TB&A: From Bankruptcy to 'Business of the Year'.

By utilizing the US Commerce Dept. and customer partnerships, this firm resurfaced after 5 years of financial turmoil to set the stage for exponential growth.

In every turn around story, the participants often can look back and point to the moment when they realized they had made it.

Maybe it was the first time they achieved a profit.

Maybe it was the first time they received preferred supplier status from a key customer.

For Tampa Brass & Aluminum (TB&A) Corp., Tampa, Florida, the moment came in the year 2000.

This was the year that TB&A's comeback bid came to fruition as the firm:

* reached an all-time high of $5.7 million in casting/machining sales;

* was the first foundry accepted into the U.S. Dept. of Defense (DOD) Mentor/Protege Program for small business development through the U.S. Small Business Administration (SBA);

* was named Florida's Small Business of the Year.

For a 75-employee foundry and machine shop that filed bankruptcy in the late '80s and escaped employee sabotage in the early '90s, these achievements proved that the struggling required to stay afloat was worth it.

This article takes a look at the growth of TB&A from a three-man start-up in 1957 to today's operation, which provides casting, heat treat, machining and assembly services to more than 100 customers. In addition, TB&A's involvement with the DOD Mentor/Protege Program, which is expected to increase the firm's sales by more than 300% in the next 5 years, will be examined as an example of programs available to other foundries to build integral and long-lasting customer relationships.

Having Faith

TB&A was founded as a three-man, hand-molding green sand shop by the late Sam Leto, Sr., and his son and current President Sam S. Leto, Jr., to produce components for the shipping and phosphate industries. By 1977, the foundry, by now utilizing green sand squeezer and nobake molding, grew to 20 employees and 20,000 sq ft and, at the request of customers, added a "few thousand-square-foot" machine shop to produce value-added castings for its various commercial industries.

"With that, we became one of the first value-added producers in the state," said Sam Leto, Jr.

Due to the rapid growth of the machining business (that also included contract work) in its first three years, TB&A relocated and expanded its machine shop in 1980 to five new acres of land (and a 56,400-sq-ft building) across town. This new location also would become the new home of its foundry if and when demand warranted an expansion.

During the mid-'80s, TB&A became aware that government defense agencies and their suppliers (such as Boeing Co. and Raytheon Co.) were seeking minority suppliers of castings and machining services. The Leto family believed its Hispanic heritage would present them with business opportunities. "We thought it would be lucrative," said Chris Leto, executive vice president. "However, we weren't savvy about how those casting jobs were controlled." Chris Leto cited how TB&A was working with "designs from the '60s" that would require months of lead time for approval on even the simplest design changes.

TB&A's initial contract was casting aluminum-bronze submarine components for the U.S. Navy, and was followed by additional contracts from Boeing, Lockheed Martin and Raytheon Co. for various defense-related components. This new flood of jobs led TB&A to anticipate sales to increase $1 million/year for the next 5 years. As a result, TB&A moved its foundry to the new location in 1986 and added an automatic matchplate molding line with a carousel mold indexing system to its squeezer and nobake molding capabilities. TB&A also added shell and [CO.sub.2] coremaking. The foundry needed to increase capacity and capabilities for the prospective job orders.

This leap into government contracts and expansion proved to be devastating for TB&A however, as 1986 marked the first of two major financial blows.

"The construction of the new facility marked the reversal of TB&A's forward position," said Sam Leto, Jr. "In 1986, our (loan) vanished amid a bank purchase and merger. In 1988, the FDIC shut down operations of another bank we dealt with for business." The banking problems were compounded by the downturn the economy and foundry industry took during the early '90s.

After trying to stay afloat independently for several years, filing for protection under Chapter 11 Bankruptcy in 1991 became the only alternative. To begin its resurrection, the Leto family supported the business using personal reserves. By 1992, casting production began to support the operation again and the firm achieved $4 million in sales that year. Despite these financial hard times, however, the Leto family couldn't possibly have been prepared for what was going to happen next.

From 1992-94, the foundry experienced unexplained regular power surges and brownouts. The resulting operating inefficiencies and downtimes were severe for the foundry and machine shop and it missed a majority of its delivery schedules. As the problems worsened without explanation, TB&A's sales dropped to $1.5 million by '93. After 2 years of investigation, TB&A was able to determine that it was internal sabotage as an employee was deliberately altering equipment for personal financial gain. Located mostly in the machine shop, the employee sabotage consisted of connecting copper wireson equipment from a ground to an active phase on the circuit board. The result was that when the equipment's RPM increased above a certain limit, the wire would cause a short. Although the problem was remedied, the two years of missed deliveries left a mark on the customer base and TB&A again was on the brink of closing its doors for good.

"We made a plea to our customers," said Chris Leto. "They knew we made quality castings and were people of integrity. It was old-fashioned service as we visited our main customers face-to-face to tell them what was going on and ask them to hang in there with us. We had to convince them to have faith."

With 10 main customers in the fold, TB&A began its drive back to profitability. Included in this effort was TB&A's receipt in 1995 of SBA's8(a) Business Development Program designation as a socially and economically disadvantaged small business. This allowed TB&A to quote on set-aside government contracts as long as it met fair market value. In the first 5 years as an 8(a) business, TB&A received more than $1.5 million in sales through the program.

