Celestica CEO Craig Muhlhauser suggests the rumours that Canada’s manufacturing industry is dead are only that—rumours.
Burnaby-based Creation Technologies is a thriving and expanding electronics manufacturing services (EMS) provider. From the get-go, it developed an entirely unique workplace culture aimed at engaging employees and enhancing customer satisfaction.
“I’ve seen a number of other EMS companies and in the 10 years we’ve been buying companies around North America and elsewhere, I’ve never seen anything comparable,” says Chief Financial Officer Mike Walsh, who has been with the company since 1997.
Creation manufactures a broad spectrum of electronics for more than 200 original equipment manufacturers in the medical, security, communications, instrumentation, computer, defence, and environmental fields.
And its growth has been impressive, outstripping average industry growth rates year after year. This year’s revenues are forecast to be in the $550 million range. Creation just added an 80,000 sq. ft. satellite operation in San Jose, California and has recently branched out by adding two design centres, with plans for as many as half a dozen more. Adapting and growing its many mid- to long-term customer relationships is integral to Creation’s ongoing growth and profitability. Fostering a healthy employee environment is also a key priority, as customers work closely with Creation’s employees — often for as many as five to seven years. As a result of that focus, Creation seldom loses customers or employees. In fact, it welcomed 25 new customers to its roster last year alone and its people retention is in the 95%+ range.
Creation offers Canada- and US-based manufacturing, and lower-cost manufacturing in China. The company is also looking to add low-cost manufacturing options in Mexico, and to extend its US footprint through acquisitions of other manufacturing operations in the eastern United States from New England to Florida.
“We established a goal several years ago to be at $1 billion by 2015,” explains Walsh. “Completing our current expansion plans will provide the capacity we will need to accomplish that objective.”
Their self-devised system, or “secret sauce,” which started in 1991, has given Creation Technologies a major step-up in a competitive EMS market. Walsh says that the system is comprised of several elements, including employee bonus and share ownership programs, proactive risk-management practices, a rigorous customer screening process, a value proposition focused on providing flexibility and responsiveness, and constraining how large an individual business unit can grow. Sophisticated financial reporting systems foster communications and accountability among employees, particularly general managers and customer-focused team leaders, who are seen as the front-line drivers of the business.
“Our culture is probably the single most sustainable element of differentiation for us,” says Walsh. “We have consciously defined and nurtured our culture over time. There are distinct elements to life at Creation that we have incorporated over time, and those have been present from the very beginning of our company.”
The first and most fundamental of those elements, he says, is employee ownership. Creation has nearly 600 employee shareholders who collectively own a sizable share of the company. When Creation acquires a business, such as Colorado-based Quest Product Development, Walsh meets with staff and informs them that they’ve just joined a culture that not only offers a bonus program that extends to every employee, but also an opportunity to invest in the company. As a result, all employee shareholders have input into the direction of the company. For most manufacturing staff, that’s an entirely new work-life concept.
“We really believe it changes the way people view their jobs — they think about work in the shower in the morning because they have some ‘skin in the game,’ they have a bit of risk and the potential for upside as the business grows,” says Walsh. “Their personal investments, whether they’re $500 or $5,000, are very important to our people. And I think that builds a nice, healthy tension and creates a much more open environment. It creates much more of a challenging environment for our leadership teams, too. But in a healthy sense.”
Another ingredient in the secret sauce is risk management, including securing detailed contracts that outline the “what-ifs” at the onset of customer relationships. Risk management also means choosing customers who are willing to communicate and operate with the Creation team, and who appreciate the company’s value proposition. Creation has developed a detailed customer profile that helps them determine whether the prospective Creation/customer relationship is likely to result in a win-win arrangement for both parties.
“We believe that risk management extends in both directions,” says Walsh. “Relative to other companies in our industry, and even many outside it, I think we view risk differently and are more proactive about managing it. And that has served us very well over the years.”
Then there’s Creation’s unorthodox management style, bereft of individual departments or top-down culture. Instead, all employees are viewed as team members. Customer-focused teams establish and maintain customer relationships that typically last for years, with team leaders and general managers that are more accountable than anybody else in the system.
The customer-focused team leader is expected to act as if he/she were the president of a small business. General managers typically oversee no more than three or four such teams, maintaining responsibility for the smooth running of all those relationships and guiding both their income statements and their balance sheets. Their performance is also gauged by such feedback tools as customer satisfaction surveys, which Creation conducts three times a year, and semi-annual employee satisfaction surveys.
“What does that do for our customers? It means they’re dealing with the same people day in and day out over long periods of time. It means the people they are talking to understand how that customer’s culture works, and how they fit in with Creation,” says Walsh. “They’re living and breathing all of the issues around that relationship every day.”