Employee cuts at Ozark Structures reflect changing operations

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by Paul Schreiber|ret||ret||tab|

SBJ Reporter|ret||ret||tab|

pschreiber@sbj.net|ret||ret||tab|

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In order to maximize its efficiency and maintain growth, Ozark Structures is changing from the inside out. |ret||ret||tab|

Working out of 80,000 square feet of manufacturing and office space on seven acres at 5731 W. U.S. Highway 60 in Brookline, 30-year-old Ozark Structures designs and builds roof and floor trusses and wall panels for commercial structures including apartments, hotels, restaurants and retail centers, said Jim Datema, chairman and CEO. It also does residential applications.|ret||ret||tab|

Fluctuating between 80 and 120 employees, Ozark Structures has added to its operational structure with four, in-house subsidiary LLCs, Datema said. The entities will all do business as separate components under Ozark Structures Holdings Inc.|ret||ret||tab|

These subsidiaries have all been formed within the last 24 months, said Mike Burkhart, president, COO and minority owner. Datema and Burkhart purchased the business in 1999. Datema owns 83.2 percent; Burkhart owns 16.8 percent. |ret||ret||tab|

The decision to split out operations came, in part, per legal counsel, Burkhart said. It's a way to separate areas like accounting and insurance within operations "so that we can evaluate and determine what we should need, making adjustments and how we should operate," Burkhart added.|ret||ret||tab|

Each LLC has different responsibilities, Datema said. OS Subcontractors LLC handles framing issues; Nations Contracting LLC works on retail concerns; Alliant Contracting LLC works with hotel contracts; and Homeland Developers LLC takes care of single-family housing tasks, said.|ret||ret||tab|

Homeland Developers is not very active yet, said Burkhart. Its purpose is to develop housing packages Ozark Structures puts together. "Springfield hasn't really been a market where framing contractors are using trusses and wall panels in their residential framing," Burkhart said. Instead, what's done locally is stick framing in which everything is built from scratch.|ret||ret||tab|

There is only a small work force dedicated to these enterprises, however. Altogether, the four LLCs employ only about 11 employees, Burkhart said. Everyone else works for Ozark Structures, he added.|ret||ret||tab|

Since Datema and Burkhart purchased Ozark Structures, yearly sales and outstanding orders have increased, Datema said. In 1998 the company had $6 million in sales with $80,000 in back orders and 50 employees. In 2003 OS Holdings had $18.2 million in sales and about $13 million in backlog with about 100 employees. Projecting ahead, Datema forecasted more than $20 million in sales for 2004.|ret||ret||tab|

Realignment|ret||ret||tab|

In the last two years, Datema and Burkhart realized they needed to better manage their companies' growth. |ret||ret||tab|

"The first few years we were growing at a rate of between 30 percent and 40 percent annually," Burkhart said. " Last year we spiked in expenses and in sales, but it wasn't contributing to the bottom line, so we decided to go back to the more conservative approach."|ret||ret||tab|

After evaluating each OS Holdings business on its own merits through 2003, it was determined that by "trimming our combined companies' sales volume 13 percent, we would be able to reduce combined overhead expense by 30 percent, plus dramatically reduce workers' comp and other insurance premiums and risks," according to a company memo given to employees Dec. 2.|ret||ret||tab|

The memo said, "the majority of the 13 percent sales volume reductions will come from Ozark Structures. This is due to the disproportional amount of working capital needed to maintain current sales, plus associated risks. At its current sales volume, we have barely justified the working capital required and risks involved."|ret||ret||tab|

The result was that Ozark Structures terminated nine staff members.|ret||ret||tab|

Marty German, a 21-year employee who worked as the network administrator, said once the memo was read, the employees were immediately released from their jobs.|ret||ret||tab|

"About a half hour before, the locksmith showed up and started changing the lock on the front door, which had always been a pretty good indication that someone had left or someone was going to leave," said Jim Ryan, a senior designer who worked there for more than nine years but was let go in December.|ret||ret||tab|

Each of the terminated employees visited with personnel in human resources and an accountant for details on insurance, retirement plans and the like, said Ryan. Severance pay equal to more than three weeks' pay was the one departing benefit, he added.|ret||ret||tab|

Though no longer an Ozark Structures employee, Ryan's work address remains the same. He works at Struc-Tech, an independent contractor that does work for Ozark Structures.|ret||ret||tab|

"We have a close relationship with them because they're trying to get in and develop single-family housing," which is a local market in which Ozark Structures wants to expand, Burkhart said. |ret||ret||tab|

Of the terminated employees, one was a trainee, another was relocated to a different job with a consulting engineer and three of the others are now working with independent contractors, Burkhart said.|ret||ret||tab|

The staff terminations were part of the company's sharpened focus. |ret||ret||tab|

"In the past I think we've been trying to do a little bit of everything, and we've become more focused on the types of projects that are more profitable for us. So it kind of eliminated some of our capacity in some of the areas that were labor-intensive, design-intensive, that we're not focusing much on," Burkhart said.|ret||ret||tab|

Now, the company is preparing to add staff.|ret||ret||tab|

"We're booking a tremendous number of orders right now," he said, citing more than $200 million in outstanding quotes on projects in at least 15 states. He expects to add another 10 to 15 people in the next two months to get near the 100-employee mark.|ret||ret||tab|

"Our staff levels will fluctuate with the time of year" and in relation to the construction market, Datema said.|ret||ret||tab|

Because the fall is almost constantly a peak period, Burkhart said, employee counts should rise to about 120 by autumn.|ret||ret||tab|

Five Ozark Structures employees who were terminated in December have new careers now with Structural Component Systems Inc., a Fremont, Neb.-based firm that is establishing an office in Springfield, said Kevin Wytrykusz, SCS marketing director. One salesperson and four design staff have been hired, he said.|ret||ret||tab|

Twenty-year-old SCS also manufactures roof and floor trusses and wall panels and saw an opportunity to gain a local presence by employing the experienced help, Wytrykusz said. Rather than relocate the employees to other offices, it made sense get them working locally, he said. |ret||ret||tab|

The five employees going to SCS are Jim Ryan, Dan Shum, Carver Young, Don Halbur and Paul Lais, according to Ryan, who heard about the SCS hiring in late June.|ret||ret||tab|

SCS's Springfield office space should be finalized by July 2, Wytrykusz said. Revenues for SCS for 2003 were about $36 million, he added.|ret||ret||tab|

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