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HydraForce Insider
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For over 25 years, HydraForce has produced the highest quality cartridge valves in the industry while providing exemplary customer service. Despite the slide in US manufacturing over the last two decades, HydraForce has defied the odds and flourished in an unstable manufacturing climate. For the 25th anniversary of HydraForce, we decided to interview our Founder and President, Jim Brizzolara, CFO Joe Reifenberg, and VP of Sales and Marketing, Tony Casale to get a history lesson on what it took to succeed in this market, and what they see in the future for HydraForce:
Twenty-Five years of growth and sustained success is a huge accomplishment in this market, how has the path treated you?
Jim Brizzolara: I feel good; this is a very exciting time for the company. There are a few things on the horizon that could make the next 25 years even more exciting than the first 25. I think we have built a very strong foundation these past 25 years. About the only thing I’d be willing to give up these past 25 years for would be to have another 25 years of youth.
Joe Reifenberg: You told me this is what keeps you young!
Jim Brizzolara: Imagine if I had another 25 years, the things we could do [with today’s technology]...
Tony Casale: But you wouldn’t have had the years of experience firmly grounding you... to make sure that HydraForce became what it is today.
What did you expect going into this venture? What did you set out to achieve?
Jim: We put together a solid business plan, so we had already envisioned the products that we’d offer. We certainly did not expect the success we had early on.
Tony: It figures that [now retired, co-founder] Dick’s forecasting would be off (Dick had been known for undershooting his forecast, that way, at the end of the year his numbers exceeded expectations).
Jim: Our experience going in to this was that no other [cartridge] valve company had ever gotten bigger than $25 million dollars. Therefore, we figured that if we got to $5 million in 10 years, then we were a success.
We began talking about this in 1981 or 1982 [amidst a recession] no one was willing to take a gamble. It wound up taking about 3 years to get an investor. In 1984, things started to turn around; we layed out our timetables for product development, executed our marketing plan, and opened our doors.
We would market through distribution. We had a potential distributor meeting that August. Thirteen distributors showed up (10 US, and 3 European Distributors), the enthusiasm for the product in that room was incredible [even though we had not yet released a single product].
How did your experience prepare you for this venture?
Jim: The first hydraulic company that I worked at really taught me how business works. In my 17 years there, they changed from a small entrepreneurial company into a branch of a much larger company through a series of buyouts. The larger the company got the more overwhelming the rules and regulations became.
I learned about various ways you could [essentially] cheat accounting, things like padding finished goods numbers, and various inventory strategies. It taught me that there were ways you could make your organization look good and not necessarily be good for the company. These experiences helped me to form the opinion that management by objective can lead you down the wrong path quickly.
The second valve company I worked for was 8 years old and completely disjointed. There had been no organization implemented whatsoever, and the company lacked discipline. I came in and spent three years completely re-organizing the entire company. What I really learned there, beyond the reorganization experience, was customer service.
The first company I worked at had gotten too big for their britches and stopped listening to the customer. In contrast, at the second company, it was common to see two helicopter pilots waiting out front to rush a product to the customer. They never second-guessed their customers. That was a great lesson learned for the three of us that were creating HydraForce.
What has been the most surprising thing about owning this business?
Jim: I think the overwhelming support we have received throughout the years from our distribution has been the biggest surprise. The credit of our success really goes to our long-time distributors. As one story goes, a larger competitor had told our original five distributors that if they did not drop HydraForce’s product line, they were going to cut them off. At the time, this company was probably doing ten times the business we were doing with them. Instead of giving in, the leadership at those five distributors came in to see Dick and I, told us what was happening, then proceeded to tell us there was no way they were going to drop HydraForce.
What fostered this loyalty?
Jim: Well, at the time there were 37 companies manufacturing cartridge valves. All of them small, privately owned companies. We knew that if we were going to succeed, we would really need to establish ourselves as the market quality leader.
At the time, cartridge valve companies were considered Mom and Pop or garage shop operations. No one had really stepped up to the plate in regards to quality. We did not want the perception of having a “Me-Too” product.
What have been the most drastic organizational changes?
Tony: The organization is not as flat as it used to be [but], it is still flatter than similarly sized organizations. We made sure in the beginning that we had a good process for everything that we do around here, and we’ve maintained our speed.
Joe: The evolution of HydraForce LTD and the entire European Market in general have been quite surprising. When I started, I never expected our European business to be as large of a part of our business as it is today.
The other drastic changes have been the many retirements. We had to fill some very large shoes when Dick, Ron Reuter (fellow co-founder and former Chief Engineer), and Julian Westwood (Distributor owner of TA Savery and our first managing director of HydraForce Hydraulics, LTD) retired, and we weren’t sure how we would do it. So far, we have been able to do it with the people we had internally. I am happy to say, people that we already had onboard have filled all these shoes, very well. That says a lot [about the organization].
