By Dave DeWitte
CEDAR RAPIDS –Growing and sustaining a family business brings a different list of challenges than other businesses face, but it can also bring a stronger resolve to overcome adversity.
At 50 years, Midwest Metal Products of Cedar Rapids, which began in a family’s garage in Swisher, is a good example of that perseverance.
Led today by brother-and-sister team Kevin Urban and Rita Jelinek, Midwest Metal Products has managed to abide through everything from deep recessions to the closing and departure of major customers, labor disputes in earlier times when the company had a union and the death of their father, Ray, eight years after he started the company as a part-time garage business.
“We’ve weathered many storms,” said Ms. Jelinek, who handles the “people side” of the business, including a comprehensive employee wellness program. “The economy is so uncertain, you just try to do what you can.”
One of the family dynamics that makes Midwest Metal Products successful is the trust and complementary abilities of Ms. Jelinek, the company’s vice president, and Mr. Urban, its president.
“We have a good relationship because we have occasional conflicts,” said Mr. Urban, adding that the siblings have always managed to work through every disagreement. The two don’t always approach situations from the same perspective, but tend to meet in the middle.
One example is the way the company enforces personnel and workplace policies. Mr. Urban admittedly likes to see the rules enforced more rigidly, whereas Ms. Jelinek tends to mediate and look out for the interests of employees.
“She has a different perspective and so we balance out,” Mr. Urban said.
Being the second-generation owners of a family business is more unusual than many think. In a February 2012 article in the Harvard Business Review, business consultants George Stalk and Henry Foley wrote that 70 percent of family-owned businesses never survive to transition to a second generation of family ownership, and only 10 percent survive to make the transition to a third-generation.
Some of the challenges include developing a new generation of leadership within the family, financing the ownership transition so that the original owners can retire and the fact that the leaders of family businesses often hold their positions considerably longer than other top executives at other businesses, limiting exposure to new business teachings.
Midwest Metal Products uses highly advanced computerized numeric control machine tools, including laser metal cutting machines and highly precise computerized brakes for bending metal. The precision products it produces meld seamlessly into finished products ranging from agricultural equipment to equipment found in aircraft cockpits, and most consumers have no idea where the parts originated.
Still, Midwest Metal Products’ largest base of customers is within a 300-mile radius of Cedar Rapids, because customers like the confidence of being able to work with customers within an easy day’s drive.
Mr. Urban, 64, has been involved in the business since age 14, when he began helping his dad, who worked at Cherry-Burrell in Cedar Rapids, fabricate parts in the family garage. After graduating from Iowa State University, he went into the Army for two years and returned to work in the company.
Mr. Urban’s father, Ramon “Ray” Urban, died of complications from leukemia at the age of 45 in June 1972.
After his father’s death, Mr. Urban talked to his mother, Maxine, about which of his father’s former business associates at Cherry-Burrell might be able to step in to lead the business at least temporarily. One of them was running an office in England for Evergreen Packaging, a successor company to Cherry-Burrell, and agreed to return to Cedar Rapids to help out.
The arrangement worked and the leader became a new addition to the family. Edward Vanderlind went on to not only lead the business, but to marry Maxine.
Mr. Urban worked with Mr. Vanderlind for two years, but left the company in January 1976 after Mr. Vanderlind brought in a different plant superintendent from England and conflicts broke out with a number of the existing employees.
The departure proved valuable to Mr. Urban from an experience standpoint. He worked in six different metal fabrication companies in the Denver metro area, including some of the top fab shops in the West, before returning in 1983. Ironically, Mr. Urban said, one of the reasons for his return was the lack of upward mobility in the Denver fab shop where he last worked, because it was family owned.
A brother, Brett, had already returned to the company in 1980, and was joined in September 1982 by Mr. Urban and Ms. Jelinek as full-time employees. What might have been a happy family reunion was a sobering reminder of how fragile business could be.
“It was very depressing when I first moved back,” Mr. Urban said. “The economy was flat and we were laying people off.”
The conditions were caused by the farm crisis and the economic recession surrounding it. In the years that followed, the company saw many of its leading customers – heavy industries such as Norand, Harnischfeger, Rockwell Goss and Linkbelt-Speeder – close their doors or move away.
“We had to venture out and get sales from outside the area to make up for those (closings),” Ms. Jelinek said.
In 1997, Midwest Metal Products announced to its customers that the family had sold the business to a Chicago company, but the deal fell through after the two sides could not agree on terms.
Although initially interested in taking over the company, Brett Urban moved to Florida in the late 1990s. Ms. Jelinek and Mr. Urban spent much of 1998 trying to convince their mother that they would be able to acquire and run the business successfully.
Ms. Jelinek and Mr. Urban purchased the company from their parents in 1999. Ms. Jelinek’s son, Adam, a recent University of Iowa graduate in marketing, was able to help out.
The purchase agreement was based in part on the expectation signaled by a major customer, Norand, was going to expand production. Instead, Norand changed its plans, and two weeks after the purchase agreement was signed, the new owners had to lay off 30 employees to make the numbers work.
Such decisions can be painful, but are sometimes necessary. The ability to make such decisions rapidly has, in fact, helped the company navigate difficult times, Mr. Urban says.
“The best part about being family-owned is, you can make intelligent business decisions based on fact,” Mr. Urban said. “We don’t have to wait for a lot of committees to decide.”
Mr. Urban and Ms. Jelinek have tried to align the goals of Midwest Metal Products with those of its employees through open-book management, company-wide meetings two times a year and a profit sharing plan that pays out once a year.
The strategies have not only helped motivate employees to pull the company through bad times, but in good. They have also helped create a strong base of metalworking experience, Mr. Urban and Ms. Jelinek said.
Being family-owned also makes it easier to be flexible with employees when they have a special need, such as taking a pet to the veterinarian or picking a child up early from school, Ms. Jelinek said.
“I’m proud of the fact that we’re a family-owned business,” she said. “I think it sets us apart.”
One sign of the family orientation is on the roof of one of the Midwest Metal Products buildings – one of 14 building additions over the years. It proudly proclaims support for the University of Iowa Hawkeyes in huge letters.
Good communications and relations are also part of the Midwest Metal Products formula, Ms. Jelinek said. Close to 40 employees have taken the Dale Carnegie Course.
Sons of both Mr. Urban and Ms. Jelinek work in the business, as does Ms. Jelinek’s sister, Kim. Adam Jelinek works in sales and marketing, and Ryan Urban joined in the last year, and is beginning a career learning circuit with training in sales.
Midwest Metal Products also has many employees with family ties to each other.
Ms. Urban and Mr. Jelinek are reaching the age where they are seriously considering the future of the business’ ownership. Beyond the possibility of a family succession, they are also beginning to study the possibilities of transferring the company to an employee stock ownership plan, or ESOP, Mr. Urban said, due in part to a new state law that encourages the practice.