Stratified Systems Theory - an Important Element in Turning Around a Business

Speaker A Bob Tungate from Grand Rivers, Kentucky. Recently, since my retirement a year ago gone, mark and I have been friends. I consider his strong friends, good friends for the last 17 years. We first met in 1989. He introduced himself while we were in labor negotiations as our new plant manager, which was unusual for us and kind of scary as a union negotiator because here came a news plant manager right in the middle of negotiations that weren't going well anyway. I think the second day in negotiations I thought, I'm going to check Mark out and see how he responds to certain things. And I'd heard a story the night before from some of the guys in the mill. Mark had gone out into the mill when he first came to the planet and he looked really young for his age.

Speaker B He was 34.

Speaker A He looked even younger. I think. He walked out into the mill. No one knew him. He walked into casting and went into a DC pit and started talking to the operators. Well, they thought he was a young new hire that was a metallurgist or Ie something. They didn't know who he was. They started talking to him. They were kind of leaning back, watching her drop and talking to him. And finally someone asked Mark, or he introduced, said, I'm Mark Kaminsky, I'm the new plant manager. Well, they fell off their well, they come telling me what had happened so we might really screw things up. We didn't know he was a plan manager and we were just shooting a breeze with him like we did some of the new hires. And I told Mark the next day in negotiations, told him, ask him first. I said, Mark, we're going to have to demand plays, willing demand on the table that you wear a bell at least until everyone knows who you are. And he took that really well. I did it light heartedly, but I was also trying to find out what kind of guy this guy is. But he took that well. He and I, from that day on we developed a really good relationship. It's been a journey for me and the journey continues as far as I'm concerned. And it's been a really meaningful journey for me. My life changed. I think I hadn't thought about that until recently. I think my life changed the day I met Mark and some of the things he introduced me to and mentored me with and through. So it's been a good journey.

Speaker B Well, Bob, as Bob said, I first walked on the Lewis Port site in 1987 and had walked out of Logan Aluminum, which was the most modern rolling mill in the world. And with good people, systems and great capital. Lanc Richfield having funded it really the last funding they did in the metals business before they pulled out. And boy, I was just shocked. The terrible conditions really that at that time Bob was part of the bargaining unit. And were you union president? 87?

Speaker A Yes.

Speaker B So he was union president. I probably met him in 88 when I was on the OD team, but we really didn't maybe know who I was or whatever. And then 89, we met at the negotiating table. And I had a lot of empathy for the bargaining unit that Bob and his team represented because I felt like they were I don't want to be critical, but there was a lot of opportunity for the facility to run better. And because the facility was struggling, it made for a difficult negotiation. And so he was dealt that, and I was kind of dealt that and we were trying to work our way through that. And before we knew it, we had a strike on our hands. And I was two weeks into the job. My wife it's a long story, but we're moving a house and all that kind of stuff at the same time. Anyway, the TV it's a big news in western Kentucky. Anyway, the TV crews are out the plant on August 1, which was the first day of the strike, and they're interviewing me out in front of the plant. And we have kind of a little skirmish going as people were leaving the plant. And so the news crews are out there and kind of getting people through the picket line and all that stuff. And my oldest daughter at the time would have been she'd been five years old, and I really hadn't seen my family because I was thrown into negotiations. And prior to that, my boss, Nick Stump, had we go down to Australia for like, five weeks. So I'd seen Liz for like one night in six or seven weeks. And my oldest daughter five, and I had a daughter, one at the time, and she goes, hey, mom, come in here. Dad's on TV. And that was kind of the we ended up having a ten week strike. We had some hard decisions to make, whether it was health care or we had signing bonuses that we had offered that we had to rescind once that and so that was a bitter pill for us to get through and get ratified. And we had some strike misconduct that we had to deal with and National Labor Relations Board stuff. But through that whole, it's uncanny how in life you kind of trust people kind of early on. I always trusted Bob, and I think Bob always trusted me. And we got through it, and we kind of met in the fire, right? And we kind of made it through that fire together. And then we started to work with trying to improve the communication, really trying to build trust not just from the two of us, but throughout the whole organization. And it was a great journey. It was a friendship that I really cherish. And when Bob said earlier about how I changed his life, clearly of our relationship. He helped change my life. And I think together and with all the other people that support, we made all the people's lives there a little bit better. And I think that's a nice way to kind of go out. So some of the highlights, low lights first, Bob talked about a little bit earlier, and I just didn't want to lose that one. But I was appointed CEO in November of 1990. And then Nick and I had Nick Stump and I had transition period, but April 1991, we lost $6 million in one month. And I got a letter from John Ralph, who was chairman at the time, at that time, and he said, you're going to come to the May board meeting? Yeah, April results. So it's like the third week of May. You're coming to the May board meeting. You're going to tell me how you're going to staunch the fleeting as a good Aussie term or we're putting a gate on, we're putting a padlock on the gate. So I had about three weeks to prepare that and I got this budy, this great news. I got may president. Bad news is we're deep shit right now. So you might want to talk about.

