That eased her cash-flow concerns. By stretching out the payments, she'd have more cash available to run the business and a better chance of avoiding borrowing against her credit line. But she pressed for more. She wanted the right to renegotiate the loans after five years, when she was certain she'd qualify for lower rates. The bank consented.
All told, with the funds from the bank, the state, and the city, Nordeck had a blended rate of 10% and total monthly payments of $6,200. That was workable. By May 1988 she had all the letters of commitment in hand. None of the money would be released, though, until the plant was completed. Nobody was willing to finance the construction. John Ochipinti was set to start. He knew he wouldn't be paid until the plant was finished, but he liked Nordeck and trusted her to honor her word. He broke ground in early June and completed the job, on time, in mid-September. Part of the credit for meeting the schedule goes to Nordeck, who applied the same tireless diligence to the construction that she now brings to the daily operations.
"I'd drive an hour each morning to be here at 5:30, to make sure the subcontractors were here," she recalls. "If they weren't, I'd drag them out of bed. I made sure it was all laid out what had to be accomplished that day. Then I'd work all day in Roseville and drive back here at night to make sure everything got done.
"I remember one day when a foundation was supposed to be poured because we were to start setting up equipment that night. It hadn't been done, and I went and had a real heart-to-heart with John. He had floodlights out here that night, it got poured, and we were right behind him installing the equipment, boom, boom, boom."
The project came in $1,010 under budget.
It's a spring day at Unity, and Shelley Laurel, the banker, is sitting in Nordeck's small office. She's glad she fought for the company back in 1988. Her only regret is that Nordeck never borrows any money, although her credit line is now $500,000. "Enita manages the assets so closely," Laurel says, "that she doesn't have to."
Indeed, the place is run as tight as a nuclear submarine. Nordeck has grown the business profitably from $6 million in sales the first year to $15 million now. What makes that all the more remarkable is that she has done so in a field where start-ups are rare and female owners are virtually nonexistent. Moreover, Nordeck runs the company on a management concept she assembled piecemeal over the years, one that defies the industry's traditions.
"Throughout my career, I saw things I knew could be done better," she says. From the start, for example, Nordeck has insisted her customers pay within 10 days, for which she offers a 1% discount. The sawmills demand payment in 10 days, too, but they give a 2% break. Since Unity operates on an 8.5% pretax margin, the differential is important, and Nordeck says she's never missed a discount. By collecting receivables in 10 days versus the industry average of 27, she effectively gains a 200% cash-flow advantage over the competition. And she doesn't have to borrow to maintain operations. The avoided interest makes for a healthier bottom line.
To ensure those speedy returns, Nordeck departed from the industry norm in setting compensation structure. At most lumber remanufacturers, salespeople are paid a base rate for meeting a quota. That made no sense to her. "Is that salesman motivated to sell to a customer who's going to pay in 10 days?" she asks. "Or is he going to sell to any customer just so he meets his quota?"
Other competitors pay salespeople a commission on adjusted gross sales, plus a base rate. In that scenario, she says, "each salesperson is like his own little business. Salespeople don't differentiate between 10-day accounts and 30- or 45-day accounts. They just want to make as much money as they can. What that does is pit each salesman against the one at the next desk. I have always felt, and observed, that that makes enemies of everyone in there. Nobody works as a unit. You can't have star players. You've got to have all stars who work as a team."
At Unity, everyone's compensation, including that of mill foreman Smith and Nordeck herself, is figured exactly the same way. "We go off a net bottom line for all our key people," Nordeck explains. "We all get a flat guaranteed rate each month, plus bonuses if we can swing it. There are no commissions. Monthly bonuses can range from 5% to 15% or more, depending on various factors: What are we planning to do in the next six months? Are we going to buy new equipment or increase inventory? What is the economy doing? How's our cash position?"
With sales pay based on overall profitability, nobody is inclined to make a marginal sale. If a customer fails to pay on time or to pay at all, everyone gets hurt.
To make sure the money comes in promptly, Nordeck reviews the books every Saturday. She writes out longhand all the receivables due that week. Writing them out helps her remember them, she says.
The expected payments had better arrive. "We know what the mail time is from our customers, and if those checks aren't here, we're on the phone," she says. "We hold customers to that rule, and they don't want that call. It's the squeaky-wheel thing. They'll pay me before they'll pay someone else."
Riding herd on receivables also alerts her to potential trouble. Two years ago, for example, word came through the industry grapevine that a customer in Sacramento was going under. Unity had just shipped $40,000 worth of lumber down there, and Nordeck had yet to be paid. She grabbed Til Johnson, threw a strapping machine into her pickup, and hit the road. On the way south, she called Mike Smith and had him divert three 18-wheelers to meet her there.
"When we arrived, the place was shut down," she says. "The owner was there and I started negotiating with him, but he said nothing could be done. The sheriff was due that afternoon to padlock the gate. I insisted I wanted the lumber back, and he said, well, maybe if I could get a truck in there, he'd let me take it." The trucks were hidden a block away so he wouldn't see them. When the first one rolled in, the owner couldn't believe his eyes. Johnson started strapping lumber and loading it with a forklift. As Nordeck spotted more of her wood, she called in the other two trucks. "It was like a movie," she says. "But we got everything out of there just before the sheriff arrived."
The most exceptional feature setting Unity apart from the rest of its field is Nordeck's approach to marketing and manufacturing. As a rule, lumber remanufacturers produce product and then try to sell it. At Unity, sales are made first, and the mill then churns out whatever is required to fill the orders.
