For Rent: Chief Financial Officer

Posted by Warren Carter | Posted on 22-09-2009

Category : Executive Search, Job

Tags: , , , , , , , , , ,

By RAYMUND FLANDEZ
This past year, Al Lovata, chief executive of Be Our Guest Inc., cut expenses for his party-equipment rental business by laying off staff and reducing workers’ salaries. He credits an “outsourced” chief financial officer with helping him prepare for the worst of the economic downturn.

The Boston-based company had sales growth in the double digits for the past few years, when revenue fell flat last fall. Now, thanks to the part-time CFO’s guidance, the company is stable with revenue down 20% to 30%, but profitability higher than in the previous months, he says.

If we hadn’t had this service, “we would still be struggling,” Mr. Lovata says.

Mike Loria of Re.Source Partners Asset Management, in Detroit, consults his CFO, Sheri Pawlik of B2B CFO.

Mike Loria of Re.Source Partners Asset Management, in Detroit, consults his CFO, Sheri Pawlik of B2B CFO.

Mike Loria of Re.Source Partners Asset Management, in Detroit, consults his CFO, Sheri Pawlik of B2B CFO.
Some small-business owners in need of accounting help to balance their books and guide them out of a financial black hole are renting CFOs rather than hiring them. The strategy comes at a time when the deep recession has forced small companies to look for money-saving alternatives that can yield good returns yet avoid substantial overhead costs.

“They’re looking for ways to streamline and be efficient as they can,” says Glenn Dunlap, a co-founder of Milestone Advisors LLC, a small-business consulting firm in Indianapolis that provides CFO services.

The average annual salary for a full-time CFO in a small- to medium-size businesses ranges from $94,250 to $175,750, according to a 2009 Salary Guide by Robert Half International Inc., a Menlo Park, Calif., staffing services firm that serves the accounting and finance fields. Renting one can be significantly cheaper.

B2B CFO Partners LLC, a Phoenix, Ariz., firm that has over 100 CFOs-for-rent, charges at least $300 to $400 per month for the service. The company has doubled the number of small- to mid-size business clients to 650 since 2007, says Jerry L. Mills, founder and chief executive.

Business owners often want such a service when their company’s finances are getting more complex and need someone with more financial expertise, says Germain Böer, professor of management and director of the Owen Entrepreneurship Center at Vanderbilt University in Nashville.

Still, he cautions that some small businesses that have simple financial structures or are completely self-financed may find renting a CFO not so useful. But “if you have a loan in the bank or an outside investor, something like this is well worth considering,” he says.

These CFOs have a bigger role than accountants, who mainly keep track of the company’s books. They work with business owners to manage their accounting and finance departments, connect them with business sources that can help them grow and provide financial data to help make strategic long-term or day-to-day decisions. Many are certified public accountants.

The payment structure varies. Some are on project-oriented deals, such as developing financial projections, assisting with raising capital or completing a business plan. Some are on-going in nature and can be based on an hourly or flat monthly fee.

Concerns regarding privacy from such consultants can easily be mitigated by nondisclosure agreements, experts say. Mr. Mills suggests that small businesses interview at least three CFO candidates, assess the quality of the firm they work for and avoid long-term contracts, if possible.

Ruthann P. Lacey

Ruthann P. Lacey

Some business owners turn to CFOs to establish proper bookkeeping systems. Ruthann P. Lacey, owner of a law practice in Tucker, Ga., brought in a part-time CFO in October. Before, an office manager handled bookkeeping while she also turned to her husband for ad-hoc financial and tax-preparation advice. “I didn’t really know what the big picture was,” she says. “I only knew we made payroll every month.”

Upon the advice of her rented CFO, she installed QuickBooks software, hired an accountant and sorted out the company’s accounts-receivable system, billing those customers who owed the company.

Ms. Lacey also began reviewing monthly reports about cash flow and profitability that’s making it easier for her to make hiring decisions or put more into the marketing budget. She says she’s quite happy paying the rented CFO’s $185 per-hour rate about 15 to 20 hours per month, because she can’t afford a full-time executive. “This is something I should have done a long time ago,” she says.

Entrepreneur Bob Compton, founder and chief executive of Vontoo Inc., an Indianapolis-based voice-messaging company, says he has rented CFOs for six companies he has started or been a lead investor in. “To hire a CFO in the early-going is a waste of money,” Mr. Compton says. “It’s much better to invest that money in engineers and sales people.”