Speaker A Know when Mark told me that, and I had no reason not to believe in years past with some Mark's predecessors and others in the organization, they tell you things. In my view, you were told things like that to set up for something coming. But when Mark said that, I believed it faithfully. I went home that night and I couldn't sleep. So I got out of bed at about 1030 and my wife asked where I'm going and I said, I'm going back to the plant, I got to talk to the people. So I spent all night in a plant and caught all the shifts, and then the next day in the plant called all the shifts, explained to him my concern was that with the situation we were in that there may still be some lingering mistrust or some lingering bitterness toward the strike or something that went on. And I wanted everyone to understand that this is the situation we're in and let's do everything possible to make sure we survive this and go on to prosper. And we got a good response. It didn't change overnight, but we didn't see the negativity that we'd seen before that spoke to everyone. And again, I didn't expect it to, and it didn't really change overnight, but you could see shortly after that an attitude changed. Everyone was focused, people understood the situation we're in and we couldn't get out of that unless we did it together. And again, that couldn't have happened without the trust that had been built just in a short time, relatively short time, that Mark had been the leader of the organization.

Speaker B So then I had to take this presentation down to Australia and Nick Stump was my boss, and he goes man, I'm sorry. I mean, you're really under the gun here, you know, what's going on? And he says, you okay? I go, yeah, I'm okay, I got the answer, I got a plan. And we worked well together, had put in place a lot of good management team and we were really committed to making the place. We knew it was serious and we needed, we need to improve it. So, anyway, Les Cupper at the time, who was a Stratum Five role in HR. I worked for Jack Brady. He and I went out and had a couple of beers together and he goes, you know, you're losing a million and a half dollars a week because my plan was that I'd make money in 1992 after losing a million and a half dollars a week in April 91. Anyway. Nick says, man, I'll help you all I can. But he did, there's no doubt. Anyway, I made my presentation to the Kamalco board and I think they thought it was about half crazy but they thought, well, hell, we'll give him a go. We'll see if he can make this plan. And they monitored me or the Commonwealth results every month and we hit matter exceeded them all. And then in 1992 we made money and then from then on we continued to make money. And then in 1995 we went public. In March of 1995, Kamalco decided that they didn't want to stay in the downstream businesses. So we did a public offering in March of 95. So in April of 95, which was 48 months after the $6 million loss in April of 91, we made $6 million in April of 1995.

Speaker A I think the situation you need some incentive to change. For a person to change there has to be a reason for them to change. And discomfort is normally the reason you can generate discomfort but then people scattered all directions. So I think the discomfort was the situation that the mill was in. But Mark had shown us a direction to go in. And even those who had been reluctant to accept the changes in the Stratified system theory from their old forms of work, how they identified worker management, they began to see that there was a need for change. And I think it helped speed up the changes and acceptance of that. That's what I saw from my position anyway.

Speaker B I think we made the other one. I'd add to that is that when we had the Requisite organization, it was much easier to sort know who could perform enroll and who, you know. Again, we weren't trying to be real draconian and all that, but over that four year period I just described, we really got the right people in the right roles. And we ended up, as Bob talked about earlier today, about it wasn't about us and them, it was about all of us together. And I think when everybody's pulling in the same direction and you've done a better job of harnessing people's genius by getting them in the right roles. I think everybody felt better about it. And then we added the science of process control, so we kind of had the behavioral side improving and at the same time we brought some science to the process. So our first pass quality on can sheet, which we were in, then we had months where our first pass quality, which is make it right the first time, was 10%, and we probably got it up to 60 or 70 or 80% by process control. And then now they're running 96% 1st pass quality. 97% 1st pass quality so we were putting a lot of effort in. One funny story I thought about was we were running about 25, 30 million pounds a month in the plant. And I had one of my staff meetings early on and they were all complaining because I was taking them from like 26 million to 30 million or something for the next month. And they were all whining and giving me all these excuses and man, I got frustrated with them and I said, I said, we're going to 50 million, so you may as well get used to 30 million. And they all were like stunned. Mullets would be an aussie term, but they were all like, man, this guy's from Mars, he doesn't know what the hell he's talking about. So we break out from our staff meeting, like on a Tuesday or whatever day we used to do it on, and anyway, about an hour later, I was out in the plant every day anyway, but I was out in the plant, man, everybody in the plant. We've been improved communications, but everybody in the plant, get over here, we're 50 million pounds. What are you talking about? But that's the part about stratified systems theory we didn't have right at the time, but we got right. And the thing was, you couldn't just go from like 25 to 50, you had to break that down and you had to be able to sit down with the guy running the coal bill and say, mitch, right? Mitch Keen, yeah, Mitch Keenan, he was one of the guys that flagged me down and he said, what are you talking about, Mark? And I said, well, how many coils you run a ship miss? And he goes about ten. And I said, well, do you think you could figure out a way to run twelve? And he goes, Hell, yeah, I can figure out a way to. I go, well, that's all I'm asking you to do. And I said, those ten, you run, two of them, we scrap out because we don't make them right, so we got to figure out what's wrong with that. You think you can do that? He goes, yeah, I can do that. And I go, that's all I'm asking for. But you had to be able to break it down and that was one of the lessons I think we learned, too was just trying to make people feel like, well, I can contribute. I can do that. But when it's real abstract, like, well, from 30 million to 50 million, it's kind of like, well, how the hell am I supposed to contribute to that solution? So that was a big piece of it. Too is just really getting the systems engaged or enabling them with the tools and the training and all that. We built a human resource development center. Did a lot more training, probably more than a week per employee per year. So that'd be but if you figure everybody has four weeks off, that's 5% to 10% of their work time.

Speaker A You sam.