After moving to the United States in the early '80s, Popa worked 16 years for a fabricator of aluminum ladders in Franklin Park, Illinois. Then management thumbed down his proposal to diversify into other products. Frustrated, Popa flew to Japan, where he used his savings of $400,000 to buy all the machinery in an abandoned aluminum-extrusion factory. "I said, 'Okay, dismantle this thing and ship it to the United States," says Popa. "Only I didn't have a ship-to address. The only building we could find that could fit all this equipment was in Beloit, Wisconsin."
Hendricks believes you can tell what people value by what they discard. On Ken and Diane's first date, he accosted a departing restaurant patron to request the uneaten half of his sandwich.
So Popa and Darius Szczekocki, who had become his business partner, stowed the machines in a bay of Beloit Ironworks while waiting out construction of a plant in Kirkland, Illinois. It was 2003, and the Ironworks buildings were still in chaos. The partners wanted to use the facilities for just six months, for maintenance and repairs. "Then one day as we were unloading the containers a guy comes by and says, 'What's all this?" Popa recalls. "We said it does aluminum extrusion. He says, 'What is that?' We explained. He said, 'How many jobs will you have?' We said a couple hundred.
"He came back later and said, 'My name is Ken Hendricks and I own the building. I want to reanchor this complex. I want something that's going to be big, that's going to create jobs. I want you guys to stay."
Hendricks offered to buy 70 percent of the business for $5 million and sealed the deal with a handshake. He made $150,000 worth of modifications to the building, digging 18-foot-deep foundations to support the 200-ton extruder, which resembles an enormous Play-Doh machine. In 2005, the three partners attended a machinery auction in Ohio. Hendricks bought nearly every lot and launched an Ohio company, which Szczekocki runs. American Aluminum Extrusion, in Beloit, and American Aluminum Extrusions of Ohio have combined sales of $85 million.
The strangest new business in the Ironworks is undoubtedly American Industrial Art. Its provenance is vintage Hendricks. When he bought the Beloit Corp. property, the entrepreneur found nearly half a million patterns--wooden molds, of assorted shapes and sizes, used to make machine parts. A bankruptcy judge paid him $35,000 to haul this trove to the dump. Instead, Hendricks called on Jack De Munnik, an old friend and onetime artist at advertising agency Leo Burnett in Chicago. Like the king in the Rumpelstiltskin tale, Hendricks presented his protégé with a mountain of cheap material and challenged him to spin it into gold.
De Munnik started spinning. Preserving the shape and patina of each pattern, he assembled the pieces into tables, clocks, sculptures, and wall hangings of fabulous beasts he called Machinas. "They kind of build themselves once you start playing with the parts," says De Munnik, leading me around an otherworldly gallery suffused with low light and ambient music. "You see a wing, then you see a face, then a leg. Or you can do it the other way. I decided I wanted a Jurassic turtle and went looking for the shapes and parts."
The works of art, many priced in the thousands of dollars, don't have an obvious market in Beloit, but Hendricks expects interest from corporate buyers and affluent consumers once word gets out. Bank of America (NYSE:BAC) bought five pieces this year--a nod, Hendricks says, to its industrial customers. "If we made enough of these we could haul them out on a semi," says Hendricks, gesturing around the vast atticlike space where hundreds of thousands of forms await transformation. "We could take them to San Antonio, Santa Fe, Rodeo Drive, Merchandise Mart in Chicago. Those people have money and would appreciate the uniqueness.
"Even if we only got $50 apiece for them, 50 times 500,000 is $25 million," says Hendricks. "That would have taken the Beloit Corp. out of bankruptcy."
I love the pattern story because it richly illustrates another of Hendricks's favorite themes: You can tell what people value by what they discard. That belief is ingrained not only in the business, but also in the Hendricks clan. Perched on a stool at Skip's Friendly Village, Diane Hendricks tells me about her first date with Ken, during which he accosted a departing restaurant patron to request the uneaten half of his sandwich. Diane, who is an executive vice president at ABC and president of her own insurance company, then leans down the bar to ask three strangers if they want her leftover pizza.
On his visits to distributorships, Hendricks is forever astonished at how much waste he sees. Many businesses fail, he believes, because management doesn't value the right things. "Maybe somebody nicked a little bit of roof edging in a warehouse, and they say, 'Ahhh, it's scrap. Throw it away," says Hendricks. "Well that's $30 or $40, and at a 20 percent margin you've got to sell that five times before you're back to breaking even. You've got customers who are building a shed or something and they'll pay 80 percent for that."
To hammer home his point, Hendricks often drags bemused managers out to their own scrap heaps. If the day is windy, he'll pluck a $20 bill from his wallet and let a gust carry it away. Invariably the manager takes off after it. "He's running down the block to get it, and when he comes back I'll say, 'Was that pretty hard?" says Hendricks. "And he'll say, 'Yeah.' And I'll say, 'Just take this out of the trash and sell it to somebody and you've made $20."
If wasting building material is a crime in Hendricks's eyes, wasting people is a sin. Repeatedly he rails against "sick" cultures that don't nurture employees, or that simply discard workers as Beloit Corp. did. ABC, by contrast, invests $15 million each year (.5 percent of sales) in training and employee development and returns 51 percent of after-tax net income to the work force in bonuses. Close to half of the company's managers making an average of $100,000 or more started out as roof loaders, warehouse workers, or truck drivers.
