Before the Behlen LBO, Raimondo had never worked with bankers. His finance education was quick and rude: "If you don't do this, you're in deep shit, and if you don't do that, you're in deep shit. We were always in a demand situation."
The local banks had turned their backs on Behlen. Then, early in 1988, Raimondo called on a financier who had been involved in the original buyout. Now at a different bank -- Washington Square, in Minneapolis -- that banker could easily recognize the improvements in Behlen's gross margins. Raimondo won a financial reprieve.
There was no better evidence of progress than in the gain-sharing plan, which doubled its payout in 1988. Everyone in the plant was learning to understand how gain sharing affected labor and materials costs. "When you make gain sharing work," Raimondo told employees, "gross margins improve." And the variety of new work was making Behlen a fun place to work again.
Raimondo hadn't hesitated to change the unchangeable. Removing the time clocks, of course, had been a remarkable alteration, and so was the president's new hot line. He invited everyone to call him or walk into his office, and many did. "One time I asked him his salary, and he told me," says engineer Quentin Yada. And Raimondo's bid to replace supervisors with natural team leaders was coming along. "I was reluctant to take a team leader's job at first," says Gayle Gerber, who'd hated answering to the supervisors of yesteryear. "But it's been good. The people keep me in line."
"It took five years to really change the company culture," says Raimondo. And every company Behlen has acquired has scaled the same learning curve. "There was lots of fear in making the adjustment," says Cooke. "It took years for most of us managers to fully understand the benefits of participative management. Now I wonder how I ever functioned as a hard-nosed decision maker."
In 1989 sales growth stalled at $54 million, but profitability was no longer a distant rumor. The next year, when Behlen declared a profit of $194,000, Raimondo activated a profit-sharing program. "I never thought I'd see that," says Quentin Yada. "I thought profit sharing was someone's pipe dream."
Internal growth, combined with another acquisition, boosted 1991 sales to $68 million. The real breakthrough came in 1992. The company had successfully diversified and was able to negotiate better terms with a new lender, Chicago-based Drew Conneen of the National Bank of Canada. "The more difficult the loan, the deeper you have to look at the collateral and the people behind the numbers," Conneen says. "There was a lot of hidden value in the assets, and with the same amount of debt, Behlen had doubled sales."
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The national market for livestock equipment is growing, and Behlen has the biggest chunk. In 1993, after having spent several years in hot pursuit, Behlen absorbed another key competitor. The $23-million livestock-equipment division of Universal Cooperatives, based in Goshen, Ind., brought Behlen another trusted brand name, as well as some much-needed engineering prowess. "Behlen was the leader before, but Universal made it even stronger," says ConAgra's Dan Schoening. And livestock equipment, now worth about 60% of the company's revenues, is by no means the only healthy business unit. The building-systems group is thriving, and so are international sales of agricultural products.
Employees like to talk about the rising value of Behlen stock (the ESOP was activated in 1993) as evidence that the company has arrived. For some, the ever-escalating profit-sharing check is the only proof they need. The excitement mounts month by month as team leaders share the latest numbers with employees, and Raimondo publishes a midyear estimate in the company newsletter. Last spring, as people at Behlen were saying that 110 hours of extra pay was a good bet for 1994, Nebraska governor Ben Nelson joined in a companywide celebration of Behlen's $108 million in shipments and its $5-million profit.
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The company is carrying $22 million in long-term debt, and "no one thinks it's too large a debt," notes Bill Kathman, an accountant at Coopers & Lybrand, which recently issued Behlen a clean bill of health. In fact, National Bank of Canada's Drew Conneen fought rival banks to retain Behlen's business by setting its interest rate below prime.
There is talk of a possible merger or public offering. But in this open company at which the workers count as much as the numbers, Raimondo doesn't want people to get distracted. "What we can do on our own used to take four supervisors. That's the biggest change," says Dale Buell. "That's Tony's accomplishment. It's OK to take action on your own. Tony has created an atmosphere where employees can succeed."
10 YEARS TO A TURNAROUND
1982 August: Tony Raimondo joins Behlen as general manager.
1983 Behlen acquires Farmaster, an $8-million gate manufacturer. Summer: U.S. government introduces "Payment in Kind" program, which makes 50% of farmland idle and decimates "ag" industry. September: Behlen workers vote to decertify union.
1984 May: Raimondo pulls off LBO. Time clocks get taken out.
1985 Behlen acquires Berico, a $3-million grain-dryer manufacturer.
1986 Arthur Andersen issues "not a going concern" opinion.
1987 Behlen acquires Hutchinson Steel Operations, a $6-million livestock-equipment manufacturer.
1988 April: Behlen gets refinancing through Washington Square.
1989 Behlen acquires Big Valley, a $5-million livestock-equipment manufacturer.
1990 Behlen acquires WSI, a $1-million livestock-equipment manufacturer.
1992 Behlen gets better terms with National Bank of Canada.
1993 Behlen acquires Universal Cooperatives' $23-million livestock division and $3-million Agri-Engineering.
1994 All four business groups are profitable for the first time. Behlen tallies estimated $5 million in AIM (Awareness Is Money) savings.
