It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity … Charles Dickens, A Tale of Two Cities
Indeed, 2002 was a Dickensian year for American businesses and the economy. Amid corporate scandals that left companies and private citizens in financial ruin, a slumping economy, creeping unemployment, and war in the Middle East, 2002 left many wondering, “Could things get any worse?” But despite the turmoil, for a small group of companies, last year was their personal best, a year marked by smart business moves that enabled them not only to survive the economic downturn but to profit in spite of it.
Four members of this year’s freshman class are not entirely new to the BE 100S. Charles H. James III, who just completed his tenure as CEO of PrimeSource FoodService Equipment Inc., was last on the BE INDUSTRIAL/ SERVICE 100 list in 1999. His holding company, C.H. James & Co. Inc., ranked No. 78 with $31.43 million. James’ success with PrimeSource FoodService Equipment Inc. put him on this year’s list. Joseph B. Anderson Jr., currently CEO of Vibration Control Technologies L.L.C. (VCT), has also spent time among the ranks of the industrial/service companies, though not with VCT. He last appeared on the 2000 BE INDUSTRIAL/SERVICE 100 list, coming in at No. 78 with Chivas Industries L.L.C. The automotive supply company, which Anderson has since sold, grossed $34 million that year. His January 2002 acquisition of VCT has reintroduced him to this year’s list.
There are also two companies in this year’s class who have made comebacks. Lanham, Maryland-based Radio One Inc. wasn’t on last year’s list but was most recently on the 2001 BE INDUSTRIAL/SERVICE 100 list, ranking No. 17 with $177.22 million in revenues. Alert Staffing is our second comeback kid, debuting and last appearing on the BE INDUSTRIAL/SERVICE 100 list in 2001 at No. 13, having grossed $204.2 million in revenues.
These most recent additions to the BE INDUSTRIAL/SERVICE 100 list, while operating in different industries, all have one thing in common: a remarkable knack for creating the “best of times” from the worst. James McNeil, CEO of McNeil Technologies Inc. (No. 80 on the BE INDUSTRIAL/SERVICE 100 list with $38 million in gross sales), saw revenues increase 30% when his company was tapped to provide airport screening and security following the Sept. 11 attacks. Anderson, CEO of Vibration Control Technologies L.L.C. (No. 63 on the BE INDUSTRIAL/ SERVICE 100 list with $59 million in gross sales), used his military and auto industry experience to boost company revenues. Gilbert C. Morrell Jr. proved with The Nucon Group (No. 98 on the BE INDUSTRIAL/SERVICE 100 list with $29.88 million in gross sales) that an economic downturn is often the best time to test the waters for new opportunities. And James took PrimeSource FoodService Equipment Inc. (No. 30 on the BE INDUSTRIAL/SERVICE 100 list) to $140 million in revenues, making it a Top 30 industrial/service company. Here are the tales of this year’s freshman class.
A TIME OF OPPORTUNITY
When authorities announced that they had captured suspected terrorists known as the “Lackawanna 6” outside of Buffalo, New York, James McNeil was not surprised. The arrests were due, in part, to information provided by his screeners working at the Greater Rochester International Airport in New York. “They came through the Rochester airport, were identified by our staff, and later apprehended,” says McNeil, whose company also provides language translation and localization, and intelligence analysis service to government agencies. “Every time the president gets on TV and says, ‘We’re doing X,’ we have people providing on-the-ground support to our troops,” says McNeil. And with increased demands for security, intelligence, and language services, McNeil’s company is in a prime position to reap even more benefits from the war on terrorism.
Thanks to a slew of lucrative contracts with government agencies, such as the Transportation Security Administration (which gave McNeil Technologies two, yearlong contracts worth $12 million to $14 million) and the Department of Energy (which gave McNeil Technologies a one-year, $3.2 million contract), the Springfield, Virginia-based company’s revenues rose 30%, from $25 million in 2001 to $38 million in 2002. Even more impressive, McNeil Technologies is the only minority contractor in the U.S. selected by the Transportation Security Administration to provide airport passenger and baggage screeners at one of five airports nationwide — a job he won in a competitive bid. “It’s exciting because this is a line of business we’ve been in for a while, but to actually do security for the TSA is a feather in our cap.” McNeil, 50, has been able to use his background in vulnerability assessment and analysis, as well as extensive government contacts and a little inside experience (he worked for the federal government for 12 years and left at a GS-13 rank) — to land contracts.
Although the screening process is classified, McNeil can reveal that the federal government provides the equipment (including explosive trace detection machines and X-ray screeners) while his company screens baggage, passengers, and employees. With more than a million visitors to the upstate New York airport and more than 400 airports nationwide, these days are particularly promising for the company and its 600+ employees. And the best of times are yet to come. “There are 427 airports in the country and only three contractors doing private screening; there is tremendous opportunity for expansion,” says McNeil. In addition, on Nov. 19, airports nationwide will be able to “opt out” of the federal screening process in favor of private screening firms like McNeil Technologies.
