Chapter 11, Threshold Management …

Chapter 11 bankruptcy is a legal way of tuning up companies for a restart. If you have not gone through one, it is an experience that one should live with the positive outcome and not an excuse to slide away from what once was committed by purchase.

Chapter 11 is a structure as explained to me as a restart and to give the company a chance to start over. I am not so sure I agree because most lose, but there are some personal values in the process. The company that files Chapter 11 sheds the debt and the creditors have to take it on the chin. Does not sound fair to me.

I was once involved with a company as it came out of Chapter 11 filing. It, as directed by the courts, had to make some very tough decisions to “Reorganize.” Its structure, as approved by the system, was very clear: The creditors had the option of being paid 20 cents on a dollars owed or 100% plus interest over 5 years upon exiting the filing. Some debt-owed companies choose the path of taking the 20 cents and getting super mad, while most took the five-year plan with the belief of getting paid all their money, except being a bank and praying for the company’s survival.

By the way, each got all of their monies in the way that they chose. The company sold off some assets, regrouped, and came out much stronger and paid all of its debt plus interest. It lived up to the challenge and its word as it was a privately held corporation.

Now why is this a subject to talk about, and what does that have to do with good maintenance management? The wise owner of that $2 billion company told me: “Operate each day son as if Chapter 11 was on your doorstep.” It’s a lesson well learned and not forgotten.

As good managers, we need to watch every penny, pennies of parts, pennies of labor and pennies of waste. When you go through Chapter 11 you are forced by survival to manage. A tactic of managing I would suggest is managing every day, every minute as if you were trying to climb out of C11. Become a coach to each supervisor, technician, mechanic, office worker, parts personnel, and everyone under your structure, and not with the fear of going out of business, but the practice of controlling the check book. Finance people force their controls through “the budget;” it is the only way they can push down the financial protection for the company. They should do so, just differently.

It is too often that so-called managers just spend, spend and spend – making or not making decisions that are easier than saying no. It is like trying to tell your spouse no to a purchase, or telling a friend that the 40th row is as OK as the fifth row in an event. So often we do not have the control of the techs requesting parts, being parts changers because that was the culture and making inexperienced decisions. Now, not that I do not think that a tech knows what they are talking about, but most do not understand the quest to be the low-cost provider.

Examples:

  • Electric window regulator on a young truck had a motor that the tech told me was burned out. The new self-contained part had the motor attached to the regulator and you could not buy the motor separately. He vividly told me a few choice words upon my simple question: “Is the motor burned out?” He replied, “Why would I change it then?” That was my question. Never the less, we tested the $380 part and voila, just jammed. We removed the motor and tested it, and it worked fine. We reused the regulator.
  • A shop wanted to retrofit the entire fleet with those nice-looking, bright-colored wheel nut indicators so the nuts could be seen if they got loose. If a wheel is torqued and maintained, it will not come off. A simple procedure will correct this problem. Approximately 5 degrees of pointing is 100-plus lbs. of torque. Tough to see five degrees.
  • In buying decals, we want to buy 5,000 when we need 3,000. But the price is cheaper when you buy 5,000, so the excess sits there for 5 years and are too dry to use in the future, still being carried in inventory.
  • Gallons and gallons of unused sprays and additives hidden on the floor in the dark storage area.
  • Copy paper: Well when the SS, Strategic Sourcing makes a deal for copy paper, the shop uses four reams each month, but the minimum to order is 12 cases. Not an issue, most walk away, everyone needs copy paper.
  • Nut, bolts and supplies: Bins that over flow and the salesperson is turned loose or the mechanics walk around with the aggressive commissioned sales person.
  • A new shop foreman in charge believes he has to change all the rear ends’ synthetic lube each year because he just wants to, because that is what he did at his last fleet as a lead mechanic. He only had 35 trucks then and now 400 trucks … he may not cross the bridge.
  • Air filters when the tech wants to: $75 DEF filters that can be washed out, $26.00 cab washable air filters thrown away, slack adjusted replaced because we wear them out from constant adjusting.

Although I did see a sharp tech move a bent step he had straighten out to the right side of the vehicle, there is hope, but that has to be coached.

My suggestion would be to manage and coach every day as if the threat of going out of business is on your doorstep. That does not mean spend no money or procrastinate on repairs, just make the right decisions, maintain low inventories, manage time and control the check book; all will be better employees and managers because of it.                                                                              

For more information, visit www.darrystuart.com or email comments or questions requests to [email protected]

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