,” one executive explains.

Another says, “So many places out there watch for any reference. I could lose my job talking to you, any whiff gets me in trouble.”

For those who think such concerns are overly paranoid, let me add perspective: a lucrative line of the media business is providing business news and analysis within specialized categories. For years, the Southeast Missourian has had a relationship with the media monitoring firm, “BurrellesLuce,” which promotes itself as “the U.S. leader in media monitoring.”

From its website: “Professionals in a wide range of industries (like public relations, marketing, research and development, government, non-profits, Fortune 1000) rely on our comprehensive curated content from local and national print, online, broadcast and social media sources. BurrellesLuce has a turnkey copyright compliance program that allows us to provide copyright-compliant, behind-the-paywall content not available to other news clipping services.”

As a former board member of the Associated Press, I also know that the AP strikes deals for its content to be repurposed for business analysis (something which is not a secret). Beyond aggregated media monitoring, analysis of seemingly innocuous business intelligence — especially when targeted — can be big business in itself. For example, the global market for disposable diapers is projected to surpass $64 billion by 2022. Insight into the diaper manufacturing processes of a market leader can be valuable to its competitors. That’s why I don’t begrudge Linda Greaser and P&G for their reluctance to share specifics.

Wage pressure and union interest

Another paranoia about a spotlight on business success is concern about unions. “We don’t want publicity, because we don’t want union attention,” one executive flatly told me.

John Mehner, the president and CEO of the Cape Chamber and director of Cape Girardeau Area MAGNET, the industrial recruitment group, explains it slightly differently.

“Growth puts a strain on employees, because of overtime and keeping up with orders,” Mehner says. “That can lead to disgruntled employees, which is more fertile ground for unions, especially if the company can’t hire fast enough.”

Another company avoids publicity because of the up-and-down nature of its production hiring. During a boom, it might hire a hundred additional employees, but if business slows two years later, “maybe because of gas prices,” and they lay off 70 employees, they don’t want the big, negative story. Sharing employment numbers in their case is a double-edged sword, and “too many people remember the negative news more than the positive.”

Hiring talent

Attracting and retaining talent is often cited as one exception to the allure of secrecy. The business owner with experience in a portfolio of industries says, “The exception is if you are looking to sell your company or there’s an advantage to share your growth because it helps you attract talent. Or — and this shouldn’t be underestimated — it helps you retain your talent. There’s a benefit to employees understanding that they’re working for a winner — and that their family and friends know that and respect them for that, too. Pride in where you work is a powerful energy.”

Simmers proved that point by declining to talk about operational issues but talking openly about hiring at Select, which is known for having one of the top industrial work cultures in the area. Turnover at Select’s Scott City plant is virtually non-existent, and quietly, it has added seven to 10 jobs per year over the past four years.

“We treat people really well,” Simmers says. “We bend backwards for them, and we help remove a lot of unnecessary stress. For example, in a lot of manufacturing companies, managers often ask for a lot of illogical things. We go out of our own way to make sure that doesn’t happen. We don’t ask anyone to do anything we wouldn’t do ourselves as managers. We just try to avoid people on an ego trip.

“At other companies, the focus is on trying to satisfy the owners,” Simmers adds. “We’re making an acceptable profit for the owners, and they’re happy with us treating people right. The owners also support staff in important ways; for example, with medical assistance, even above and beyond health insurance.”

Maybe because of its reputation and work culture, Select hasn’t faced some of the hiring challenges afflicting other local manufacturers. According to Simmers, the company experimented with temp services at one point, but found it wasn’t a fit. Instead, managers have relied on expanding their employee base through current staff’s contacts and “other like-minded people, who were looking for our kind of respectful work environment.” Simmers and his team have created a network effect for hiring good people.

