Combat Zone - Fighting the recession one scrap at a time
Due to reduced sales, Jenkins has had to cut labor back to one installation team that is able to work with all of the types of materials Top Service Inc. fabricates, like the natural stone pictured here.
Though natural stone accounts for the largest percentage of sales for Jenkins, the recent addition of post-form countertops, (pictured above) has proven to be a positive move for the shop.

It's no secret the surfacing industry, and many others, are suffering from a hard-hit economy. Many businesses have filed for bankruptcy, closed their doors or are simply crossing their fingers they can get by without letting go of even one more employee. Paul Jenkins, owner of Top Service Inc. located in Nicholasville, Ky., has been there and is working on coming back.

Founded by Jenkins in 2001, Top Service Inc. had been very successful, growing at a rate of 25 percent per year. With a background in cabinetry, the company started out fabricating solely solid surface and laminate tops sprinkled with a few tile backsplashes, until 2005 when a stone fabrication facility was added to the lineup contributing to much of the shop's most recent growth.

Signing On With Stone

The expansion into the stone market took approximately two years to make happen. "We started installing and templating stone in 2002, and by 2005 our fabrication shop was up and running," said Jenkins. "We were templating and installing just quartz, and subcontracting out the fabrication of the material because we weren't equipped with the proper tools."

After about one year, Jenkins realized it could be difficult to count on other manufacturers to deliver the same level of service as Top Service and decided to get into fabricating his own quartz and stone tops. It took one year to complete the planning and design of the wet fabrication building, but everyone was pleased with the outcome.

"We wanted to be green-conscious," said Jenkins. "We spent time sloping our floors, digging the trenches and putting in a holding tank for the water so we could recycle it. We purchased a Yukon bridge saw from Park and a Wizard as well. Then we bought a Master router, some work tables and A-frames, and other storage items."

Jenkins owns two separate 12,000-sq.-ft. buildings, one for solid surface and laminate and the other for wet fabrication of quartz and natural stone. In the wet building, there is an additional 2,500 sq. ft. to expand into as stone and engineered stone, accounting for a majority of the sales at Top Service at 39 and 30 percent respectively, continue to grow. Laminate and solid surface make up approximately 13 and 14 percent of the shop's sales.

"I know, right now, stone is what's carrying us through this economy," added Jenkins. "Laminate and solid surface are now picking up, but I'd say for about six months before that, everyone who was buying had disposable incomes and it was all about the granite and quartz."

Tough Decisions

The recession has had a large impact on the happenings at Top Service Inc. In comparing 2008 and 2009, since last year the company has shrunk from 28 to 15 employees; and Jenkins has predicted 2009 will fall $800,000 shy of 2008 sales, but he hasn't thrown in the towel just yet. Jenkins was asked about his recession strategy, and here's what he had to share.

Surface Fabrication: When were you forced to make cutbacks due to the effects of the recession on production?
Jenkins: January and February were pretty scary months. I didn't know if we were going to be able to make it through, and I had to make some really tough decisions on cutbacks as everyone here is very qualified, dedicated and loyal to the company. I have quite a few people still laid off, but we have managed to bring back one employee this month and one last month, and it looks like we'll be able to continue this trend next month as well.

SF: When the economy began to hurt sales, was labor where you made your first cuts?
Jenkins: I started cutting back office staff after January and February.

SF: What was your methodology for deciding how to trim back the cost of running the business, for example, cutting back on machinery, materials and labor when sales began to drop off?
Jenkins: Each person, on average, manufactures about $100,000 worth of work per year. When our sales numbers dropped, the first thing I saw were guys standing around, and I knew I had to cut back on my labor.
During this time, I also used my office staff to implement things we had needed to work on in the shop, but couldn't because we were too busy, like improving our safety program, organization and repricing structures. This was busy work we could do now to improve ourselves and be at the top of our game when the economy did turn around.

SF: You mentioned you have been able to hire back a number of employees. Do you see this as a sign to the recession turning around locally, or in the surfacing industry specifically, where people are becoming more comfortable making those home investments?