By 1996, TB&A's overall sales climbed back to $4 million, and this grew to $5.7 million in 2000 with a customer base that is split 50/50 between government contracts (10% direct government and 40% sub-contract) and commercial jobs (electronics, telecommunications, medical and transportation).

"Through integrity, honesty and communication we managed to regain the trust of all our customers," said Chris Leto. "Once we got past our problems, we were willing to do everything necessary to meet an order. In hindsight, this philosophy won back the hearts of our customers."

TB&A cites the component contracts for the Patriot missile and SQQ Minehunter it manufactured during the Persian Gulf War for Raytheon Co., a manufacturer of defense-related equipment, as examples of winning back customers' faith. Raytheon was in a bind and needed machined aluminum-bronze components for these two systems on a tight schedule. TB&A was able to sand cast the components leak-free and without porosity while meeting the production schedule. "We made them look good in the eyes of their customer," said Chris Leto.

Mentor/Protege Program

The relationship that developed with Raytheon during the Persian Gulf War also served as the cornerstone for TB&A as it rebuilt itself back to stability throughout the late '90s. The relationship then was raised to another level with the introduction of DOD's Mentor/Protege Program for small business development. This program encourages private sector relationships in which the mentor provides technical and management assistance, financial assistance in the form of equity investments or loans, subcontract support, and assistance in performing prime contracts through joint-venture arrangements. Raytheon had served as a mentor in the past and, based on its past experiences with TB&A, encouraged the firm to apply.

Beyond the rigorous application process for the Mentor/Protege program, TB&A also was competing against 30 other firms for Raytheon's mentoring. When TB&A was selected for the program, it became the first-ever foundry participant.

"Raytheon will guide TB&A to the next level of business development," said Chris Leto. "They will help us learn to build systems, and we will become significantly more competitive and profitable."

"Our goal is to take a good company and see if we can stretch and grow them," said Terry Downing, manager of special programs for Raytheon.

The initial stages of the program have begun. A team from Raytheon has worked with TB&A to review its vision and business plan, management, training, technology and quality and has set up a priority list. In terms of technology, TB&A and Raytheon have targeted in-house mechanical assembly, ISO 9000 quality systems and lean manufacturing as the three areas to focus on immediately.

Chris Leto expects TB&A to excel in the next 3-5 years through the Mentor/Protege program. TB&A projects reaching $10 million in annual revenue with up to 100 employees in the next few years and hopes to reach $20 million by 2006. In addition, TB&A is planning a 20,000-sq-ft expansion to the plant on vacant space behind the current building.

"We will need to work a few late nights, but the potential growth and profitability we've laid out in our vision plan is achievable with Raytheon's assistance," said Chris Leto. "It is a great relationship."

Tampa Brass & Aluminum Corp.

Tampa, Florida

Metals Cast: 319, 356, 535 and 771 aluminum alloys; 836 and 865 copper alloys.

Casting Size: 0.25-150 lb.

Molding: Green sand (automatic matchplate, rotolift and squeezer), nobake and permanent mold.

Coremaking: Nobake, shell and [CO.sub.2]

Melting: Reverberatory, coreless induction and gas-fired crucible.

Value-Added

Services: Heat treat, machining and assembly.

Founded: 1957.

Foundry Size: 56,400 sq ft.

2000 Production: 1.1 million lb.

2000 Sales: $5.7 million.

Markets: Defense, electronics, telecommunications, medical and transportation.

Employees: 75.

Staff Officials: Sam Leto, Jr., president; Chris Leto, executive vice president; Tim Leto, CFO and human resources manager; Jason Leto, COO; Nilla Leto, purchasing director; Bill Martin, foundry manager; Dan McLachlan, machine shop manager; Mark Parker, sales; and Paul Rehsi, casting manufacturing engineer.

From Print to Finished Part

The machining capabilities added in 1977 began a chain reaction of value-added services offered by the TB&A. Today, the foundry offers patternmaking, machining, heat treating, X-ray inspection and assembly (mechanical and electrical) operations to all its customers to provide them components "From Print to Finished Part."

"For a small foundry, this sets us apart," said Chris Leto. "We provide the one-stop shopping and take away the aggravation for the customer."

An example of TB&A's value-added services is a 535 aluminum alloy mounting bracket for a wireless communication radio (Fig. A) that it casts, machines and assembles for Triton Network Systems. The 16.5-lb component was previously manufactured as a fabrication, but TB&A converted it to sand and permanent mold castings (and its own in-house machined components) and assembles it in-house, reducing the component's cost by 70%.

Another example is a 356 aluminum alloy satellite dish sub-reflector (Fig. B) TB&A converted from a hogout of billet stock to a sand cast and machined component. Produced at a rate of 100/year, the foundry reduced the cost to the customer by 40% with the conversion to casting.

TB&A Named Florida Small Business of the Year

Honored for its "staying power, growth, increase in sales, financial soundness, innovation, response to adversity and community service, TB&A received the 2000 Florida Small Business of the Year award at a ceremony last year in Washington, D.C.

"With our history and the amount of adversity we have faced, this award proved that everything we have put on the line was worth it," said Chris Leto.

TB&A was one of only two metals-related firms recognized by the SBA.