When Termax Corp. threw open the doors of its Lake Zurich, Ill., operations to a group of manufacturers in support of the 2016 IndustryWeek Manufacturing & Technology Conference & Expo, the move was entirely in keeping with a philosophy espoused by co-CEO William Smith. It's a philosophy of life-long learning--and what is a successful plant tour other than a sharing of knowledge among fellow manufacturers that leaves everyone wiser in the end?
"It might be a new set-up routine or it might be how a system works for other companies," Smith says. "I really want our best people to have outside influence. That influence is vital."
In this instance, it was the plant tour participants at the May event who received the lion's share of learning. Termax, a family-owned manufacturing company that produces metal and plastic fastener solutions primarily for the automotive industry, showed its equipment, shared its thinking and talked about how a small manufacturer can successfully compete in the United States.
IndustryWeek recently caught up again with Smith, whose father founded Termax in 1971, to capture a few of his thoughts about manufacturing, leadership and giving back.
IW: You and your brother Mike are co-CEOs of Termax and you have promoted others to president. How do you define your role?
Smith: Our job is direction. The way I look at it is, the CEO looks outwardly and the president should be looking at the inwards parts of the company. So a CEO is the face of the company to the world, and the president is the face of the company to the company itself, to the employees -- their job is to make sure everything gets done. Ours is to set direction. I think of it as cheerleader in chief.
I have a firm feeling that my job should be to hire the best people and give them the tools to do their jobs. I believe in Ronald Reagan's [words] of trust and verify, so my job is a lot of looking at reports and making sure we're on the right track.
A CEO should be working on his company not in his company.
IW: What is the origin of the Termax name?
Smith: [My father] called the company Termax, which meant 'terminals with maximum reliability.' I thought it was kind of clever at the time, but now it has nothing to do with what we make.
IW: Some folks perhaps think you have worked at Termax most of your adult life, which wouldn't be surprising in a family-owned firm. However, that's not the case. You are an accountant by training and owned two accounting firms before joining the family firm (in the late 1990s). How did you come to join Termax?
Smith: I spent my [early] life trying to run away from this company because my dad had a large shadow -- that's how I thought of it then. I went and got my CPA and had my own public accounting firm in Wisconsin. Well, first I had one in Arlington Heights, Ill., and I sold that to a partner and moved up to Wisconsin and raised my children and did public accounting. [Then] I sold that. After my having sold the CPA firm, my father had the idea that maybe I might like to work for him or with him, and so I did.
IW: Did you think, back then, that you would join Termax eventually? And what does an accounting background bring to the table?
Smith: I never did. I thought I would run my CPA firm or firms, forever. Being a CPA is good because you learn about all sorts of different businesses. I was able to learn how the good companies worked and how the bad companies worked.
IW: I would think that working with family could bring a whole lot of emotional baggage that is not part of a more arms-length work environment.
Smith: That's true. I will say that one of the nice things when we grew up, my dad would bring the problems of Termax home and we would sit around the kitchen table discussing his problems. It is how I knew I was going to be an entrepreneur in my life … I enjoy the problem-solving and the ownership levels. I don’t know how to be an employee. I learned that from the dinner table. There were a lot of good things that happened in that kind of environment.
My brother, and we have a sister as well, all of us are pretty entrepreneurial and I can say that goes back to go back to the dinner table discussions. They made a point of asking our opinions on various things even though we were just dumb kids and we didn't know diddly squat. We'd tell them what we thought and he listened and … oftentimes it would help us to learn how to structure answers to questions and problems. It was a good way to grow up.
IW: You are immediate past chairman of the Precision Metalforming Association. I read that one of your goals was to promote a mentoring program. What prompted that?
Smith: I think one of the problems in manufacturing is that for years there's been a brain drain … a significant decrease in the amount of and quality of leaders in manufacturing. Manufacturing went for many years as being seen by parents as this dirty awful place – 'I want my kids to go be doctors and lawyers and Indian chiefs rather than to do something like this.'
I really fit into that myself. I had seven children; only one of them did I really work at trying to get to become an engineer, do STEM stuff. What I learned coming back here is there's a whole middle level of people that we are missing.
I'm really encouraging that mentoring program. I think we really need to help our kids want to do what we do.
What does Termax do to encourage that next level of leadership?
Smith: We have very good training programs here. Plus, we encourage all of our people to take part in [Precision Metalforming Association] and/or other organizations. The value is that is while we do many things right, I don't think we do everything right. It helps to have a lot of outside influences. I think of it as cross fertilization.
I think it's going to keep us young, No.1. But No. 2, it's going to keep us so that we are not inwardly focused. That can be a problem because you can think you're the best and then you find out, 'we're good but we're not always the best.' We need to keep learning. That's part of the life- long learning process.
IW: Might some of that 'outside influence' influence an employee right out the door and to a new company?
Smith: If somebody leaves my company, that's on me. I want to provide -- whether I'm paying them the most money or not -- I want to make sure that this is a fun company and they know they are making a difference. That's why we have 82 patents, and we have a really fun environment. People love to work here. At least I think they do.
In 2011 you gave Congressional testimony in which you said tax reform was the single most important barrier to growth in the United States. Have your views changed five years later?
Smith: I still believe tax reform is vital. I don’t trust my politicians, particularly the new crop of would-be presidents, so I'm of the opinion now that we just have to make our own luck, make our own way.
I know we can compete with anybody in the world. I do think it is not a level playing field right now because our tax structure and our regulations structure are perverse. That’s the way I think of it. As a nation, we are very entrepreneurial but the way the tax structure is set up, it's really poorly done. It needs to be changed.
There needs to be a major overhaul. I would even be willing to be part of that. …The more I can help, I want to. To whom much is given, much is expected. I truly believe you’ve got to keep giving back. I'm willing to help, in whatever way I can.