One company recently in the spotlight for hiring is Schaefer’s Electrical Enclosures, which is located on Nash Road near the Cape Girardeau airport. Renewal of industrial revenue bonds called for it to share some information publicly, including its growth from almost 90 employees a few years ago to 225 today, with a target of 280 in the next couple of years. According to the Southeast Missourian, since 2013, Schaefer has made significant investment into new laser-cutting equipment, automatic bending equipment, material handling equipment and robotic welding, and it has expanded its market footprint. Its business to produce customized electrical enclosures is growing fast, leading to the need to hire fast.

“Our ownership prefers to hold things close to the vest,” says Randy Nielsen, president of Schaefer’s. “But I can share we’re growing. Over the past 25-plus years, the company has grown at a 15 percent CAGR (compound annual growth rate) each year. Over the past three years, it’s grown even more rapidly. The good thing is that the market is growing, and we are gaining market share, as well.”

Regarding hiring, Nielsen says the company has had success after addressing wages and encouraging more internal references. “We spend a lot of time recruiting through our employees. We pay them for references, and the best employees come from those already working here.”

More circumspect about talking is American Rail Industries (ARI), a public company based in St. Charles, Missouri, with a plant in Jackson, Missouri. In August, the St. Louis Business Journal reported ARI signed a $750 million order to deliver a mix of tank- and covered-hopper railcars over five years to GTX Corp., a $1.4 billion, Chicago-based railcar leasing company.

“This agreement will provide a level of consistent and efficient production at our manufacturing facilities,” John O’Bryan, president and CEO of ARI, says in a statement. “A longer term production plan will help us achieve our vision of world-class results in safety, quality and service, and will support our talented team members with a backlog that extends out for several years.”

How will the contract affect the plant in Jackson? Local management declined to comment, referring all inquiries to the corporate office. By magazine deadline, corporate had yet to call back.

The Downsides of Secrecy

Schaefer’s and Select notwithstanding, according to Chamber director Mehner, “This practice of not announcing has been a trend in this area for a long time. It’s a challenge, because you wouldn’t know the progress taking place unless you were involved in it.”

“People who say that there’s no manufacturing here, it’s b.s.,” Mehner adds. “Eleven percent of the local workforce is in manufacturing. But it can be a frustration when it’s your job to help build industry, and if you can’t announce things, people don’t believe you.”

A partial list of industries in the Cape Girardeau area that have expanded in the past two years include Select Plastics, P&G, Mondi, Signature, SEMO Box, Verdesian, Schaefer’s and more.

“People ask me, ‘How come we haven’t had growth,’” Mehner says. “But we are.”

Business theory is changing about many aspects of secrecy, too. As one Forbes columnist writes, “Stealth mode is often just an alibi for bad marketing.” Serial entrepreneur, investor and University of California professor John Greathouse writes, “It is nearly impossible to keep interested parties in the dark for long. If someone has a vested interest in your activities, it is likely they will eventually determine [them]. … Be wary to not remain in stealth mode beyond the point at which the disadvantages outweigh the advantages.”

One clear disadvantage locally is the failure to create a market destination for skilled labor. With so many local companies growing — and skilled labor in short supply — it is harder to recruit talent from outside the area if the story isn’t shared. In weighing the benefits of relocating, engineers, managers and workers not only look at the immediate opportunity, they also consider what the overall options are in their potential new home. Like it or not, career paths upward often move in diagonals between companies. The more workers recognize there is a broad range of opportunity in a market — and that they’re not limited to a specific company — the less risky a significant move becomes.

Without creating a recognized destination for skilled labor, what happens instead is an endless fight for the same work pool. In fact, one executive I interviewed complained about the problem of other local manufacturing companies poaching his employees, creating additional stress.

Some companies like Select might create positive differentiation through work culture or others like P&G might dominate because of prestige and benefits, but the rest will likely struggle to find workers, especially in boom times like today. By tossing off the cloak obscuring some aspects of business success, the whole area — workers and companies alike — has a better chance to thrive and succeed.

If you are interested in your company’s success being covered in B Magazine, contact Jon K. Rust at jrust@semissourian.com, carbon: mpohlman@rustmedia.com.