Minnesota Elevator, Inc.

Bouncing Back
Minnesota Elevator, Inc.

Don Goltz, Rick Lowenberg, and John Romnes

There’s no avoiding it: Minnesota Elevator has had its ups and downs. But ever since a 2006 turnaround pulled the Mankato-based company out of a financial hole, the downs have been a thing of the past.

Founded in 1971, Minnesota Elevator grew from a one-man operation servicing elevators in southern Minnesota to a flourishing business repairing and modernizing existing elevators in Minnesota, as well as designing and building custom lifts for clients throughout the U.S.

But Minnesota Elevator’s business took a dive in 2004; during the next two years, it posted losses of $2.2 million. A key reason why: The company had underbid on many projects, winning work but losing money. In addition, it had invested in a training program that (it turned out) customers didn’t want to pay for. In March 2006, Minnesota Elevator founder John Romnes called in Rick Lowenberg, who was the lead consultant at Minneapolis-based turnaround firm Alliance Management.

Lowenberg got the company back on track with a new business plan that included improving outdated billing practices, downsizing the work force, and focusing the company on what it did best: custom projects requiring a high level of engineering and project-management expertise. Lowenberg asked every employee to help out by finding ways to cut costs and improve operations.

By May 2006, every one of Minnesota Elevator’s 10 business units was turning a profit. The company brought in a consultant to train everyone in lean manufacturing, and the concept of “continuous improvement” took hold. In 2007, Minnesota Elevator won the Turnaround of the Year Award from the Upper Midwest chapter of the Turnaround Management Association, and Romnes persuaded Lowenberg to take over as company president to handle day-to-day operations. (Romnes remains the company’s CEO.)

Minnesota Elevator’s continuous-improvement practices are still going strong. “Now it’s just a way of life for our employees,” Lowenberg says. “We initially thought that getting improvements the second year might be a struggle, but that hasn’t been the case.”

Examples of improvements include each department’s 15-minute, once-a-week “easel meeting,” where ideas and issues are written on an easel-sized pad, discussed, and acted upon. “We get right to the meat of the matter,” says Don Goltz, Minnesota Elevator’s plant manager. “It’s low tech and informal, but it gets formal results.”

Employee-driven improvements are typically small—but together, company executives say, they add up to big results. From 2006 through 2010, Minnesota Elevator has implemented more than 7,000 improvements, saving approximately $900,000 in 2007, $1.3 million in 2008, and more than $1 million in 2009. This year, employees are on a pace to meet or exceed the previous years’ submissions of 1,300 individual and 500 team improvements.

A larger, crossfunctional project involved ridding Minnesota Elevator’s approximately 50 mechanics’ trucks of about 300 pounds of extraneous tools and parts each. This improved the efficiency of both the vehicles and the mechanics. Another project resulted in a standardized method for drafting elevator dimensions, which eliminated errors internally and with suppliers.

Each Minnesota Elevator employee is asked to submit at least five individual improvements and three crossfunctional team improvements per year. Improvements are presented during twice-monthly all-company meetings; five employees who meet their improvement goals can be nominated by their peers to win the annual recognition trip, which in past years has been held in Lake Las Vegas, Key West, and Puerto Rico.

Minnesota Elevator is also committed to the continuous improvement of its employees and the Mankato community. In 2009, it agreed to pay for each employee to take one outside education course; employees complied by taking more than 200 courses. This year, it asked each employee to contribute at least eight hours of time volunteering in the community, for which they receive up to eight hours of extra paid vacation time. To date, Minnesota Elevator employees have volunteered more hours than they’ll be reimbursed for.

“This obviously helps the community,” Lowenberg says. “And in the long run, we think it will help Minnesota Elevator, too.” Minnesota Elevator also gives back financially. It has donated more than $300,000 to various charitable organizations over the past several years.

The company’s current headcount is 200, back to about what it was pre-turnaround; revenues are expected to be around $45 million for 2010. The company services more than 4,000 elevators in Minnesota and Wisconsin; it also manufactures elevators and components for more than 50 customers across the country, building about 400 to 500 elevators per year. Its custom-designed lifts are being used in transit, airport, hotel, and university facilities, among others.

“While our competitors are looking out at how gloomy and grim the economy is, we’re focusing on just getting better, and better, and better,” Romnes says. “And it’s working.”