For Vontoo, he pays $5,000 a month for the CFO’s strategic advice, bookkeeping services and accounting expertise. “It’s a tremendous cost-saving,” he says.

A company outsider can also help deliver a reality check. Re.Source Partners Asset Management Inc., a reseller of technology products in Detroit, has used cash to fuel growth since 2001 but is now using a line of credit for the first time, and needed help managing the new financing. In 2007, Mike Loria, the company vice president, brought in a part-time CFO who advised the company to rein in aggressive plans for growth and prepare for flat sales this year of about $9 million.

The CFO is more objective and “someone who can prevent us from making any bad decisions,” Mr. Loria says. “It has really given us a level of confidence that we did not have in decision making.”

Write to Raymund Flandez at raymund.flandez@wsj.com

http://online.wsj.com/article/SB125358186243529783.html


Warren Carter is an Executive Recruiter in Qualifind, Inc. You can share your responses with Warren by e-mail at: wcarter@quali-find.com  Qualifind, Inc. provides professional and executive search services for specific disciplines and industries throughout the U.S. and Mexico. We are a U.S. based firm with our corporate offices in San Diego, California. We have branch offices and recruiting staff in the U.S. (i.e Chicago, Austin) and Mexico (i.e. Monterrey,  Mexico City).

Pace of Job Losses Sets Stage for Quick Labor-Market Rebound

Posted by Warren Carter | Posted on 10-08-2009

Category : Executive Search, Job

Tags: , , , ,

By JUSTIN LAHART
The rapid pace at which businesses shed jobs during the recession comes with a flip side: Workers will need to be hired back quickly as the economy improves.

So deep have companies cut jobs that Friday’s employment report, which showed that the U.S. economy lost a quarter-million jobs in July, was seen as a relief. Since the recession began in December 2007, U.S. payrolls have fallen by 6.7 million, according to the Labor Department. That’s a 4.8% decline, a level not seen since the late 1940s.

“Firms were unusually aggressive in cutting costs and cutting employment,” said James O’Sullivan, an economist with UBS. “The flip side of that remains to be seen, but it could mean that companies will be quicker to bring back people because they were more aggressive about getting rid of them.”

Businesses say they are running lean. Philadelphia staffing and outsourcing company CDI Corp. has seen demand for its services fall sharply in response to the recession. Its engineering services business, for example, has seen a 22% drop-off, said Chief Executive Roger Ballou. But the company has cut staff deeply enough that it doesn’t have many idle hands, and Mr. Ballou said that’s true at CDI’s customers as well.

“I’m unaware of any firm out there today that has lots and lots of people sitting on the bench, waiting for business to come back,” said Mr. Ballou. As a result, he thinks jobs will come back more quickly as the economy recovers than they did in 2001.

Milwaukee-based Wisconsin Steel & Tube Corp., which sells precut steel bars and tubes to manufacturers and machine tool shops, has seen business pick up recently as customers move to replenish inventories and is moving to add workers.

“We’re a lean company — we don’t have a VP of this and a VP of that,” said company President Joseph Teich. “We got rid of some temporary workers and some other people, but now we do anticipate hiring people.” Last month, the company brought in a salesman that a competitor had let go, and it will likely hire two shop workers this month.

To be sure, even as more companies begin to hire as the economy recovers, it could take years before payrolls reach their prerecession level. With Americans spending more cautiously in response to the massive losses in wealth associated with this recession, some jobs may simply never come back.

“We are going through an important transition in the U.S. economy away from consumer discretionary and housing expenditures towards more exports and research and development,” said Northern Trust economist Paul Kasriel. “It’s going to take a lot of time for workers to retrain and get skills in those areas.”

Moreover, with manufacturers continuing to make strides at wringing more production out of fewer workers, even as demand picks up, they may be able to hold off on hiring. Manufacturers began cutting workers in 1998, long before the 2001 recession started, and they kept cutting them through the subsequent recovery and into the current downturn.

And a quick labor-market recovery would be a break from what has happened in recent downturns. After the brief 2001 recession ended, the economy continued to shed jobs for nearly two years, and after the 1990-91 recession, jobs growth sputtered. The two experiences led economists to conclude that there had been a shift in the behavior of the job market, which in the past recovered quickly after recessions.