Jenkins: I think it's probably our industry or market. It seems to weather these recessions better than a lot of the country. I've been through a few recessions over the last eight years and this is, by far, the worst, but I think we've found the bottom, actually hit the bottom in February. Now, I've seen a steady increase in business over the last three months. In this month we're actually seeing another growth, making that four consecutive months of growth.

SF: Now, specifically, with the economy hitting fabricators and what they can do to weather the storm, you've started a remnant program. In addition to a green solution for any shop with scraps, it appears to have helped you combat the recession through selling the scraps at a reduced price. How did you get started with your remnant program, and what were your expectations for its growth?

Jenkins: We were just getting into the granite business and that started it. We had been here for a couple of years with business growing nicely, but we ended up with a lot of materials that were standing around and collecting dust. I saw that as money sitting there, and we weren't doing anything with it. We looked at the small pieces and asked, "OK, how can we all win from this?"

Our customers win because they're going to receive a discount from the remnant program. We're going to win because we're going to get rid of all the scraps and turn that inventory into cash. Then, the program also falls into our green goals of reduce, reuse and recycle.

Due to reduced sales, Jenkins has had to cut labor back to one installation team that is able to work with all of the types of materials Top Service Inc. fabricates, like the natural stone pictured here.

SF: What discounts do you have available within the remnant program for the customer?
Jenkins: The discount takes 30 percent off of the price of the material. We don't discount our labor; we discount the material. If you're looking at a stone remnant that is $30 per sq. ft. material, you're going to get $9 per sq. ft. off of that price. That's a pretty good discount.

SF: How has this promotion impacted business during the recession? Have you been able to turn any of the remnant sales into larger repeat business?

Jenkins: Through the worst of the recession, in February, the only jobs we sold were through our remnant program. Those pieces were vanities and small islands. If it wasn't for this program in the shop, we probably would not have had any work at all.
Now that things have turned around, those customers who purchased vanities three to five months ago are confident enough in the economy to do their kitchens now. The customers have gotten to see the quality of work we put out there as well as our customer service, which is what we strive to succeed at, and they're hiring us again for those big jobs.

SF: Is your program only available for natural stone and quartz inventories or does it also extend to solid surface scraps?
Jenkins: No, the remnants aren't just natural stone or e-stone, the program extends to our solid surfacing scraps as well.

SF: While the program has been a big help to bring in business during the recession, not to mention the Green aspects this has offered your shop, what else have you done to stay afloat during this recession?
Jenkins: We've been very aggressive in many aspects of the business. We've designed a new Web site this year and have been marketing it in conjunction with a radio campaign we run. We've had great hits off of the site, and customers tell us it's very informative. We have links to all of our distributors there. This way our customers can look at thousands of colors right there from the home.
We've done a number of other things as well. We've added different production lines. I've added post-form, which is something I never thought I'd do. We got into the post-form countertops when one of our competitors went out of business and was looking to get rid of some equipment. I saw an opportunity there we hadn't had in the past, and we picked up a new product line. Within the shop, we've also been aggressive in going after the commercial projects. In weathering this storm, we just found ourselves diversifying.

SF: Is commercial work part of your plan to expand the business?
Jenkins: Yes. The commercial work was a logical choice. A lot of my employees have worked for commercial cabinetmakers and they have the experience and put out a great product. It's not something our employees had to be trained in -- they already had those skills. It was just another product we could offer without increasing our overhead.

SF: If the economy hadn't hit this hard, would reflecting on your business model have been easy for you to do, or would you even have had the time to look at it?
Jenkins: I probably would not have done it. We were always so busy just keeping up with countertops in the prior years, we never had the time to take a look at diversifying our work. Now that we've gone out there and made relationships with contractors, the commercial work and our other ventures are going to be very profitable expansions for us.

SF: Do you have any advice for other fabricators working through the recession?
Jenkins: I'm still trying to figure that out myself. This is the way I looked at the recession: "What else can we do with the staff we have to keep us busy?" I've been in this industry for 15 years and had never seen anything like this.

Service Fabrication Magazine - Top Service article in July 2009 issue
Read Article Online @:

http://www.surfacefabrication.com/

Paul Jenkins can be reached at 120 Park Central Court, Nicholasville, KY 40356; 859-881-3344; or online at www.topservicelex.com.

Associate Editor Marci Presser can be reached at marci@surfacefabrication.com.

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