McNeil has come a long way from Chatom, Alabama, and his dreams of earning a whopping $10,000 a year once he graduated with a bachelor’s degree from Alabama State University in 1976. “That was a lot of money to me at that time,” he tells, laughing. “I come from a very, very small town. I can remember when my mom made only $1.25 a day cleaning houses.” Times, indeed, have changed.
GOOD VIBRATIONS
For those of a certain generation, “Shake, Rattle and Roll” is a song title and nothing else. But for Joseph B. Anderson Jr., 60, CEO of Vibration Control Technologies L.L.C., it’s the absence of trembling that distinguishes his product from the competition.
Troy, Michigan-based VCT supplies torsion vibration dampers to automakers such as Ford, Honda, Nissan, and DaimlerChrysler. It’s a product that helped the company produce revenues of $59 million in 2002. Also known as crankshaft dampers, these devices dwell in the harsh environment of a vehicle’s engine and serve to reduce the noise and vibration of a vehicle. They’re an integral part of cars, light trucks, SUVs —
just about any vehicle. “It’s the competitive differentiator between car companies,” says Anderson. “When you get into a car that is quiet and smooth-running, that is a major factor in your decision to buy that vehicle. The more effectively we design and engineer our dampers, the better off I am and the faster I’ll grow.”Like the torsion vibration dampers he engineers and supplies, Anderson is no stranger to harsh environments. A West Point graduate, he endured two tours of duty in Vietnam as a combat infantry officer, during his second tour he was a company commander as well. Anderson was also a White House Fellow, but resigned his commission when General Motors recruited him in 1979. The Topeka, Kansas, native has found that much of his military training and experience translates quite well to the business environment. “[Corporations and the military are] both large organizations with a chain of command; there’s teamwork and a significant amount
of training [involved] to get quality and productivity; there’s orientation on mission and objective,” he says. Of his time at GM, Anderson likes to say that he “traded in his rifle for a wrench, and competition from the Vietnamese to the Japanese.”
Now, the Japanese, as well as a variety of domestic and overseas companies, are his customers. And his experience running a joint venture in Korea for GM has enabled the 23-year veteran of the auto industry to purchase a business of his own in Korea. So while he learned French at West Point, Anderson is now “boning up” on his Korean to communicate with clients. “I’m in an industry that has to be global,” he says. “That’s just the way the world is. If African American businesses aren’t prepared to [do business globally], they’re going to be left behind.”
FINDING THE RIGHT STAFF FOR THE JOB
A great sense of timing is nothing without the ability to execute. In his struggle to grow his business from a one-man consulting operation to what today is roughly a $30 million staffing company that provides services to the pharmaceutical, aerospace, energy, and utility industries, Gilbert C. Morrell Jr. has had to work overtime to convince prospective clients that a minority firm can indeed execute.
First, however, he had to define his company. Although Morrell had positioned the Connecticut-based company as an engineering firm, working with clients in the nuclear energy and engineering field, he found that the demand for engineering support was surpassing the demand for engineering services. “I was concerned about what industry I belonged to. I realized that the definition of my company was nearer to a staffing firm, so we had to come to grips with the fact that we were a staffing firm, not a consulting firm. [But] that allowed us to bring companies and success into our portfolio that we didn’t have before.”
While his company handled a variety of projects, the Jamaican-born Morrell says he still wasn’t comfortable. “Over 95% of our business was with one client,” he says of the firm’s business with Northeast Utilities (NU) companies. But diversifying was easier said than done. Morrell, 48, found that although he was armed with a database of experienced professionals following a successful three-year stint with NU subsidiary Millstone Nuclear Power Station, which netted him $3.8 million, prospective clients weren’t convinced of his expertise in areas outside of the energy industry. “We had the
expertise, but they didn’t want to talk to you if you didn’t have experience in that particular field.” The opportunity to broaden their experience came in 1994 when NU awarded The Nucon Group the Retire Skillbank Program, a database of retired NU employees who are brought back into the engineering field as consultants. It turned the company into a $10-million-a-year operation. The Retire Skillbank Program led to business outside of NU and work on non-nuclear projects.Twenty years after Morrell began consulting, he now helms a 375 employee firm and is doing things with The Nucon Group that “a mature company does,” such as offer employee training, maintain their own servers, and for Morrell, delegate. “We have three major clients — Pfizer, Northeast Utilities, and United Technologies — who are no more than 30% of our business, and I want to get that down to 10%,” he says. “I don’t want to diminish the amount of work we do, just make our client base more diverse.”
With business on the upswing, Morrell also finds time to do something else a mature company does: mentor smaller firms, often sharing contract work, helping them handle difficult clients, and teaching them about facilitating cash flow. He’s come a long way from his consulting days when his mother would tell him to “get a real job.” Over the years, as Nucon has continued to grow, “she has become less vocal about it,” Morrell laughs.
