The comeback kids
It’s a relatively simple script: A large, publicly traded company finds itself over-leveraged. It enters and exits bankruptcy protection, reorganizes and emerges as a leaner, more focused company.
It’s a story that has played out many times in corporate America. But don’t be fooled by the simplicity of the plot. It’s never easy.
Case in point: BMC, which emerged from reorganization in January 2010. There was nothing simple, nor easy, about the transformation, according to the people who lived and worked through it. Plus, like any reorganization, there was never a guarantee that it would work, despite the confidence of the principle actors.
Some of the executives and managers who worked through the challenge shared their thoughts with HCN on some key themes of the transition.
On moving the headquarters to Boise, from San Francisco
Stephanie Erickson, VP human resources: “It was like getting back to our roots and getting back to basics, shedding all the excess and focusing on business. San Francisco was kind of considered to be the ivory tower — the second-most expensive real estate market in America, and we had a building materials company there. When we moved it to Boise, we said, ‘OK, we’re going to get back to our roots that made us successful.’ “
On belief in the transformation
Danny McQuary, CFO: “There wasn’t a question that financially we were going to make it. But what was gratifying was to see our new board come in — a group of outsiders — and do a complete 180-degree turn. They tended to think their job was to sell the company, but after a relatively short period of time, they realized there was way too much value here. Even though we believed it, here came a group of outsiders who also believed it, and that was important.”
Michael Badgley, executive VP company-wide operations: “I never once felt that I was going to have to look for a job. And I don’t think that from an operating level any of us ever doubted that we would make it through. It was just a matter of going to work and getting down to the basics and taking the business where it needs to go. We knew we had a very strong operating company inside of that nonsense that was going on.”
Wayne Mangan, market sales manager, Tacoma, Wash.: “We got stuck in the mentality that bigger was better, and that mentality cost us. When we thought bigger was better, we thought, ‘Let’s get concrete.’ We got into areas where we shouldn’t have. The difference with this new company BMC is we’re not going to get into anything that is not in our wheelhouse. The idea is: ‘If you’re in it, you better be good.’ “
On restructuring the sales team
Mangan: “[CEO] Peter [Alexander] said, ‘I got news for you. I hired a VP sales for you.’ It was Keith Costello. ‘And I want to know how you guys are going to accept this.’ My answer was: ‘Thank you!’ We needed one so badly. That was the start. We are customer-driven and not operational-driven. I think everyone was hesitant at first, but now we love him.”
On the annual sales meeting in Las Vegas
Mangan: “Visualize this: You’re in a room full of hundreds of people. I grabbed the microphone and asked [former president Stan Wilson] to come on up front. I turned to face him and in front of everybody said: ‘On behalf of the company, we would like to say thank you. You took us through these tough times. You could have retired, but you kept us afloat.’ There was a standing ovation.
“Then I called Peter up to the stage. ‘I don’t know what we can say to you. We were in the middle of the ocean treading water. You pulled us in. Thank you.’ Another standing ovation. That was a defining moment.”
Keith Costello: “At first, the feeling was, ‘I don’t want to be gone for a week at a time.’ Taking time out is difficult. But now they’re looking forward to coming back and meeting with the team. It’s a great chance to learn not only from their fellow employees, but also from the vendors.”
On cuts and the comeback
Erickson: “When I joined the company in 2006, we had 23,000 employees. Now we have 4,600.”
McQuary: “At the operational level, we had cut and cut and cut, closed locations, and done a lot of things. But I think there was a perception in operations the cuts had not been as deep at the corporate level. There was a psychological benefit to cutting off the high-cost San Francisco holding company, but it went beyond that. In January 2010, when we emerged from bankruptcy, we had 160 corporate employees. Now we have less than 110. Yet we’ve grown 35%. So the feeling now is we’re more in line than we’ve been in 15 years.”
On receiving the 2012 Pro Dealer of the year award
CEO Peter Alexander: “It hasn’t been easy. At our peak, we were nearly $3.7 billion in size with nearly 23,000 employees. We were public. We were over-leveraged and ultimately went through a financial reengineering to right our ship for the future.
“We were humbled as a company beyond reproach. We emerged as a new company in January 2010. We used that opportunity to define a plan, determine the best people to drive the plan forward and define the pace by which we execute.”