I need to write this story down. I am simply telling of things that I saw and heard, I do not claim to know what motivations there were behind any of it, even if there were motivations at all. In the end, I believe that every player was trying to do the best they could with what they knew at the time.
There was a company that was formed a while ago, probably 20 years ago or more. They built large equipment that is used to chop and shred and pulverize rocks into sort of a runny product that can be used for various purposes in the landscaping industry. The idea is very green and potentially very profitable, as what was chopped and pulverized is basically trash.
The company was divided into two parts, one would focus on building and fabricating the pieces and parts and would be called Reputable Fabrication, and the other would focus on the design and would own the intellectual property and would be called Enviro-Arc.
Years pass, and RF is a moderately successful endeavor. EA still exists, and sends a large amount of work to RF. Since RF gets paid for what they do, and knows exactly what it takes for them to make money, they do well.
EA, however, repeatedly embarks in projects which simply don’t make money. Each one is different, and EA can’t predict what it will cost to do the work, and they undercharge. They know they cut it close, but evidently don’t want to charge more in case they lose the work.
They operate, technically, in the red for years. Luckily, through creative book-keeping and a continuous stream of large, yet unprofitable projects, they stay afloat. Afloat, yet surviving by a large but hidden bilge pump in the bottom of the boat keeping it from sinking. They make just enough to (mostly) pay all the bills for the project, but no more. The down payment for the NEXT project keeps them going. So, basically, they are half a project behind at all times.
It is said, by the president of EA, that he is more interested in building people than building a business. He is an incredibly charismatic, peaceful and likeable man, is basically laid back, and, I believe, thoroughly enjoys life.
EA has a number of customers, and two of them combine into a larger company. That larger company now grows and eventually buys a few more of the other EA customers. EA continues to build plants, still in the red, and still half a project behind. And they have one big customer. Hmmm….
Then, suddenly, one day they have the chance to do two large projects at once. Can they do it? They will need more people. How can they expand?
So, let me explain a little more about the nature of EA’s product. EA’s product is pretty unmanageable, but needs to be neatly bottled in a way that it can be transported and handled. EA sometimes builds or buys machines that take this runny product and can shove it into a bottle. Very neatly. Unfortunately, those machines that bottle the product also are such that they can also squish hands, fingers, legs, and other unmentionable body parts of the people that would operate them. Not good!
So, EA and their big customer, US Stone, want to do some serious business, but need a better bottler. What do to? Well, luckily there are some people in the world that build safer, faster and more automated bottlers. EA locates a company and makes some deals. That company, located in Canada, gets squirrely, and then EA locates another company, in Europe, that is actually CHEAPER!
As it turns out, US Stone wants to buy a whole bunch of these special bottlers and put them in all their factories to replace all of the appendage squishing bottlers that are already there. EA sees dollar signs.
EA would buy the bottling machines from the manufacturer at a certain price, and sell them to the customer at a higher price. The normal markup is 20%. The president of EA cleverly negotiates both sides and, at the end, boasts that he will actually be making 21%.
EA is a small struggling company with a (admittedly) feast or famine industry. US Stone apparently realizes this, and realizes that this is a big deal for EA, so they offer to make a big down payment on the “bunches” of bottlers. EA sees more dollar signs. US Stone writes a check for 40% of the entire deal, even though the deal was stretched out over 2 years. Enviro-Arc deposits over 1.5 million dollars in the bank.
By this time, EA’s VP of sales and marketing, Tom, has left for greener pastures. He is responsible for making the two deals which EA has now, simultaneously. Tom knows that EA has a large deposit in the bank, however he does not know their intentions. After all, the majority of that money is earmarked to go to the fancy bottling machine maker.
EA, however, is still seeing dollar signs. They know the timeline of the large bottling machine project, and figure they will make enough money in the next two years to more than pay for the machines. After all, they need to expand, now, in order to finish these two large projects and also handle what will, undoubtedly, be coming down the pike in the future. It’s a good plan. Tom tells the president of EA “I hope to God you don’t spend it.”
They spend it.
They hire engineers and other people. They buy computers, top of the line. They rent a very expensive building with a very expensive down payment. They do lots of things with the money, which would all be fine. If the money was actually theirs do that with. Which it technically wasn’t. It would be fine, assuming they can greatly increase profits in the next two years.
They would, at some point in time, need to pay for the bottling machines.
The employees of EA take a field trip to the new building to see it. As they stand outside and ponder the enormity of the building, one engineer says to another – “I hope they don’t put this in the paper. Because, if this goes south, it will be big and will definitely be in the paper then.”
So, they continue to design and build the equipment for the two large projects. This equipment is all top notch, over built, welded wonderfully by EA’s wonderful welders, rugged, and one-of-a-kind. Even though they have this large, new building which is costing them $25,000 per month in rent, it ends up turning into a confusing mess. Pallet after pallet of parts start arriving, each going to a particular subassembly for a particular machine for a particular project. Which, there are two going on at the same time. Some parts get lost. What to do? Reorder them- rushed!