What have been some of the major epiphanies we’ve had along the way? What major decisions have we made as an organization that has allowed us to grow?
Jim: From an organizational standpoint, something that had a massive impact [on who we are today] was the hiring of Joe Reifenberg. Before Joe, we had an umbilical cord tying us to Barnes and our investors. Joe coming in really molded us into an independent company.
Another factor that contributed to our success was the development of the 08-size cartridge valve. At the time, others in the market had developed 10, and 16 size valves, but there really wasn’t any 08-size cartridge product. Dick did a very thorough market study and he determined that 65% of the market we were targeting was low enough horsepower that they would not need any larger [valve] than a 08 size cartridge valve, he really hit the nail on the head.
Joe, had you previously held a position as a CFO?
Joe: No, I had not; in fact, my original position with the company was as the first Accounting Manager.
Jim: When we blind posted the job opening in the Tribune, it was only for an experienced accounting manager. We received over 60 resumes for the position, but what we were really looking for was someone with the capacity to someday be our CFO.
Have there been any make-or-break moments/stories about getting the company off the ground?
Tony: Certainly, every time one of our competitors has been bought out. Every time that has happened, it has done great things for our sales.
Jim: We never really had any issues getting the company off the ground, but we faced several major issues along the way. For instance, there was a year were we grew 61%. Dealing with all of the growing pains and setting up all of the support functions that went along with the growth was not easy. It has not been easy to keep our quality levels high as we have grown.
Tony: One thing about this company, every aspect of HydraForce is overwhelmingly centered on customer support. Whether it’s sales, manufacturing, purchasing, or engineering, it’s pervasive. The customer always comes first.
Jim: Let me give you an example. A couple of weeks ago, on a Saturday, I got an email on my phone from one of our regional sales people. The email read that it was important that we got these ten valves shipped. A customer was going to be testing first thing on Monday and it would seriously affect the schedule of their test trials.
Right away Sue [one of our CSR’s] went down to the manifold line and had the parts expedited. Unfortunately, when it came time to ship, the shipping department had already gone home for the day. At this point, no one at the facility knew how to process these critical valves and get them shipped. So I called up long time employee Laura O’Bryan [who was half way home] and asked her to come back and work on getting the valves ready for shipment. She came back, no questions asked, the parts were processed for shipment, and I took them in my car and had the parts shipped overnight at UPS.
Now, that is a recent example, but it happens all the time. This type of service makes a huge impact on customers. There was no question on Laura’s part as to whether she needed to come in our not. It is engrained in everyone at our organization that the customer comes first. Whatever it takes [to fulfill the mission statement is your job title here].
Switching gears a bit, how has the hydraulic industry changed since HydraForce opened its doors?
Jim: Acceptance of the cartridge valve has really changed. In 1985, cartridge valves were not a generally accepted way to control hydraulics. They were coming on, but there was a lot of trepidation about the quality and durability of cartridge products. Also, the emergence of the Integrated Circuit, which has become a major marketing channel for our valves. When we started, we thought we needed to make manifolds as a vehicle to sell cartridge valves; today they are a market channel of their own. I think this trend will continue as we marry more of products with electronics.
Tony: The acceptance of the cartridge valve is so great that it is the only segment of hydraulic valves growing today. Every other valve platform is in decline. Yet, only a handful of people really view the cartridge valves as a launching point, even though it is an emerging technology. It’s very strange, almost counterintuitive.
Jim: But it’s one of the things that give me confidence in HydraForce’s continued success. When all of your competitors are viewing your product as a commodity, and not as an engineered product, it gives you a leg up. Our view is completely different; we believe that there is still real technology to be harnessed.
Joe: Couple that with the fact that our rate of invention has accelerated.
Tony: Absolutely, we’ve built a wonderful base, and we’re in a great position to capitalize.
Joe: Two years ago, when we solidified our mission statement, we inserted the term innovative solutions. Two years ago, I didn’t know what that meant, but I have a better idea now. We constantly push ourselves to get more innovative; “How innovative can we get”.
Jim: I have a limited horizon in front of me, and it bothers me, because I wish I had another 25 years to give [to this company]. It is exciting to think of the future. What we will accomplish in the next five years will be incredible.
What percentage of this change do you attribute to the advances in cartridge valve technology?
Jim: I think we have had a significant effect on the overall landscape of the industry. If you look at many of the companies that were bought out, in a lot of cases it was a result of the pressure we applied on them. We raised the bar in this industry, many of our competitors did not know how to step up or have the wherewithal to step up. The pressure was always there to improve the product; we were just the first ones who understood how to do it.
