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Thursday, June 9, 2011

Factory Five then and Smyth now..a brief history.

by Smyth Performance on Tuesday, May 3, 2011 at 2:27pm
I had the pleasure of creating and then running Factory Five Racing, Inc. for 6 years.  From the first day in 1995 until a transition away in 2001...We went from 0 to 10 million in sales(and people think 0-60 acceleration numbers are tough).  We survived a massive federal lawsuit from Ford and Carroll Shelby(Ford is a buddy now...go figure).   It was terrific fun and a huge challenge to my car making and managerial skills as I didn't start this endeavor with enough of either.  It felt good leaving on top and I went home to build more machines and help Kim raise our 5 kids. That was Sept 2001.  The american dream attained at 39 years old.

Like many others I use the 9/11 attacks on the world trade center as a time-stamp in life since we all knew what we were doing when they occurred...My dad and I had already left FFR by then since we were on the phone from our homes as it happened.  The transition away from running FFR on a daily basis was complete.  Nice ride.

Those last days are very vivid for me since as the millennium came to a close  FFR was selling around 10 million bucks worth of product and was bringing in about a million and a half in net income for the two families that owned it.  Not a bad five year launch at all.  In the crazy manufacturing rush to 10 million I had brought in not only Dave from day one as a co-founder away from his white collar job and porsche 944 turbo/California lifestyle that he had been enjoying for two years, but my operations genius father Tom Sr., my sister Jen who was a terrific learner on web site development and continues to this day to amaze me with her work ethic and intellect, and my brother Tom Jr. who nailed the complexities of purchasing and plant flow to a degree I have never seen since.

But in 1995 at the start it was Dave and I finishing  the 2d cad work on a home assembled personal computer in a converted bathroom...FFR's first shop in Padanaram village where I still live(not the bathroom, the village).  In 1995 it was a start up in the truest form, and the most fun for me I have ever had at work.  We made and shipped the first production kits in Nov and Dec of 1995.  Then we started to move fast.  The kit business was not ready for us and we were eager to go after them.  Dave and I nailed it.  A few of the established kit guys lashed out with some weird tactics but in the end we persevered with a superior product and a personal connection to our customers that created a great company. Zero to ten million in the manufacturing world, financed by raw energy, good margins and great customers.  By 2000 we were a real new england manufacturing company that had decimated the competition in the U.S. and took over the category.  It took 6 years to do it.

As I mentioned earlier, by 2000 I had also involved most of my family in the business.  The reason for this was simple.  MBA car talent or not, the fast growth environment we were working in did not give me the time to find managers whose talents were absolute and without risk.  It's all about the people my dad, experience and fancy MBA had taught me.  Team, team and more team.  Not only did I not have enough experience in this area of hiring talent, I already had an operations/management guru in my dad.  When Tom Sr. came in the door, the entire organization was improved overnight.  He had a lifetime of real management skills and the strategic level experience to fit in and help with a fast growing organization like FFR.  We needed experienced boots on the ground.  My brother Tom came out from his management gig in Chicago with his family around 1998 and had the opportunity to work and learn directly under my father as we all did.  I may have been in charge as the MBA/CEO/car designer, and dave was there as co-founder,  but Tom Sr. was perfect as the educator and de-facto leader of the whole plant.  Turns out my dad in retirement had more than a few things left to teach us.

If you ask my dad about his time at FFR he will say that he  "was just helping his boys".  Nothing could be further from the truth...he RAN the plant, he TAUGHT everyone, he was incredibly demanding and respectful.  He wanted excellence in thinking and treated candor and honesty as the payment for entry into his way of business.  I will bet that some of the employees he supervised are still asking him for guidance to this day at his home ten years after he left.  He is the kind of boss you never forget.  I remember turning to him after getting served by Carrol Shelby who filed a ten million dollar law suit against FFR back in 2000.  We were in a 5000 sq foot plant with another 3000 or so down the road in Wareham, MA.  The new building was still quite far off in the future and I turned to my dad and said,  "you have to get from 5 or 6 now to 10 cars a week in order to fund this battle...I don't know how you are going to do it...we can't move yet."   Now at 5 or 6 a week we were already straining the facilities and people...that's why we had purchased  the land and started construction on the new Tow road facility that FFR is now in.  He didn't bat an eye.  He just did it.  Absolute pro. Now in the midst of this new threat to the company Dave and I were still arguing as we had been for a few years. Even though the course of the company was set for a while, our styles were very different and the in fighting was starting to take a toll on the family and the organization.  A tougher environment for growth you can't imagine.

I told my Dad that I  knew Dave and the front office could sell 10 cars a week if we raised prices and used the Shelby law suit as good car selling press. The FFR product was spot on for the times back then and was a true category killer.  Our plan for aggressive but steady growth had to be stepped up if we were to fund the fight with Shelby.  As the R&D head as well as the guy directing the business I thought a hot rod project was too much volume for the company to handle at the time and was scared to death of our growth getting the best of us.  Our capabilities were higher than our maturity as a business.  We decided to focus on selling more of what we new products till Shelby was done.

