A Win-Win Situation

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In the past few months, we’ve written about numerous plant closings and consolidations. So it was very refreshing to receive this report from the Bluegrass State, describing how a management team at a soon-to-be-shuttered Komatsu plant in Lexington took matters into their own hands—the Komatsu managers teamed up with the Bluegrass Business Development Partnership (BBDP) and found another manufacturing concern that was willing to buy the plant and rehire all of its employees, saving 64 jobs.

Here is the story, as told by our friends at Commerce Lexington:

“Too often our heroes are those that never have a direct impact on our lives. Sure Princess Diana, Pope John Paul II, Steve Jobs and others have contributed wonderful things to society. But can you point to one tangible thing they have done for you? In most cases, the answer will be no.

Former employees of Komatsu’s remanufacturing facility in Lexington just may have found their real life heroes in the leaders at Springfield ReManufacturing Corp (SRC).

When rumors started circulating that the economic downturn reached home and Komatsu would be closing the Lexington facility, the local management team put their thinking hats on. They knew that Komatsu wouldn’t make the decision lightly, so there was no chance in changing their minds. They also knew that there was a need for their business and they were profitable, even if their specific line of business didn’t fit into Komatsu’s new plan. Certainly their business had to fit into someone’s plan.

It was in March 2009 that Rob Shear, General Manager of the Lexington plant teamed up with a manager from Komatsu’s Chicago office and approached corporate executives about finding a buyer for the Lexington plant. After much research, it seemed that Springfield ReManufacturing Corp (SRC) could be a perfect fit. SRC is the market leader in remanufacturing for construction and agricultural equipment. They have also founded and invested in more than 35 separate companies that do everything from consulting to packaging to building high-performance engines.

SRC is known as being an employee-owned company and the culture of ownership permeates the entire organization from the CEO to the shop floor. A key part of this culture is business education that is regularly promoted throughout the company to help everyone understand the financials, which are published in visible locations throughout the plants.

This culture has made the company very successful. So successful that Jack Stack, President and CEO of SRC has written two books, The Great Game of Business and A Stake In the Outcome, detailing the business and management techniques practiced and promoted by the company.

Executives knew that Komatsu would still have a need for some local remanufacturing capability. Could it be that this was a win-win situation?

The local management team decided to find out. Fortunately for everyone, SRC also saw the win-win in the deal. The Bluegrass Business Development Partnership (BBDP) was contacted to help seal the deal. Retaining these jobs was very important to the community. BBDP officials stepped up to make sure that SRC knew the value of keeping these jobs in Lexington and to let them know they had local support.

In July 2009, after much due diligence and negotiations, Komatsu agreed to sell the assets to SRC. In September 2009 SRC officially took over the operation of the plant and SRC of Lexington was born. They expect sales of $17 million per year and hope to expand sales and employment over the next several years.

Thanks to SRC, those 64 employees are not former Komatsu employees but are current SRC of Lexington employees. SRC of Lexington will continue to supply Komatsu with remanufactured products, while looking to sign up additional OEM customers in the mining and construction business.”

Here’s a tip of our hat to the enterprising managers at Komatsu of Lexington. An heroic effort, worth repeating across the country. Well done.

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