Cushioning A Blow
When its sneaker-manufacturing clients moved offshore in the 1980s, CMI Enterprises—a maker of foam-backed materials—looked cooked. But the company figured that its stuff could pad car seats just as well as shoes. CMI became the top supplier of soft interior trim for trucks, buses, boats, RVs, and vans. The result: triple the revenue, and for Michael Novick, a supplier-of-the-year award from one customer on September 10.
From Michael's original entry:
Tell us what you do (or what your team or organization does) and the specific challenge you faced.
CMI provides interior soft trim such as fabric, leather and vinyl to manufactures of niche transportation vehicles; buses, trucks, vans, recreational vehicles, boats, and cars...but we didn't start out doing this. From 1968 through the early '80s, we were the premier supplier of raw materials to the footwear manufacturing industry in South Florida. During that time, nearly 400,000 pairs of athletic shoes were being produced every day by our customers. CMI sold materials from needles, thread, and shoelaces to the laminated nylon/foam/tricot package that was used as the upper material for nearly 75 percent of every shoe made at that time. The industry was strong and CMI was the largest supplier. In 1984, several of our customers began experimenting with offshore production. By the end of 1986 there was one manufacturer left in South Florida, producing less then 25,000 pairs of shoes a day. So we had a great new plant with equipment specifically designed to apply foam to fabric, but, our customer base was quickly leaving the country and contrary to every supplier's hopes, they were not coming back. Reading the handwriting on the wall early on, and while most of our competitors business plans centered on hoping Taiwan would fail, we exploited the inevitable and changed course. We knew we had a great plant, unique equipment, and talented people and we went to work to find new markets where we could utilize these existing resources.
What was your moment of truth?
Late in 1984, we watched the gentleman who hauled our scrap materials away for us load up his truck. He had just come from our competitor and we noticed scraps of what we later discovered to be automotive headliner material, piled in the bed of the truck. After a few days of research it was clear that our specialized equipment was perfect for producing foam backed material for the automotive industry. But the automotive industry was 1700 miles away in Detroit, and we were a supplier to the footwear industry...how would we get from here to there. Our research showed that the van conversion industry was booming—and close by, specifically Northern Florida and Georgia. We opened a warehouse in Lavonia, Georgia and filled it with headliner material and went to work. Whatever the van conversion customers needed, we went out and found. We inventoried it and delivered it to them overnight. Word spread and soon we were getting calls from Elkhart Indiana, which today remains the heart of the van conversion and recreational vehicle industry. Our reputation began to grow along with the fortunes of the recreational vehicle industry. Fabric Mills wanting to sell their products to this industry began calling us to handle their lines and a business transformation had taken place.
What were the results?
Today, CMI is the premier supplier of interior soft trim to every niche transportation market and we are expanding into the contract furniture industry. Our products can be found in every major recreational vehicle brand, as well as buses, trucks, boats, planes and cars. We service these various industries from plants in Miami, Florida, and Elkhart, Indiana with warehouses in Arlington, Texas and Sacramento, California. When we were the kings of the hill in the south Florida footwear market we had 30 employees, in one location, with revenues under $10 million. Today, nearly 20 years later, we employ 170 people in four locations and service markets throughout the country producing revenues close to $30 million.
What's your parting tip?
Parting tip Hope is not a strategy...keep you eyes open for the next revenue stream and remember it may have nothing to do with what you are doing today.