NEW DIRECTIONS
“I don’t like the term ‘serial entrepreneur,'” says Charles H. James III, shrugging off the moniker often given to those who start, grow, and sell businesses — and then do it all over again. “You can call me a serial acquirer of companies. I feel more comfortable with that,” he says. James, 44, headed Dallas-based PrimeSource FoodService Equipment Inc. until about two months ago. At press time, he is more than likely working on his next acquisition. PrimeSource distributes food service equipment, such as ovens, refrigerators, signage, seating, and décor, to fast-food and casual dining restaurants like KFC, Pizza Hut, and Taco Bell.
If James’ name sounds familiar, there’s a good reason: He and his family have been in the food service business for four generations. Having cut his teeth at the family-owned C.H. James & Co., he went on to purchase and then sell pre-cut produce-processing plant North American Produce. From there, James launched ProduceOnline.com, which he sold for $20 million in 2000, several times the $3.3 million he raised to fund the venture.
But as James sees it, he’s no serial entrepreneur. “I have chosen to operate in a real marketplace, that is moving faster. It’s a very competitive marketplace, and I’ve had to be very nimble.” He says his strategy is to create a company that will develop economies of scale to meet the needs of companies in the food service industry. “Economies of scale are very important. Major chains can’t afford to have hundreds of little suppliers — they need key suppliers that can handle all aspects of that channel.”
James’ experience as a serial acquirer has helped him take the family business from operating in what was essentially a mom-and-pop marketplace to one that is attempting to stay competitive through acquisitions along the food service channel. “There are other things C.H. James & Co. is working on that will give us the opportunity to go down that channel, such as real estate and restaurant opportunities.”
One thing being a serial acquirer has taught James is the importance of timing, that is, capitalizing on opportunities the moment they become apparent. “Right now, it’s both the best of times and the worst of times for business,” he says. “In terms of capital, there has never been a better time to be a minority entrepreneur. The money is there.” And the food service industry is a “willing marketplace” for minority entrepreneurs. The challenge, he says, is getting into the deal-making community. His answer? Simple: timing, opportunity, and sweat equity.
Making the Top 100
The 14 companies that make up the 2003 freshman class had an even tougher act to follow than last year’s. Unemployment numbers are still high and the economy has yet to rebound. “Gulf War II,” initially expected to boost the economy, did not have the impact hoped for. But even in the midst of this lingering recession, businesses found a way to prosper. In fact, the climate of political unrest presented a couple of this year’s BE INDUSTRIAL/SERVICE 100 companies with some of the most lucrative business opportunities they’d seen in years. Meet the newcomers.
Act One Personnel Services No. 3
CEO Janice Bryant Howroyd’s 300-employee staffing and professional services firm in Torrance, California, ranks high on the list with $487.53 million in revenues.
MV Transportation Inc. No. 27
Providing fixed route and paratransit services to the government is how this $155.31 million Fairfield, California, company made the list.
PrimeSource Food Service Equipment No. 30
Former CEO Charles H. James III put his Midas touch on this distributor of restaurant equipment. He introduced the $139.9 million, Dallas-based company to the list.
Manufacturers Industrial Group No. 46
This Lexington, Tennessee, automotive supplier of welded and light assembled products earned a spot on the list with $74.3
8 million in revenues.
Vibration Control Technologies L.L.C. No. 63
CEO Joseph Anderson keeps automobiles running smoothly with his $59 million automotive parts supply company out of Troy, Michigan.
RLJ Development L.L.C. No. 71
Entrepreneur extraordinaire Robert L. Johnson makes this year’s list with his hotel development and investment company, which grossed $49.4 million last year.
Vanguard Holdings Inc. No. 73
This Savannah, Georgia-based MRO supply chain management and safety equipment distribution company made the list after pulling in $45.58 million in revenues.
McNeil Technologies Inc. No. 80
CEO James McNeil’s $38 million information management, consulting services, and facilities management company helped guard the U.S. against terrorist activity.
Q3 Companies No. 85
Headed by Francis Price, this automotive supply company out of Columbus, Ohio, grossed $36 million last year, earning a spot on our list.
Peebles Atlantic Development Corp. No. 88
Real estate development is what this Florida-based company does well, making the list with $34 million in revenues.
TDS US No. 91
Only 5 years old, this Brownstown, Michigan, automotive supplier debuts on the list with $33 million in revenues.
Larry C. McCrae Inc. No. 95
CEO McCrae and his staff of 349 put this $30 million company out of Philadelphia on the industrial/service map.
The Nucon Group No. 98
Not afraid to switch gears in midstream, this engineering-services-turned-engineering-staffing firm makes the list with $29.88 million in revenues.
Blackwell Consulting Services No. 100
This 11-year-old, Chicago-based IT strategy and planning firm debuts on the list with $28.6 million in revenues.