New building, diverse products lead charge for Megavolt

by Kris Ann Hegle

SBJ Contributing Writer

Jack Stack's concept of open-book management and employee involvement has become the key for many of today's successful businesses including Megavolt Remanufactured Electrical LLP. Founded in 1991, Megavolt is a joint venture of Springfield Remanufacturing Corp. (SRC), where Stack serves as the president and CEO, and Case Corp., a worldwide designer, manufacturer and distributor of construction and agricultural equipment.

Stack's business philosophy is at the root of many of the current changes going on at Megavolt, which remanufactures starters and alternators. Earlier this year, Megavolt hired a direct salesperson, and the company began diversifying its product line. Megavolt also is in the process of building and moving into a new facility at Springfield's Partnership Industrial Center. The new building will provide the company an additional 16,000 square feet of space.

Originally Megavolt was located in Marshfield, but in 1994 the company relocated to a smaller plant in Springfield and its work force was reduced. By the end of 1995 Megavolt's profit margin had improved.

While 1996-1998 were good years for Megavolt, 1999 has presented a number of challenges. According to Dianna Devore, general manager of the plant, most of the starters and alternators remanufactured by the company's 65 employees are sold to customers in the agriculture industry. When the agriculture market segment took a downturn this year, Megavolt suddenly found itself with a high level of inventory.

At the same time, competition was increasing. Although Megavolt works with 1,500 dealers nationwide, Devore estimated the company has more than 8,000 competitors, most of which are mom-and-pop operations.

To take the business to the next level of success meant making some changes. Management began seeking ways to diversify the company so it wouldn't be so dependent on fluctuations in the agriculture market. One of the strategies Megavolt recently began pursuing is to remanufacture power diesel generators, which will be sold to both retailers and wholesalers through another SRC subsidiary, New-Stream Enterprises.

The company also hired a salesperson with more than 30 years of experience in the industry. In the past, Megavolt had no direct sales force, Devore said.

Hiring a salesperson, however, has helped Megavolt attract more long-term customers, she said. The company also has regained some of the business previously lost to competitors.

"Studying the competition is an ongoing job," Devore said. "Traditionally, it hasn't taken a lot of overhead to remanufacture starters and alternators, which is why a lot of mom-and-pop operations got into this business. Now, many of these shops don't have some of the more expensive equipment needed to repair or remanufacture starters and alternators particularly imports, which have become much more high-tech. I would say remanufacturing imported starters and alternators currently accounts for 30 percent of our company's business volume."

Besides hiring a direct salesperson to diversify its product line, Megavolt is expanding its facilities. Devore estimated Megavolt will be ready to move by December.

In the meantime, Devore is visiting other remanufacturing plants around the country and is gathering ideas for new ways to streamline operations. Megavolt's open-book management practice also is encouraging employees to contribute their own ideas on how to improve operations at the new plant.

Recent improvements on the shop room floor have been made using the Japanese philosophy of kaisan, which stresses continuous improve-ment.

As part of Megavolt's open-book management, employees attend business meetings that let them know the company's financial status. Each worker keeps a folder that contains a copy of monthly financial statements and inventory levels, the yearly business plan and information on how various employee bonus programs work. Employees also serve on committees that focus on everything from productivity to safety.

"SRC's open-book management philosophy is great," Devore said. "It teaches you how to think like a businessperson at every level of the company."

Devore said she believes Megavolt's open-book management and commitment to employee involvement will not only contribute to the company's future success, but the success of its employees. Last year, employees received bonuses that were 13 percent of their base salary, according to Devore.

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