In the rush to practically double production Tom Sr.  and Tom Jr. created an excel spreadsheet for purchasing that I still look at with wonder.  We didn't have time to bring in a computer systems person to implement a purchasing software system.  My dad and Tom worked on the formulas in that spread-sheet for months while ordering just the right volumes to keep enough parts to keep making cars.  Back-orders were high as Dave was tearing in sales with a price increase threat looming...we ramped up but the rate of improvement was steady.  The structural problem of a supplier network that was used to small orders started to show cracks.  We could double but they were having trouble keeping up.  My dad was bringing the molding of the panels in house with a young engineer named Dave Riha(now at local motors),  and my protege r&d guys were better than I was.  Jesper and Jim were simply wowing our fans and critics alike with dazzling on track and at show performances. The machine was rockin.

Over the next years my dad always reminded me how people have so much to give if they are appreciated.  He proved it during the Shelby case. We sold and shipped 10 a week. We beat Shelby in court and in the end it was Shelby American that had to reorganize...not FFR.  I was able to hand over my company to Dave and his style of leadership after accomplishing something wonderful with a great team of family and loyal employees.  I will bet that Jesper, Jim, Tom, Dave, and all of us there at the time will join me in saying that those days were the most difficult and rewarding days at FFR.  The business that I left in Dave's hands pulled in close to 2 million a year and had terrific financials.   Nice work for a company joining steel with fire in the U. S. of A.  There is no tougher business than the car business, and FFR was doing great.

Stepping down and stepping out.

Dave and I had always had a bit of a testy relationship re FFR and its path for the future.  To Dave's credit he is a perfectionist and the high growth, mistake filled climb from 1995 to 2001(you can't do ballistic growth without quality and other problems) was  just too much.  Before the Shelby suit ended we had a family FFR meeting off site in a conference room in Fairhaven, Mass and decided that Dave should leave while I continued to run FFR.  Like most guys used to the excitement of the daily life/work at FFR he lasted 6 months at home.  Since he was coming back I told him that I would go...he would be doing the job alone as I would be the one to leave  to avoid the infighting that was simply not in the best interest of the company.  I finished up the Shelby case duties I had managed and it was his turn at the helm.  FFR was a well oiled machine pulling in good revenue with great R&D group led by Jesper and Jim that could come up with great new products for years to come.

A little later on I formed the boat company Factory Five marine after designing a 33' go fast fishing boat and asked Dave if he wanted to invest.  We both had plenty of cash at the time so Dave and I each put 25k in the FFM checking account.  Within a few months we were arguing about something small again...I gave him his 25k back to end it.  Lesson much as we are drawn to do business together and are good people individually,  I have no shame admitting that we just can't work together.  As I continued to fund the boat business venture based on  the 33' sport fishing boat hull, and began work on the next model by re-powering my 50' scarab with two 750hp bio-diesel seatek engines with surface drives...the timing in the marine market started to look wrong to me.  With the kind of income FFR was generating these bills were not a problem...but I needed a new business, and it appeared boats were too risky.  You know the joke right?  How do you end up with a million dollars in the boat business....start with 2 million....

The birth of Smyth Performance.

So without the boats I started on a terrific single sided Harley based chopper kit design.  This was the beginning of Smyth Performance and used more of my mechanical aptitude as a designer.  My University of Michigan college bud Mike Voss was chief executive of Ultra motorcycles, a chopper manufacturer in California, and the market looked ripe for a high quality kit bike.  After many trips to vendors,  I tooled up and designed a great performance drag bike(still in the shop if you want to see it) and sure enough the market timing after an aggressive year of investment started tanking for bikes. Here I was sitting on over a hundred grand of stampings and parts and about 250 grand of engineering for the bike alone...tough call, but I again decided after tooling up for yet another machine that the economic and marketing environment was not good.  Good move to hold off in both cases it turned out...the marine and bike businesses in the U.S. are still struggling as I write this.  We will launch the products if they fit our Smyth branding...but don't hold your breath.  Half of success in R&D is having the discipline to NOT launch.  Plus the bio-diesel bug had bitten me hard.

Going Public.

As the economy was looking iffy by this time I started a two pronged business plan for Smyth Performance in 2008.  I bought the jetta tdi wagon to see if my bio-diesel learnings from the scarab could be applied to the car business that i knew so very well.  I also started a line of stainless racks for trucks as a boring but safe fall back if my big car plans didn't pan out.  The racks launched to minimal fanfare and I went to the forums 2 years ago this June and asked people what they thought of the projects I had been working on.  Remember I had been silently working below the radar for over seven years...many people on the forums didn't even know who I was since FFR had been effectively without my public presence since 2002.   FFR was at the time and remains these days  the Dave show by design...I was this guy that appeared in the background information.

This is where the change happened.  By giving the forums a voice I could take advantage of the talents of the knowledgeable car guys.  Since my friend and new business associate Jay Rogers was such a fervent believer in the power of crowd-sourcing at his start-up next door,Local motors.  I  decided to share the development of the Smyth car live online as I went through the various(and often ugly) steps of designing a car.  Hanging your work out to be conversed about took some skills and learning.  People enjoy sharing the good stuff...the mistakes and miss steps are not as easy.  But to be real and credible you have to share it all if you are embarking on a social media based launch story.  A key move that is paying dividends today with the success of the Smyth Performance line concepts as well as the success of the general machine building business book that this note will be a part of.

More on Smyth, Local Motors and FFR to come....


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1 comment:

  1. Thanks for the back history. I was curious about the background on FFR and your role.