That said, one thing different about this recession — and one more reason the job market may come back more quickly than in the downturns of 2001 and 1990-91 — is that so many of the job losses have been at the service-related companies that have come to dominate U.S employment. Since the recession began, 3.3 million service-sector jobs have been lost, a 2.9% decline that is the largest in data going back to 1939. In comparison, the previous two recessions each saw service-sector jobs fall by 0.5%.

Many service-related firms may have a more pressing need than manufacturers to rehire workers as demand comes back.

“In our industry, staffing is driven strictly by the number of guests we have to take care of,” said Peggy Mosley, owner of the Groveland Hotel in Groveland, Calif. “In the hospitality business, that’s where we have to excel.”

With 30 employees, Ms. Mosley’s hotel, near the northern entrance to Yosemite National Park, is at its highest staffing level in 19 years of business. More Americans are vacationing closer to home, she said, and because she doesn’t cater to business travelers, she hasn’t seen the drops in occupancy many of her counterparts across the country have seen. In July, there were 140,000 fewer hotel, motel and other accommodation workers than a year earlier.

But the biggest reason jobs might bounce back quicker from this downturn than the past two recessions, said Comerica Bank economist Dana Johnson, is that the economy looks likely to see a much bigger bounce as it recovers.

Gross domestic product — the value of all goods and services produced by the economy — has fallen by 3.9% since economic output peaked last year, marking the steepest decline since the end of World War II. In contrast, the 2001 and 1990-91 recessions were among the shallowest on record.

History says that given the depth of the downturn, GDP should grow at a 6% to 8% rate over the next year, according to Mr. Johnson. But because of the financial stress that has come with this recession, he expects it will grow at a 4% rate.

“What people forget is that a deeper recession has consequences,” Mr. Johnson said. “There is a considerable relationship between the depth of recessions and subsequent recoveries.”

Write to Justin Lahart at justin.lahart@wsj.com

http://online.wsj.com/article/SB124984512901117509.html

A Mexican Technology Park in Monterrey

Posted by Warren Carter | Posted on 29-07-2009

Category : Manufacturing

Tags: , , , ,

In a bid to move Mexico’s industry from manufacturing to “mindfacturing,” the new research facility has attracted many global corporations

By Pete Engardio

The mix of tenants may seem curious. A new research building for PepsiCo (PEP) stands next door to future R&D centers for Motorola (MOT), Mexican cement giant Cemex (CX), and a Mexican auto-parts maker. But for Mexico, this hodgepodge is the nation’s hope to turn industrial Monterrey into an “international city of knowledge.”

Mexico has made huge gains in export manufacturing in the 15 years since the North America Free Trade Agreement was signed with the U.S. and Canada. But it has not kept up with Asian dynamos like China in terms of physical infrastructure and training of skilled workers. Mexico also lacks the up-to-date, efficiently run science parks that are popping up around Chinese cities like Beijing, Dalian, and Shanghai.

The Research & Innovation Technology Park, known locally by its Spanish acronym PIIT, could change that. Spread over 172 acres near Monterrey’s airport, the park grew from a program called Monterrey International City of Knowledge, started in 2003 by Nuevo Leon Governor Jose Natividad Gonzalez Parás, aimed and coordinating the public and private sectors to help reposition the city. It also was part of a larger goal to boost Mexico’s per-capita gross domestic product from about $10,000 today to $35,000, the current level of industrialized nations, by 2030. Another target is to rank among the top 25 nations in global competitiveness.

A Place of Knowledge

“We want to move from manufacturing to ‘mindfacturing,’” says PIIT Director Reynold González. Rather than being known mainly for its maquiladoras—low-wage factories that export to the U.S. and Canada—”we want this place to be a maquila of knowledge,” he adds.

Monterrey already is Mexico’s premier base for manufacturing. Among the city’s big-name factory operators are United Technologies’ (UTX) Carrier unit, Ford (F), General Electric (GE), Lenovo, and Whirlpool (WHR). Metro Monterrey, which with a population of 4.7 million ranks third in the country, is also headquarters to several of Mexico’s biggest conglomerates as well as Mexico’s top engineering school, Tecnológico de Monterrey.

The diversity of labs at PIIT illustrates the breadth of the city’s economic ambitions. The park’s first $145 million phase, which is around 85% complete, includes research and development facilities by national laboratories and universities for nanomaterials, microelectronics, mechatronics, water-treatment technologies, information technology, and materials for sustainable housing, among others.

