It is 1944 and a manufacturer of plastic products opens for business in Knoxville TN. Do you think those founding members knew the impact they would have on so many lives in 2009?
Could they have ever envisioned the extreme highs their offspring would experience over its 65 year life? Conversely, did they fear the evil virus that would eventually infect and render it defunct.
My research of this company is limited to information gleaned from their website, but it appears that the founding members were true entrepreneurs. With their eyes and ears finely tuned to customer pains, they recognized a simple request from the Pet Milk Company as their chance to break from the pack . In 1947, they were asked to produce an illuminated sign made of Plexiglas. They could have looked at this as a request, but they recognized it for what it was; on opportunity to offer the market a new product that would catapult the H. G. Brooks Company to the leadership roll of the sign industry for decades to come.
The H.G Brooks Company changed their name in 1947 to Plasi-line and in 1950 they landed the contract for Coca-Cola. In 1960 they were awarded their first corporate re-imaging program for American Oil and developed the erector network to assure success. This "erector network" hired and managed local sign companies to install the signage that Plasti-line produced. This network allowed Plasti-line to expand its market share and in 1965 build a new 300,000 square foot facility in Knoxville. In that same year the founder of the company sold it to Dart Industries whom subsequently sold it to A&E Plasti-Pac in 1975.
The relevance of the A&E transaction is the leadership change to James Martin. According to their history, Mr. Martin "grew the company to the major multi-million dollar leader it is today." 1975 was also the year that Plasit-line was awarded the GM account which remained their largest account up to 2009. In 1980, Mr. Martin and two others acquired the company. In 1986 the company went public and acquired American Sign and marketing. This acquisition give them the opportunity to offer POP and indoor signage to their customers. In 2003, they changed their name to ImagePoint, to "better reflect the work we do for leading U.S. companies" and they moved into class A office space in downtown Knoxville. The ImagePoint web page states that today, "ImagePoint provides fully integrated branding solutions for the world's greatest businesses. We are an experienced partner you can trust for all your needs, from concept design to delivering a broad spectrum of facility branding solutions that meet your specific needs; project management expertise to provide complete turnkey services to navigate through the complexities of local permitting and surveying, on through to installation with the largest network of pre-qualified installers; and a nationwide preventive and on-call maintenance service program to keep your brand image consistently clean and bright."
Not exactly. On January 9, 2009, ImagePoint announced "it is shutting down, and 450 people are out of a job, the layoffs affect 270 people in Knoxville and another 180 in Florence, Ky." How could such a power house in its industry fall from grace so fast. According to Mr Martin, it resulted from the financial woes of its primary customers in the automotive and restaurant industries. According to the Company press release, they had been attempting for months to secure additional capital without success. In fact, the company claims it happened so fast that they did not have the opportunity to give their own employees the mandated 60 day notice of closure required by the WARN act.
The closure of ImagePoint is a very sad ending to a company with a grand history. However, it was not a surprise to many in and out of the industry. There were clues that the foundation of the Company was not as sound as was projected to the public.
Since its inception in 1960, the erector network fueled the growth of several small sign companies. Up until recently, getting projects from ImagePoint was good work. You were treated fairly and paid in a reasonable time frame. In my first few years at Sign Craft, we did a major project through ImagePoint for McDonalds in addition to several smaller projects. However, the last project we completed was the Bank One to Chase Bank changeover and it was quite different. The project management ImagePoint provided was top notch as always, however, when it came to getting paid, there was always something else they needed. Once that was provided (sometimes for the third for forth time) the story changed to it has been turned in, and it is accounting's responsibility. It got so bad, that we took a trip to Knoxville. There, we were told that all of the payments were processed and checks had been cut. When pressed, it was disclosed that check were cut and held for at least 90 days. That was the day we decided that ImagePoint was not our type of customer. It was not so much the delay in payment as it was the deception and/or condescending attitude of the company in letting us know that payment would be delayed. These delays came well before the economic downturn and they blamed it at that time on the slow payments of their automotive customers.
From the day they signed the GM contract until the day they closed their doors, ImagePoint was highly leveraged in the automotive industry. From the outside in, it appeared that ImagePoint did little to nothing to adjust the payment terms or limit their exposure to this distressed industry. This economic downturn has been catastrophic to the auto industry and orders of signs have probably come to a complete halt, but this was not unforeseen.
