Operating In Rough Waters

B.E. Industrial/Service 100 companies seek to grow earnings by battening down the hatches

Richardson. And rising commodity prices of cocoa and petroleum have elevated the production and transportation costs of its brands. With customers like Kellogg, General Mills, McDonalds, and Quaker Oats/Pepsi, Johnson says Baldwin Richardson will need to form an assortment of partnerships “to continue to grow profitably and enhance the quality of our customer base. One of the things that we feel very fortunate about is that we’ve got a very solid creditworthiness with our customer base.”

The La-Van Hawkins Food Group L.L.C. (No. 12 on the BE INDUSTRIAL /SERVICE 100 list) also had a sizzling performance in 2002. It increased sales more than 20%, from $246 million to $296 million. The Detroit-based company, which owns Pizza Hut franchises and Blockbuster video stores, avoided layoffs with belt-tightening measures that clipped operating costs by 35%. CEO La-Van Hawkins streamlined management, sent more salespeople into the field, and persuaded suppliers to lower food and distribution prices. He purchased a 33.7% ownership stake in New World Aviation, a 15-plane aviation company based in Allentown, Pennsylvania. Hawkins also opened Sweet Georgia Brown’s, his homegrown chain of five-star restaurants, from which he expects to reap $1.8 million in profits on $11 million of first-year sales.

Hawkins is now using — believe it or not — divestiture to grow. His conglomerate recently entered into an agreement with Yum! Brands Inc., the parent company of Pizza Hut, to buy its 89 franchises for an estimated $75 million to $100 million. The sale puts Hawkins in a position to broaden his reach into Latino and general markets through a whopper of a plan: the acquisition of a billion-dollar franchise corporation.

From fashion to staffing, this tougher, ultra-competitive environment has forced CEOs to swim against the tide and to develop unique ways to sell their products and capture market share.

Karl Kani Infinity Inc. — the Los Angeles-based apparel manufacturer perched at No. 49 on the BE INDUSTRIAL/SERVICE 100 list with $71.2 million in revenues — has found that young consumers’ appetite for fashion and music overrides any concerns about recession or war. They haven’t altered their buying habits.

The company opened retail stores in Korea and Japan in 2002 that did so well, it plans to open similar outlets in the United States. Last year the company augmented its existing Karl Kani clothing line with a new brand called Life. CEO Karl Kani revitalized Life’s marketing campaign in 2003 by structuring a major endorsement deal with rap label Cash Money Records, which includes product placements in the music videos.

The Bartech Group Inc. (No. 29 on the BE INDUSTRIAL/SERVICE 100 list with $140 million in sales) found that the harsh economy offered a wave of unimaginable prospects. CEO Jon E. Barfield
accelerated the growth of the Livonia, Michigan, staffing company by acquiring other companies. “Last year’s recessionary environment enabled us to make strategic acquisitions at much more reasonable valuations than in the past,” he says.

Barfield completed two strategic acquisitions last year that will give the firm prime positioning when the economy recovers. In September, he acquired

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