Top Honoree, Private Companies (revenue $100 million or less)
At first glance being CFO of a company that makes the wooden, forklift-friendly pallets upon which most modern products are shipped wouldn’t seem too exciting. Yet it’s been that and more for company CFO Jay Wiegand—though not always in a good way.
Not surprisingly, the recession was less than kind to a company that’s tied so intimately to factories and warehouses. But the CFO found ways around the problem, including lowering production costs and servicing clients relatively unaffected by the downturn.
“We learned that our focus on core customers in non-cyclical industries, such as food and pharmaceuticals, paid off in a sales decline in the 10 percent range, versus many other industries, such as auto manufacturing, that fared far worse,” Wiegand said.
Family: wife Lorri; daughter Kaya, 14; sons Isaac, 12, Jake, 8, and Cole, 5
Hometown: Wapello, Iowa
Education: BBA in accounting, University of Iowa; CPA and CMA
Civic Involvement: Extensive church involvement
Hobbies: Family time, working out, reading, movies, following University of Iowa athletics
He signed on with Remington, Ind.-based American Fibertech Corp. back in 1999, when it was struggling with what management diplomatically describes as a “very fragile balance sheet.”
Wiegand set about helping to revolutionize the company, helping to transform it into a vertically integrated producer of new and recycled pallets. Under his stewardship the company left its “fragile” days behind, posting $43 million in sales and industry-leading profits in 2011, and boosting the payroll from 110 to approximately 320.
The crowning achievement of 2012 was construction of a state-of-the-art pallet production facility at AFC’s Clarks Hill plant, allowing the company to double its new pallet capacity from 1.6 million a year to more than 3 million. Wiegand led the project from site development to building design to equipment installation.
Not that the pallet business doesn’t present unique challenges, including the quest to locate enough raw and recycled timber to keep the assembly lines humming. It’s a much bigger deal than it sounds. “This consistent industry challenge has led us to vertically integrate, and to source logs and mill them ourselves,” Wiegand said. The company produces more than 90 percent of its new pallet lumber at its Mitchell, Ind., sawmill and keeps more than 30,000 tons of logs in inventory.
The company weathered the recession, in part, by focusing diligently on costs. “At the bottom of the downturn we worked to maintain our entire workforce by rotating a few 32-hour weeks among our shifts,” Wiegand said. Not surprisingly, the company enjoyed record low turnover in 2009 and 2010.
It also benefitted from relatively new income streams, such as from selling colored wood mulch, a business Weigand helped the company develop to reduce its waste stream. In fact, AFC has become one of Indiana’s largest mulch producers, selling more than 5,000 semi-truck loads annually.
Ironically for an entity that sounds so indisputably green (they make their pallets from a renewable resource, a good portion of which is recycled), the CFO says he’s been forced to wade through mounds of regulations and red tape. “We have been expanding at all three of our Indiana plants over the last five years, and working through the rift of regulatory considerations has been a major challenge,” Wiegand said. “Wetland surveys, archaeological surveys, bat habitat, blind fish in the Lost River, the list goes on. In a small business without a huge staff of project engineers and attorneys, the compliance role usually falls to the CFO.”
Other recent challenges include coping with the sudden loss of the company’s group healthcare provider, which according to Wiegand decided to exit the health insurance business because of health care reform. Its departure forced Fibertech into the open market, where it faced a 50 percent cost increase for group rates plus a 15 percent increase upon renewal.
When it comes to the future, the CFO thinks a lot depends on what happens post-election with issues such as the deficit. As for Fibertech, it looks to be another good year for the pallet business.
“We have built a loyal core of log suppliers by serving them with our own fleet of log trucks to pick up logs in the woods—and we pay twice a week,” Wiegand said. “Everyone loves quick pay.”
And customers love on-time delivery. Weigand led an emphasis on delivery resulting in the company being on time an average of 99.9 percent of the time, an improvement from 86 percent in the last decade.•