Reports are that the credit crunch was the final culprit that brought the company to its knees. Wachovia refused to extend more credit and demanded the liquidation of the Company. There was a report by Larry Mock, managing partner of Navigation Capital Partners, an Atlanta private equity firm that Navigation and others offered to put in $10 million of equity and $3 million in a standby debt facility, to support a Wachovia loan of about $11 million. He wrote that after a 45-minute meeting with Wachovia in December, the bank "never contacted Navigation again" That may be accurate and Wachovia may in fact be culpable for not working with the company, but this is not normal for a bank unless they do not have confidence in the company and the actions they are implementing to correct the situation.
All Companies have a fiduciary responsibility to their customers, vendors and employees and the impact of the ImagePoint closure will have a dramatic impact on all parties.
The impact on the employees is obvious, however, it is surprising that they did not see this coming. Sign Craft quit doing business with ImagePoint because of a lack of confidence arising from responses to direct questions to ImagePoint employees. It was common knowledge that the company was delaying payments to erectors and not being truthful. It was common knowledge two years ago that the Company had cash flow issues.
The impact on the customers will vary based on the level of work that was with ImagePoint. ImagePoint made it very clear to erectors that their customers did not provide deposits. If this is accurate, the impact on customers is the work in process that will now have to be recontracted with another Company and delays in installation. Incredibly, the customers are probably the least affected.
The vendors will be the big losers in this closure. Based on several conversations, many read the tea leaves and either had ImagePoint on COD or had quit working with them. However, since ImagePoint outsourced much of their work, there is a discomfort that wholesalers have been contracted by the outsource company and are not aware yet of their true exposure. There were obviously a significant number of erectors that were still doing work for ImagePoint. Many of these will not make it. This will result in more closures and employees without jobs. In the normal trickle down process, the vendors of these erectors will also incur losses.
There are many lessons to be learned from this story and while they cannot assure a company can make it through difficult times, learning these lessons can greatly improve the odds.
Could they have ever envisioned the extreme highs their offspring would experience over its 65 year life? Conversely, did they fear the evil virus that would eventually infect and render it defunct.
My research of this company is limited to information gleaned from their website, but it appears that the founding members were true entrepreneurs. With their eyes and ears finely tuned to customer pains, they recognized a simple request from the Pet Milk Company as their chance to break from the pack . In 1947, they were asked to produce an illuminated sign made of Plexiglas. They could have looked at this as a request, but they recognized it for what it was; on opportunity to offer the market a new product that would catapult the H. G. Brooks Company to the leadership roll of the sign industry for decades to come.
The H.G Brooks Company changed their name in 1947 to Plasi-line and in 1950 they landed the contract for Coca-Cola. In 1960 they were awarded their first corporate re-imaging program for American Oil and developed the erector network to assure success. This "erector network" hired and managed local sign companies to install the signage that Plasti-line produced. This network allowed Plasti-line to expand its market share and in 1965 build a new 300,000 square foot facility in Knoxville. In that same year the founder of the company sold it to Dart Industries whom subsequently sold it to A&E Plasti-Pac in 1975.
The relevance of the A&E transaction is the leadership change to James Martin. According to their history, Mr. Martin "grew the company to the major multi-million dollar leader it is today." 1975 was also the year that Plasit-line was awarded the GM account which remained their largest account up to 2009. In 1980, Mr. Martin and two others acquired the company. In 1986 the company went public and acquired American Sign and marketing. This acquisition give them the opportunity to offer POP and indoor signage to their customers. In 2003, they changed their name to ImagePoint, to "better reflect the work we do for leading U.S. companies" and they moved into class A office space in downtown Knoxville. The ImagePoint web page states that today, "ImagePoint provides fully integrated branding solutions for the world's greatest businesses. We are an experienced partner you can trust for all your needs, from concept design to delivering a broad spectrum of facility branding solutions that meet your specific needs; project management expertise to provide complete turnkey services to navigate through the complexities of local permitting and surveying, on through to installation with the largest network of pre-qualified installers; and a nationwide preventive and on-call maintenance service program to keep your brand image consistently clean and bright."
Not exactly. On January 9, 2009, ImagePoint announced "it is shutting down, and 450 people are out of a job, the layoffs affect 270 people in Knoxville and another 180 in Florence, Ky." How could such a power house in its industry fall from grace so fast. According to Mr Martin, it resulted from the financial woes of its primary customers in the automotive and restaurant industries. According to the Company press release, they had been attempting for months to secure additional capital without success. In fact, the company claims it happened so fast that they did not have the opportunity to give their own employees the mandated 60 day notice of closure required by the WARN act.
