October 12 2023
American History, Manufacturing, and the Family-Owned Business:
The Problem with Succession
Manufacturing has withstood the test of time as an industry, but looking at it from an individual business standpoint, a substantial change in leadership is occurring as the baby boomer generation retires. According to research from Project Equity, baby boomers own 125,000 manufacturing businesses, and a statistic from IndustryWeek says 40% of those manufacturers have not instituted a succession planning process.
This hesitation is understandable given the financial and personal inventory needed to make such a big step, but waiting could rob these businesses of the needed ramp-up time for smoother transitions to the next generation, whether that be to a relation or a dedicated Team Member. We may get an idea from history, which manufacturing has aligned with for decades.
History is about learning from mistakes and understanding what works. That’s where Aaron Wiegel comes in. He is the President and CEO of Wiegel, which provides leading OEM (Original Equipment Manufacturers) and tier manufacturers across the globe with progressive die-heavy, and high-speed metal stamping services along with welding, automation, and assembly processes. He is a third-generation manufacturer and owns the company with his two siblings. By looking at the evolution of this family-owned business and its direct correlation to American history, we learned why manufacturing has weathered so many storms and how families can keep passing the torch by thinking a generation ahead.
Wiegel grew up in the industry, witnessing the challenges of his immigrant grandparents and father. He says they were role models to him and that he knew early on that their efforts contributed to making this country what it is today. However, this family isn’t all business.
His father, Martin Wiegel, knew family time mattered and nurtured his children in STEM and other interests. He let them spend time at the company, but this wasn’t playtime. Wiegel has worked at the company since 8th grade, doing tasks in areas like shipping, production and the front office until he went to Northern Illinois University, earning a Bachelor of Science in Manufacturing Engineering.
Favoritism wasn’t in the equation, and Wiegel notes that he faced more scrutiny as an employee and even higher standards to earn the respect his father and grandfather had worked so hard for. After college, he began work as a CNC operator and wasn’t given the keys to the kingdom right away. This was a joint understanding that leadership is learned and earned.
To earn that respect and be a team player, he had to take jobs he didn’t want but succeed in those roles and contributed to the larger operation. For instance, he spent time as a Production Manager, which was greatly needed at the time. He took everything that was once in the head of a 20-year veteran, applied software technology to streamline operations, and reduced inventory that converted $1.5 million into cash.
What’s clear is this family player or team player attitude has contributed to individual and company success—what does the business need, and by extension, the greater good (i.e. the family, the employees working for them, and their families).
The Wiegel Timeline
Wiegel was founded the day before Pearl Harbor in 1941 by Otto Wiegel (Mr. Wiegel’s grandfather). His grandparents were immigrants from Germany, and while his grandfather had the vision and experience, it was his grandmother, Kathe, who had the eye for finance. They began in the “heyday” of manufacturing with tool-and-die work, designing and building tools for the industry.
When the second generation grew up, Martin Wiegel was studying engineering at Purdue when drafting began for the Vietnam War. He reported for duty the day after graduation, serving in the Navy. At the time, degreed engineers were a hot commodity, and after four tours, he was honorably discharged to take care of his father post-stroke. Wiegel is convinced his father may have otherwise continued his military career all the way to the top. Being the only child, his father instead took care of his family, and by extension, the business.
The second generation entered the business in the late 60s during a transition led by his grandmother, who retained ownership. It was his grandmother, “the financial hawk,” who built risk tolerance into his father. He leaned on his parents’ staff and employees to teach him the business. However, Martin was an innovator and arrived just in time for major changes to the industry, including adding press technology, wire EDM and computer aided design (CAD).
His father decided to invest in stamping and invested in the equipment and capabilities to produce products. Stamping became their core business in the 80s, and they entered into partnerships with companies like Mitsubishi. In 1993, his grandmother passed away, and his father inherited the business. This is the point on the timeline where the secret to succession comes in.
The Succession Secret
Mr. Wiegel said it was generosity that led to a successful succession into the third generation. Martin Wiegel did a skip generation on his inheritance, putting the wealth passed over from his parents into a trust.
At the time, his father was financially stable and knew the trust could be used for future investment. Wiegel was a wealthy individual by middle school, though he had no idea. The next major piece of equipment was bought by the trust and then leased back to the company. Once Wiegel was old enough to be looped in on how the trust worked, he knew the only way he could pay his dad back was to pay it forward.
Like many businesses, the 2008-2009 recession introduced a challenge few were prepared for. During this time, his father did not take a salary, and the rest of the family took major pay cuts to keep the business afloat. Employees were asked to take a pay cut too. The expenses were day-to-day, and any debt was taken out of the trust with everything self-funded to get through the financial drought. Even with the recession cuts, many employees stuck with Wiegel and still do. Three employees have been with the company for 50-plus years with one employee at 60 years.
The “Cash for Clunkers” incentive offered the company a big turnaround, and thanks to the sacrifices made, they were ready when the automotive markets bounced back. Each of the three siblings came on in distinct roles that played to their strengths as employees, not future owners, and they were paid market value.
This mentality served them well when the third generation took over in 2010, just as the economy began to recover and technology was ramping up in a big way. When Mr. Wiegel took over there were 39 employees. Today, they have 240 with an exceptionally low turnover thanks to a winning formula of promoting within and backfilling from the outside.
Manufacturing and Technology
Mr. Wiegel and the third generation entered the workforce at the start of the digital age in the late 90’s, with constant innovation that led to a complete change in hiring, marketing, and manufacturing itself. A completely different world than when the company started in 1941, this group investigated value-adds and other calculated risks to grow the stamping business. Even with that conservative financial background, he wanted to see growth and go beyond “Marty’s son,” and technology allowed for that.
Technology in any industry moves so fast that things become obsolete in a matter of years, so it’s important to adopt and adapt quickly. They rebranded from Wiegel Tool Works to just Wiegel—to go beyond tool and die. Now they aren’t bound to any process or technology and are expanding with exciting things on the horizon. One area they tapped into was electric vehicles, a market that is surging.
Wiegel notes that five to ten percent of revenues have been invested in company technology, with these days seeing closer to 30%, which always comes back tenfold. His advice is to stay at the forefront of technology and to keep track of what’s coming up. By branding themselves as a tech leader—the company attracts customers and employees, the first big investment the company values.
Just as the family has allowed each generation to rise with the historical climate, the company values the people who make up the heart of the organization. You invest in equipment and look for new markets with existing capabilities, but it all means little if the workforce isn’t valued. Take for instance automation and robots. In 2017, the company had 0 robots, but today they have 52, all acquired without layoffs. They keep in mind technology can help people versus replace people. Technology also requires a major focus on training to keep up with innovation, something sister Erica has taken charge of by creating apprenticeship programs to keep that fourth generation in mind.
The third generation knows the importance of consulting, networking, trade shows, and being open to learning. The challenge is implementing as the amount of work taking these initiatives on is huge. That’s why he empowers his managers, relinquishes power, and creates leaders. By fostering leadership, succession to the fourth generation, whether a relation or dedicated Team Member, will go more smoothly. Thanks to the influences of the generations before him, he sees a company’s organizational chart as an upside-down pyramid—with managers and presidents supporting teams while focusing on strategic growth and technology.Tags: industrial, manufacturing, OEM