Nearly all of the fabricated steel parts come from RF, remember them? There is a special agreement between RF and EA. RF will be the single source for all of the the fabricated steel parts that EA needs, but they need to provide the parts to EA in two weeks or less. No problem! Of course, EA never checks what the price is. Ever. The parts are designed by one person, ordered by another person, and the bills are blindly paid by a third person.
Things inevitably start taking longer to do than anticipated, and panic sets in. Many more pieces and parts begin to be rushed. EA calls RF and tells them to step on it. RF complies, and starts a 2nd and third shift, doing only EA parts.
Finally, project one ships. Whew! Project two is a lot more complicated, and is costing a lot more than anticipated. That is, they know that the electrical wiring is costing a lot more than anticipated, since that guy figured out his bill and wants to get paid. And waits, and waits, and then makes some calls. It costs how much? EA management is not pleased, how could it cost that much to just do the wiring?
Meanwhile, the massive bottling machine project is not going well. Several have been shipped and installed, but there are an assortment of problems. The largest problem, it turns out, is that EA can’t say no.
The machines are complicated and quirky. They were designed and built by a European company located in a country that is more well known for making exotic sports cars. Sports cars, which, by nature are much more pleasant to look at and use for fun, not drive to work every day.
The US Stone workers would do something to break their machines, and then call to complain – loudly. EA would send technicians all around the country at the drop of a hat to fix dumb mistakes. At no charge. This quickly eats at the bottom line.
Tom, still an independent rep who is making deals, becomes the official rep of the European bottling machine line. EA breathes a short lived sigh of relief.
Tom, meanwhile, is no dummy and sees the writing on the wall. He knows, for instance, that EA has racked up some significant bills and isn’t paying them. Particularly, to the bottling machine maker. And, confusingly, to US Stone.
People employed by EA deal day to day with the bottling machine maker, and also with US Stone. These people have no idea what is going on behind closed doors, and wonder why everyone seems to treat EA so poorly.
Unfortunately, Tom says something to a potential customer regarding this issue, and EA finds out about it.
EA angrily denies that they are upside down in any way shape or form, and cuts all ties with Tom. In fact, EA has an all-hands meeting with everyone in the now-larger company, and explains that there are rumors going around that are untrue. Many of these employees didn’t know about any rumors, and did not even know exactly who Tom was, other than some slick looking well dressed man who had popped in now and then. This is due to the fact that many people had only been employed there a short time.
US Stone gets a whiff of this and asks Enviro-Arc whether it is true, are they in financial trouble? No way, they say, and they travel to the HQ of US Stone and say as much, face to face. The thing is, the president of EA might have actually believed it himself, as well as everyone who went. You see, things were happening so fast and had been floated for years, it was a bit messy.
Meanwhile, the marketing department has discovered the wonder of robotic palletizing and thinks it would be so cool to get into that. And you know what? It doesn’t cost a thing to get into robotic palletizing. There are European robotic manufacturers so eager to break into the lucrative US palletizing market they will actually LOAN YOU THE MONEY to get into palletizing. And give you a robot. And train you for free. No payments for 9 months! What a bargain it is, really.
EA said, where do we sign up? And they did. The robot arrived a few weeks later, and one of their new, keen and eager engineers got to work.
The bottling machine project is a disaster. EA is in violation of the contract, in that they are not able to install the machines according to the timeline of the contract. US Stone, weary of the whole deal, wants out. No problem, right? Calculations are made, and a dollar amount is reached. US Stone will cease buying machines, and, carry the two…. How about that?
EA owes US Stone $600,000 and the European machine builder $400,000.
Meanwhile, US Stone owes a lot of money to EA for projects that are unrelated to the bottling project. EA is relying on those payments, of course, to stay afloat. They have a big rent bill due, not to mention the ballooning payroll which happens every single week.
US Stone, fed up with EA, stops all payments. Frozen solid.
US Stone couldn’t have picked a worse time to freeze all payments, as EA was completely broke. In fact, the cash elevator operator had hit the basement and was still pushing the down button.
The first round of layoffs happened very suddenly, but no-one was too surprised as paychecks were becoming an irregular affair. The keen and eager engineer who worked on the robotic palletizer (and got it doing stuff that was “impossible” according to Tiff’s brother, Ted) goes to work for Tom, who has a company that is named Tom’s Name Spelled Backwards. It’s a mouthful, but definitely memorable. It seems that Tom is a little over his head with dealing with this European bottle machine builder.
EA owes US Stone $600,000 and the European machine builder $400,000. Somehow, EA also owes the local electrical house $250,000, they owe Tom $75,000, the local mechanical house $200,000, and they even owe RF $100,000. The president of which, by the way, is the brother of the president of EA (let’s call him Tiff). EA had not paid a dime for the robot. EA even owes Tiff’s mother-in-law $100,000. How did that happen? EA owes the federal government on payroll taxes, and UPS has stopped coming by. You know it’s bad when UPS is mad at you. All told, the amount EA owed swelled to over $3,500,000.