The closure of ImagePoint is a very sad ending to a company with a grand history. However, it was not a surprise to many in and out of the industry. There were clues that the foundation of the Company was not as sound as was projected to the public.
Since its inception in 1960, the erector network fueled the growth of several small sign companies. Up until recently, getting projects from ImagePoint was good work. You were treated fairly and paid in a reasonable time frame. In my first few years at Sign Craft, we did a major project through ImagePoint for McDonalds in addition to several smaller projects. However, the last project we completed was the Bank One to Chase Bank changeover and it was quite different. The project management ImagePoint provided was top notch as always, however, when it came to getting paid, there was always something else they needed. Once that was provided (sometimes for the third for forth time) the story changed to it has been turned in, and it is accounting's responsibility. It got so bad, that we took a trip to Knoxville. There, we were told that all of the payments were processed and checks had been cut. When pressed, it was disclosed that check were cut and held for at least 90 days. That was the day we decided that ImagePoint was not our type of customer. It was not so much the delay in payment as it was the deception and/or condescending attitude of the company in letting us know that payment would be delayed. These delays came well before the economic downturn and they blamed it at that time on the slow payments of their automotive customers.
From the day they signed the GM contract until the day they closed their doors, ImagePoint was highly leveraged in the automotive industry. From the outside in, it appeared that ImagePoint did little to nothing to adjust the payment terms or limit their exposure to this distressed industry. This economic downturn has been catastrophic to the auto industry and orders of signs have probably come to a complete halt, but this was not unforeseen.
Reports are that the credit crunch was the final culprit that brought the company to its knees. Wachovia refused to extend more credit and demanded the liquidation of the Company. There was a report by Larry Mock, managing partner of Navigation Capital Partners, an Atlanta private equity firm that Navigation and others offered to put in $10 million of equity and $3 million in a standby debt facility, to support a Wachovia loan of about $11 million. He wrote that after a 45-minute meeting with Wachovia in December, the bank "never contacted Navigation again" That may be accurate and Wachovia may in fact be culpable for not working with the company, but this is not normal for a bank unless they do not have confidence in the company and the actions they are implementing to correct the situation.
All Companies have a fiduciary responsibility to their customers, vendors and employees and the impact of the ImagePoint closure will have a dramatic impact on all parties.
The impact on the employees is obvious, however, it is surprising that they did not see this coming. Sign Craft quit doing business with ImagePoint because of a lack of confidence arising from responses to direct questions to ImagePoint employees. It was common knowledge that the company was delaying payments to erectors and not being truthful. It was common knowledge two years ago that the Company had cash flow issues.
The impact on the customers will vary based on the level of work that was with ImagePoint. ImagePoint made it very clear to erectors that their customers did not provide deposits. If this is accurate, the impact on customers is the work in process that will now have to be recontracted with another Company and delays in installation. Incredibly, the customers are probably the least affected.
The vendors will be the big losers in this closure. Based on several conversations, many read the tea leaves and either had ImagePoint on COD or had quit working with them. However, since ImagePoint outsourced much of their work, there is a discomfort that wholesalers have been contracted by the outsource company and are not aware yet of their true exposure. There were obviously a significant number of erectors that were still doing work for ImagePoint. Many of these will not make it. This will result in more closures and employees without jobs. In the normal trickle down process, the vendors of these erectors will also incur losses.
There are many lessons to be learned from this story and while they cannot assure a company can make it through difficult times, learning these lessons can greatly improve the odds.
- Know your stakeholders and treat them with honesty and with respect. This includes employees, vendors, and customers. In hard times, people will work with those they trust and can rely on.
- Constantly review the inherent risk in business relationships. It was apparent several years ago that ImagePoint was over reliant on the automotive industry.
- Do what is necessary to secure the survival of the company. Sometimes this means reducing the level of business with a customer or in the worst case firing the customer.
- Aggressively protect cash. This includes collection and payment procedures.
- Do not let your pride get in the way of good business decisions. In 2003, ImagePoint moved to class A office space in downtown Knoxville. While this may have made the employees feel better, it is hard to imagine how it added to the bottom line. All business decisions should have a focus on profitability and cash flow.
1 comment:
Excellent perspective Greg. I'd love to share this article with others if that's alright with you.
-Chris Consiglio
Yorston & Associates
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