Global Fastener News

August 23, 2006 FIN – B/E Aerospace Inc. agreed to acquire New York Fasteners Corp. for $68 million in cash.

The deal is expected to close by the end of August.

CEO Roger Crosby announced he would transition to retirement.
Andrew Basner, vice president for information systems, and Simon Basner, vice president for quality & process – both sons of founder Larry Basner – also will stay for the transition and then retire.

Crosby termed the acquisition as a great marriage. “Their fastener division is expert in procurement. We are experts at selling,” Crosby told FIN.

NYF distributes aerospace fasteners and hardware, with more than 70% of its sales derived from the military sector. NYF had revenues of $56 million for its most recent fiscal year ended June 30, 2006.

The acquisition will push B/Es annual military sales above $100 million.

Crosby told FastenerNews.com that the aerospace fastener business has been growing at 20% per year and NYF sales are up 65% in the past six months and 80% in the past month.
With that kind of growth NYF needs cash to expand and B/E has the money to grow the company, Crosby explained.

NYF has become one of the top aerospace fastener suppliers in its field, Crosby said.

B/E CEO Amin Khoury said the NYF and earlier Draeger [Aerospace GmbH] acquisitions “provide us with access to important customers in the large and growing military market. We intend to build upon these strong new customer relationships and, over time, work with them to develop and supply a broader range of products and solutions from across the company.”

B/E plans to merge NYFs hardware distribution and vendor-managed inventory business with its own distribution operations in Miami.

NYF was founded in 1956 as New York Fasteners. NYF distributes aerospace, military, telecom and industrial fasteners. NYF has branches in Connecticut and Maryland and is headquartered at 599 Valley Health Plaza, Paramus, NJ 07652. Tel: 800 631-1993 Fax 800 786-4561

Crosby, president for 13 years, plans to stay to help with the transition, but noted that there is only one company president so he will move on. “For now I’m going to retire and travel around the world.

With the rapid growth at NYF, B/E is not looking to lay people off, Crosby said. They are looking to hire. ©2006/2010 FastenerNews.com

January 2, 1998 FIN – Early in 1988 the founder of New York Fasteners Inc. suffered a stroke, creating a “serious void at the top of the business.”
Not only was founder Larry Basner no longer able to work, but his wife, Eileen Basner, left her role as controller to take care of him.

Since 1956 Larry Basner had built up NYF to a $10 million distributor of industrial fasteners.
But without his strong leadership and her financial knowledge, NYF needed an entirely new system to work.

Author Alvin Gunneson credits heir Simon Basner for turning to an outsider to bring change to the “50’s-style management.”
“The decision was made to focus on growing the business” instead of selling it, Gunneson wrote in Transitioning to Agility. New York Fastener would “bring in a professional manager to make everyone in the company an entrepreneur,” Gunneson said.
Simon Basner did not look for a fastener-experienced manager. “He wanted a new-age manager who could create the modern, team-based company he envisioned.”

Roger Crosby was hired to make the changes.
Crosby had read about Gunneson in an article on quality and contacted him to discuss rapid transitioning.
Gunneson, accustomed to working with corporations such as Coca-Cola, politely responded that NYF was too small.
A few weeks later Gunneson decided NYF could be a test case for small companies.

“Within six weeks, activity had begun on all fronts according to a well-focused and carefully defined plan,” Gunneson wrote. “There was a clear path forward, with individuals assigned to research the market and understand customer perceptions.”

Research found the fastener industry was growing but was losing 20 companies each year to buyout or bankruptcy and the “small-sized family business was especially vulnerable to this trend,” Gunneson noted.

Fierce competition, consolidation, and rapid technological change required NYF to be more agile than its larger competitors,” Gunneson said.

Crosby interviewed employees and assigned duties “that would showcase their management talents” and a “laser team was formed to scrutinize operations for immediate high-impact cost-saving opportunities.”
Employees were involved at all levels – even editing the vision statement, Crosby told FIN. The entire staff went offsite to plan the company’s future.

Despite changes in policy and attitudes, bottlenecks remained. “Managers said processes could not be better organized because each customer and each vendor was a little different, so each order required a different process,” Gunneson wrote.
“It quickly became clear to Crosby that this was a culture stuck in the ’50’s, and it also became clear that employees wanted and expected the new president to fit into the ’50’s role. That was the role they understood and felt comfortable with.”

Gunnerson said the popular cost-reduction strategy was tempting, but “there was a concern the strategy would not sufficiently differentiate the company.”
Instead Crosby decided to make competency, rather than fasteners, NYF’s prime product.
“The rationale was that the company could deliver fasteners, and any new processes or technology could be copied and improved by the competition virtually overnight,” Gunneson said.

There was cost cutting – including laying off two vice presidents and 35% of the staff – that freed funds for NYF to upgrade its computer system. Sales teams could then do margin analysis, activity-based costing and ranking of customers by profitability.

Remaining staff “had to become multifunctional and had to accept total responsibility for major pieces of the business,” Gunneson said.
Employees were involved in operations. “The financial position of the company was discussed frequently in company-wide meetings. Problem-solving techniques were employed.

The “old drab” NYF facilities were redesigned by employees and featured an open office configuration for teamwork and communication. Glass replaced sheetrock walls.
Business teams were formed “to handle customers from cradle to grave,” Crosby said. “The teams just need to swivel their chairs 180 degrees to meet at a central table on a customer issue.”
“There is no more sales and purchasing distinction,” Crosby said.

There is a team and individual-based compensation to provide peer pressure to perform but not compete negatively.
“People on the team become intuitive with each other just like a hospital emergency room team does.”
Morale and efficiency “skyrocketed, with suppliers and customers alike observing the changes,” Gunneson reported.

Relationships with customers improved and business from existing accounts increased.
The focus shifted from simple order fulfillment to developing long-term integrated supply links. NYF involved the chain all the way back to the supply sources to reduce costs.

Crosby said the changes bothered some employees and they left. “People select themselves out of your organization,” Crosby observed.
But those who stayed and who have joined since are happy. “Now we don’t have people leaving,” Crosby said. “They are in charge and responsible for customers. They don’t come to me and ask how much we should charge. They are growing their own businesses.”
The teams understood the goal is to create value for stakeholders – customers and suppliers – and “if we get it right, none of those will want to lose our company.”

Remaining Agile

Though ’50’s style management is replaced with ’90’s agility, how will NYF remain agile in coming years?
“We will remain agile by having the best ear to the marketplace. Change will be respected internally as a friend, not foe,” Crosby responded. “Instead of Roger Crosby saying, ‘the market is changing,’ you have everyone in the company with an ear to the marketplace.”

The work teams have the authority to make changes customers need. “there is almost no bureaucracy for the individual to come get clearance,” Crosby said.

“Larry Basner would be proud,” Gunneson concluded the New York Fasteners chapter.

Editor’s Note: Transitioning to Agility / Creating the 21st Century Enterprise, by Alvin O. Gunneson, is published by Addison-Wesley Publishing Company, Reading, MA, 1997.
©1998/2010 Fastener Industry News