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Marty Callison, president and general manager
Marty Callison, president and general manager

2012 Dynamic Dozen No. 5: SRC Automotive Inc.

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A recent catch phrase around the SRC Automotive Inc. plant is a simple two words: “Own it.”

The manufacturer, primarily of remanufactured engines, transitioned six months ago to a 100 percent employee stock ownership plan.

“There is a lot of upside for people to ‘own it,’ because they are owners,” general manager and President Marty Callison says of the 242 staff members, including 60 in Monett, who follow Jack Stack’s Great Game of Business open-book management plan. “That’s really what the Great Game has instilled in the people here. The opportunity for that ESOP growth is through performance and watching your spending. Hopefully, everybody is treating it like their own checkbook,” Callison adds.

SRC Automotive’s revenues have climbed by 53 percent since 2009 to $48.3 million in revenues last year. Callison points to contracts with General Motors, Mercury Marine and Axiom Automotive Technologies, which supplies engines to the U.S. Postal Service.

The ride through the recession included a rock-bottom hit in mid-2008, when SRC Automotive became the first SRC Holdings company to enroll in the state’s Shared Work Unemployment Compensation Program. SRC Automotive management decided to share the pain of reduced orders – tied to slowed new boat sales nationwide – by cutting all staff members’ work time by 20 percent, to 32 hours a week.

The other option was laying off roughly 40 employees, Callison says. Under the Missouri Department of Labor & Industrial Relations’ Shared Work program, employees received a portion of unemployment benefits while working the reduced hours.

SRC Automotive’s turnaround began with the March 2009 client addition of Axiom and the work in outfitting USPS delivery trucks with remanufactured engines.

“That was a big reason we were able to rebound so quickly coming out of the recession,” Callison says, noting that SRC Auto now produces about 6,000 remanufactured engines a year for the USPS.

Remanufactured engines, about 90 percent of SRC’s jobs, also are shipped to Mercury Marine, a seller of boats and boating products.

While indirectly experiencing the deep wounds of the marine sector during the national economic and credit woes, SRC officials are now spotting an uptick in remanufactured marine engine orders.

“People can’t get financing now for boats, but people are keeping and fixing up the boats they have,” Callison says, noting SRC is projecting a 15 percent increase in marine engine production this year. “We’re trying to rebuild inventories to get (Mercury) ready for the busy season, but sales already are exceeding what they were last year.”

A small portion of new automobile engines are produced for GM, Callison says.

Following the Great Game model, SRC Auto created a few contingency plans during the recession. “You try to have as many things as you can in the hopper (so) you can go to your (research and development) blackboard and pull something up real quick to fill in,” Callison says.

Contingencies caused SRC’s management team to consider alternative fuels.

“We’re taking gasoline engines and converting those to natural gas,” Callison says.

Those “off-road” industrial applications target the irrigation industry, primarily in the Canada and Texas oil fields.

In collaboration with Detroit-based Dart Machinery and Southern California-based IMPCO Technologies, SRC has designed its first engine from scratch. Dart provides the cylinder heads, engine blocks and intake manifolds, and Impco supplies the fuel and ignition systems.

After 18 months of work, SRC crews are running 1,000-hour tests on the 8.8-liter engines in preparation for an April launch. Callison says the company also is developing a 10.5-liter model.

As a result, SRC expects a 74 percent sales increase by its largest customer in the natural gas irrigation engine and generator market, West Texas-based Don Hardy Sales.

“That was all part of our contingencies,” Callison says, noting the team also is exploring the same engine platform for the marine market. “It’s really our first venture into developing our own engine.”

Click here for the complete 2012 Dynamic Dozen overview.[[In-content Ad]]

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