It was in the paper. Both times.
One vendor, who is owed a (relatively) small amount is particularly upset with Tiff. This vendor, let’s call him Peanuts, meets with Tiff and wants to work things out. Peanuts thinks he did Tiff a favor and really did a lot of work for Tiff, and wants paid. Peanuts is a small company, and the amount that Tiff owes him is a really big deal. Tiff assures Peanuts that he wants to work it out, and that he won’t declare bankruptcy.
Charles, the number 2 guy at EA and the head brainiac, takes over being president of EA because it’s too hot for Tiff. Charles knows it’s bad, but doesn’t know how bad. Eventually he dusts off the books and takes a look, and promptly quits as president and tells Tiff that it’s over.
A short time later, EA declares bankruptcy. Now Peanuts is really riled up, Tiff gave him his word, and Peanuts would have done some things differently had he known there was a bankruptcy in the works.
EA is a ghost of what it was. They move back to the farm where they came from, wipe off all the rat poop from the tables, and get to work trying to put the pieces back together.
Tom, and his company, Tom’s Name Spelled Backwards, is a creditor as well as represents the European bottling machine builder. As such, Tom is decreed by the bankruptcy judge to be the head of the bankruptcy committee. He is, effectively, the 2nd largest creditor since he represents the bottler maker. And, he lives locally. This matters, because the largest creditor, US Stone, was located far away and couldn’t be bothered to head it up.
Time passes. Tom watches Tiff and EA get off basically scott-free. Sure, they have to pay something like 10% of it back, over several years, but they stay in business. The sad thing is, though, that Tiff has problems at home and eventually has to declare personal bankruptcy. This is due to the fact that he somehow was personally legally liable for a business credit card that had a serious balance that wasn’t paid. Whoops! At least he keeps the house, has a nice salary, and has raises written into the bankruptcy settlement. Nice!
Really, it is nice that it is possible to make a mistake and come out of it ok, in the end.
Eventually Tom and Tiff make “amends” and have a arms-length business relationship.
Tom gets sick of dealing with the European bottling machine maker, and starts building his own. He hires the head brainiac who used to work for EA, Charles.
Charles ends up making a whip-snapping bottling machine that, essentially, works the same way as the fancy-schmancy European bottling machine, but was “designed from scratch.” That is, if “designed from scratch” means “open up a CAD drawing of the European part on the left side of the screen and make a new CAD drawing on the right side of the screen that looks a lot like the part on the left.”
Admittedly, the Europeans had made a very mouse-trap kind of machine. That means, after 20 years of making bottling machines, they’d pretty much came up with a really good way of doing it that couldn’t be made any simpler. A mousetrap has 5 parts, and if it had one part less it would no longer trap mice. Likewise, the major parts of the bottling machine can’t really be done any other way or they wouldn’t work the same. And, admittedly, when the European variety is running, it runs VERY well. Just like their sports cars.
Of course, this isn’t the first time that someone had parted ways with the European bottling machine maker and started making their own. The first time, though, it was their head engineer and it made the owner of the European bottling machine maker cry. Which is unfortunate, because this country that makes fancy red sports cars also has a reputation for making offers one can’t refuse. Regardless, Tom never woke up with a horse’s head in his bed. Yet.
After a time, Tom and Charles had created a successful business. They learned a lot from what they went through with Tiff and EA, and Tom’s Name Spelled Backwards is on the map. In fact, they quickly exceeded the maximum capacity of work that could be ramrodded through their single engineer, the keen and eager engineer who figured out the impossible robot project at EA.
Charles enjoyed making the 3D models of the machines, but after that the work was very tedious and boring. There is a very large divide between the point at which a concept is created in 3D Model Space, to the point where it arrives in large physical chunks at your door ready to be bolted together.
The keen and eager engineer somehow connected those two points, miraculously, and the Tom’s Name Spelled Backwards Bottling Machine ran beautifully.
Beautifully, if you mean beautiful as a Chevy Camaro running with open headers at a drag strip. Compared to beautiful as a Red European Sports car running at full tilt around a race track with other European Sports Cars. Beauty is in the eye of the beholder, and truth be told, both machines are truly inspiring to see if you are into that sort of thing. In the end, they both do the same job very well. And, the Tom’s Name Spelled Backwards machine is faster and simpler, more overbuilt and definitely American.
The keen and eager engineer is buried, so they hire a bunch more people to do all the same things he used to do.
At the end of this story, Tom and Charles end up hiring some familiar faces. They end up replacing the keen and eager engineer with someone who is also keen and eager, yet is one of the original circle of people at EA. In fact, everyone who used to be at EA ends up at Tom’s Name Spelled Backwards. Everyone, except Tiff and Ted, and their wonderful welders. But that’s ok, because, who do you think welds up all the big chunks of bottling machines, and ships them to Tom’s Name Spelled Backwards?
That’s right, Enviro-Arc.
It is a small world after all, isn’t it?
