Meanwhile, Nordeck was scouring the countryside for cash. No bank would fund the construction of Unity's new remanufacturing mill -- it was too risky. But there was a glimmer of hope with Wells Fargo. Nordeck had a contact at the bank's Sacramento office, a young loan officer named Shelley Laurel. They had worked together when Nordeck was at Siskiyou and Laurel was with Union Bank back in 1986.
"I recognized that Siskiyou did well because of her," Laurel says. "I knew Enita and her ability to manage assets. She's very conservative, and that's what bankers like." In Unity's first month Laurel extended the company a $150,000 operating line of credit, secured by receivables. Two months later she doubled it.
The credit line provided a safety net, but Nordeck never touched it. Instead, at each step of the company-building process, she relied on resourcefulness and caution, always hunting for bargains and favorable terms, and never parting with cash until she absolutely had to. Undercapitalized as she was, there was no other way.
In February of 1988, for instance, she and Smith traveled to Idaho to look at some hardware. A mill there had just installed a computerized system, shutting down a perfectly serviceable line of equipment. Brand new, the line would have cost $800,000. Nordeck bought it for $180,000.
She drove a hard bargain. Under the terms of the sale, she didn't have to pay for the equipment until it was needed. "I had it locked in, with no interest, and didn't have to use the cash flow until each particular section of that line was torn out and loaded onto a truck," she says. It came out piecemeal, all carefully identified, in 11 trucks. "It looked like a lot of junk, all these wires and electrical systems," she says. "But we rebuilt it all and it was like new."
Not all the equipment was perfect for her needs, but it was a start. The planer, a massive machine for high-volume work, wasn't something she could use, but she knew where she could trade it for a couple of resaws and a forklift. "There was a lot of horse trading," she says. "That's how we got everything."
Mind you, at this point Nordeck didn't even have land to build on. She looked all over California before zeroing in on a 10-acre parcel, a big field with a walnut tree in a Yuba City industrial park. It was ideal, with power and water right up to the equipment line, and near California's central artery, Interstate 5. Better yet, Bank of America had foreclosed on the property and was looking to dump it for $150,000 -- a terrific bargain.
By this time, still February 1988, Nordeck had met two people who would prove crucial to Unity's story: Jon Whiteman, Yuba City's economic-development director, and John Ochipinti, a local contractor. Whiteman's goal was to bring new industry to an area with 14% unemployment. Ochipinti was interested in building Nordeck's plant, to the point where he agreed to negotiate for the land with Bank of America. The commitment letter from the bank arrived on April 13, 1988. Ochipinti himself bought the land and held the title until Nordeck could arrange financing. Once again, Nordeck was able to preserve her cash.
One big piece of the puzzle remained: the money to build the facility.
Yuba City jumped in first. Because of its jobless rate, it is a state-designated "enterprise zone" with a revolving fund of federal community-development block grants. Whiteman recognized that a remanufacturing plant could generate dozens of jobs. And soon after meeting Nordeck, he was convinced by the evidence that her strategy was sound.
The brokering operation in Roseville, for one thing, was doing well. In the first month, sales hit $200,000. Obviously, Unity could get customers, deliver product, and make money. Nordeck's reputation in the industry was superb, as was her grasp of the nuts and bolts of management math. She had refined her concept into a five-year business plan, featuring weekly cash-flow projections. "I costed everything out in detail, right down to how many staples we'd need to staple our paper wrap," she says.
With Whiteman steering Nordeck through the local bureaucracy, the city agreed to a $100,000 eight-year loan at 3.25% interest. Whiteman then brought in the California Department of Commerce, which committed another $105,000 -- a 20-year note at 8%. But Nordeck still needed nearly $500,000 of bank money to make the project viable.
Her best bet was Wells Fargo in Sacramento, where Shelley Laurel was pressing Nordeck's case. Laurel's superiors, however, were skeptical. Mike Smith, the burly cofounder and mill foreman, told Nordeck he could turn the inventory over every 10 days. That sounded absurd to the bank; according to its statistics, the industry average for inventory turnover was 58 days.
Nordeck also said she could collect accounts receivable in 10 days. Again, eyebrows went up at Wells Fargo; its analysis of the lumber-remanufacturing business, in which it was heavily involved, showed that, on average, companies collected receivables in 27 days.
The bankers had other concerns, too. What if the contractor failed to complete the plant? Or if construction went over budget? And suppose the housing market went into the dumper?
Each time the bankers raised a roadblock, Nordeck reworked the numbers and zipped right back. "I probably redid the plan 30 times," she says, "responding to all their what-ifs." She was relentless, calling the bank every day for more than two months.
Finally, exasperated, Nordeck did something completely out of character. She walked into a senior vice-president's office and pounded on the table. "I told him that somewhere along the line he would have to invest in people," she recalls. "I said this was a very good loan because the people involved were going to make sure the business worked. We were capable. Even the sawmills were giving us credit, which was rare for a start-up.
"I think they finally made the loan just to get me off their back," she adds. Wells made two loans, actually, one for $265,000, and another for $200,000, with rates of 12.25% and 12.08% respectively. Term loans at Wells are usually five years. With Unity situated in an enterprise zone, however, and because Nordeck is a woman, the funds came from a special program with attractive terms. Nordeck got one loan for 10 years, with a 15-year amortization. The second was for 10 years, but with a 30-year payback.
