By Kevin Meyer
Today, 9/10, is a very memorable day to me. Ten years ago today I had to lay off over 150 brilliant people, including myself.
You see, not quite a year earlier I decided to leave a long career in medical device manufacturing to try the telecom world. I found an opportunity to run a hypergrowth operation that developed and manufactured laser photonics test equipment – basically the equipment tested the laser drivers that sat at both ends of long-haul fiber optic communications equipment. The operation was struggling under an 18 month backlog with a manufacturing capability grown organically over the prior two years. Loads of opportunity.
Over the next ten months the operation was transformed. Not just from my knowledge and experience, not just the experience of consultants I had the latitude to bring in to help us out, but the brilliance and passion and creativity of the initial fifty or sixty people we had and the hundred plus we added over the course of the year. A couple of very talented HR folks helped us find and relocate the best from around the country. The fact that we were (and I still am) in one of the best places in the U.S. to live didn't hurt.
Production capacity went from $1M a month to $5M in a month in the same floorspace. Quality, especially first pass yield, became near perfect. The backlog was dried up and on-time delivery made customers confident in orders they placed with us. Our technology remained leading edge. Lean methods had created an incredible transformation.
Then, like the rest of telecom in 2001, demand dried up – almost overnight. Suddenly the industry realized that fiber optic capacity was overbuilt. In March we had our first order cancellation – we considered it a blip. In July we had a very minor work slowdown – while still recruiting for open positions. In late August we finally came to the realization that this was a serious, long-term situation.
That's when the battles with the corporate headquarters taught us a lesson about lean – and traditional business. It didn't matter that our technology remained superior. It didn't matter that labor was a tiny fraction of our cost. And it didn't matter that our manufacturing operation was orders of magnitude more efficient than the ones at other locations, especially at corporate headquarters a few hundred miles south.
Traditional business thinking said that manufacturing had to contract, that regardless of where cash was actually spent labor was the easiest cost to cut, that manufacturing had to be "controlled" and remote locations were difficult to control. I was told to shut down the operation.
We tried to do it right. We kept everyone, everyone, informed as decisions were being made. There were no surprises. My leadership team fought hard, but unfortunately it wasn't enough – but it was recognized by our folks. We were respectful and compassionate. The corporate office offered many folks a transfer down to corporate office – and only two people took the offer. Both with less than a year of experience. Our product line, still in demand, was destined to die.
9/10/01 came, and it was tough. It was painful but it was not a surprise.
Then the next day, while driving into work and worried about dealing with the repercussions of the prior day, I heard the first news of 9/11. And the events of the past day were put into perspective.
I learned a lot of lessons on that 9/10. I learned a real lesson in how traditional accounting counts the pennies of labor costs but creativity, experience, and knowledge are no where to be found as an offsetting value on the P&L or balance sheet. I learned how corporate decisions can be made on politics and perception as opposed to a real analysis of product lines, customers, manufacturing capability, and technology. I learned how to not overlook the smallest blip in order pattterns – and any data for that matter.
And more than anything I learned how harnessing the passion of people can create incredible transformation. In addition to the lessons, this incident let me start and later sell a contract manufacturing business, build a consulting business, and become president of a medical device company. I've been lucky enough to hire back some of the talented people I laid off. Many others also used their new knowledge and experience to create success at other organizations.
9/10/01 was one of the toughest days of my life. And a day that transformed my future – in a positive way.