In general, HydraForce has a very skilled, experienced and loyal staff. To what do attribute this employee longevity? Why do people stay at this company for 20 years?
Jim: People get a chance to do things here that they would not be able to do at other companies. We foster creativity here, as evidenced by some of our more recent hires that came from other organizations. It’s not that they necessarily gained knowledge or talent just by coming here; we just allowed them to use it.
Tony: This Company is dynamic and ever changing, and it is nice to work for a winner that does not rest on its laurels.
Joe: For me a key was always that the founders and investors always had a long-term view of their investment and they wanted to take care of their employees. When I came here, one of my first jobs was to create a Profit Sharing Plan. We were a very small company and we had a 401 K plan. As soon as it was legal for a company of our make-up to have an ESOP, we had one. We implemented it on the first day that it was legal. The founders demanded it; it has been very refreshing to work for a company that values its employees.
Jim: Dick and I were very simple guys; we got more joy out of being the best at something than we did from the money that came along with all of it.
What is your fondest memory here at HydraForce?
Jim: My fondest memory was at a distributor meeting in Jackson Hole Wyoming in 1991. We were a 7-year-old company at the time doing about $10 million in business. I was giving a presentation, and as I always do, I was stressing our focus on quality. . . and right in the middle of my presentation, Bob Kraft from Kraft Fluid Systems stands up and says, "What you just said, I’ve never heard anyone in this industry say before." You are like the Lee Iacocca of the hydraulics industry. The whole place started clapping. At the end of the meeting, all of our distributors presented us with a plaque thanking us for being such a great supplier. Our company was only five years old, but I knew then that we had made it. That plaque still hangs on our wall of fame.
Tony: Some of my fondest memories are reading the results of the customer service survey. The results were over-whelmingly positive. Our CSRs are great people, and not to play down their contribution, but the results are a reflection of the support our CSRs get from the rest of the organization. It takes everyone in the company focusing their efforts to provide this level of customer support.
Another great memory for me is how quickly we moved to our present location in Lincolnshire, IL, from our previous location in Wheeling, IL. At the time, we were a $35 million dollar company. Without missing a single ship date, and without any change to our current rate of production, we were able to move in one week. You talk to other people who have moved facilities, they’ll tell you, it takes months to move a company of that size.
Joe: My favorite part of that story was when Dick and Jim decided that this was the right building. We were looking in every corner of Lake Country for a place that had the right amount of room. I thought we might need 35,000 sq. ft. I brought Dick and Jim to see the building at 500 Barclay Blvd --which was excessively big at 50,000 square feet-- because I wanted them to see a high quality building in a nice business park that had some world-class features, NOT because I wanted them to fall in love with the place.
Jim: Walking through the building, I just thought it was beautiful. I could envision where everything would go...but it was five times bigger than what we needed. We came out of the building and decided right then that this was the one. I can remember thinking, how will we ever fill all of this space.
Tony: Two additions later...
JR: At the time, I never would have imagined that we’d have over 250,000 sq. feet of building space worldwide. If there was one thing I wish I could do over again, it would be to have found a way to have bought the partially complete building on the plot of land next door.
What is your vision for HydraForce in the future? What happens in the next 20 years?
Jim: I’ve been telling everyone that our vision statement is our perfect vision for the year 2020. Hydraulics will still be around, the question is, what products we will be packaging them with in the future. Looking at our strategic initiatives, there are some very significant innovations in the works that will allow us to package our products very creatively.
Joe: When talking about change, I’d like to note that our company Mission Statement has changed very little over the years. We have tweaked it here and there, but the mission has always been the same.
What do you see as far as growth over the next 10 years?
Tony: In 10 years, I think we’ll double in size, easily. I hope that we will be somewhere around the $500 million dollar mark...I think that is more than reasonable.
Jim: Write that down. I think that it will take a major upheaval for us not to reach that number. We’re certainly very close with the product offering we have. We have some major marketing initiatives that will be revealed later this year that should easily get us to that number.
Joe: ...knocking on wood...
About the Author:
David Price oversees training and marketing communication efforts at HydraForce Inc. Contact David
Send your Comments about HydraForce Insider to: HydraForce.Online@hydraforce.com
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Disclaimer: Nothing in this document constitutes an implied warranty of merchantability or of fitness for a particular purpose. The information contained in this document is provided for technical illustration purposes only and may not be used as a statement of suitability for use in any particular application. Each application is unique and prospective purchasers should conduct their own tests and studies to determine the fitness of HydraForce’s products for their particular purposes and specific applications. |