Motorola engineers already are moving into PIIT to design telecom devices. In December, construction will begin on PepsiCo’s $20 million circular glass structure that will house a “baking innovation center,” where among other things 200 staff will develop cookies and crackers for Latin America and the U.S. The roof will have solar panels and gardens.

Pillars of the Mexican Economy

By clustering so many technologies, PIIT’s managers hope the campus will help spawn hybrid companies and industries. “We want to create technology-based companies that will be pillars of the Mexican economy of the future,” González says. Only around 300 people now work in PIIT. But that’s expected to reach 3,500 by late 2010.

PIIT also aims to help Mexican tech entrepreneurs. To that end, the park has set aside a building to incubate nanotech startups. Another facility will be run by the IC2 Institute, a University of Texas at Austin program devoted to commercializing technology. Visiting IC2 faculty will teach a masters program in technology transfer. A $3 million venture-capital fund also is being set up. “Mexico lacks a system for commercializing ideas,” González says. “We are trying to work with top industrialists to get them to become angel investors, but it’s not easy because they are used to safer investments.”

Even though PIIT still is in its infancy, González says, Mexico City, Chihuahua, and other cities are already looking to emulate it. “There are many initiatives to set up knowledge cities,” he says. “We are getting visits practically every other week.”

Engardio is an international senior writer for BusinessWeek .

Chrysler’s North American Plants to Resume Production in July

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Posted by Warren Carter | Posted on 22-07-2009

Category : Manufacturing

Tags: ,

By ALEX P. KELLOGG

Chrysler Group LLC will have all of its North American assembly plants up and running by late July, according to a schedule provided to the company’s suppliers Friday.

Production at a truck plant in Mexico will begin July 6, according to the schedule, while three other idle plants Illinois, Michigan and Ohio that primarily build Jeeps will resume production July 27.

Chrysler idled all of its plants during its bankruptcy process, which began April 30. The shutdown, along with cutting 789 dealers, helped it reduce its inventory of cars and pickup trucks.

The bulk of the company exited bankruptcy earlier this month. Last week, it inked a long-anticipated partnership with Italy’s Fiat SpA.

But only one of Chrysler’s 12 North American assembly plants is running at the moment. The company announced earlier this week that seven others will begin production by the last week in June.

The Saltillo Assembly plant in the northern Mexican state of Coahuila will be the first of the remaining unnamed plants to reopen. The Belvidere Assembly plant in Illinois, Jefferson North Assembly in Michigan and Toledo North in Ohio will reopen simultaneously in late July, according to the schedule.

In Saltillo, Chrysler builds the Dodge Ram and engines such as the HEMI; in Belvidere, the Dodge Caliber, Jeep Compass and Jeep Patriot; and in Toledo, the Jeep Liberty.

Chrysler resumed production at its Detroit Conner Avenue plant Monday. The plant, which makes the Dodge Viper, was the first it restarted.

Plants that will resume production later this month include Michigan’s Sterling Heights Assembly plant, home to the Chrysler Sebring and Dodge Avenger; Warren Truck Assembly, which produces the Dodge Ram and Dodge Dakota pickups and is also in Michigan; and St. Louis North Assembly, another plant where Dodge Rams are built.

Chrysler will continue its traditional two-week summer shutdown and idle all plants that restart during the weeks of July 13 and July 20.

The production schedule Chrysler provided to suppliers Friday indicated eight of its 12 assembly plants will work one shift, while four will work two. Those include the Windsor plant and a Brampton, Ontario one that builds the Chrysler 300, Dodge Charger and Dodge Challenger.

In a letter to suppliers also sent out this week, senior vice president of purchasing Scott Garberding reassured suppliers that the schedule it is providing is the company’s “plan of record.”

He also assured them the company will continue production through 2009, and complete all 2010 model year vehicles in time for “launches later this year.”

He did not specify what vehicles the company will launch, but Chrysler has announced it will introduce an electric vehicle this year.

“Chrysler is grateful for your patience during the Bankruptcy period,” said Garberding in the letter. “I simply ask that you work with us.”

Chrysler’s efforts to get its plants up and running come just as the company announced more changes up high. The company named new leaders in manufacturing, engineering and product design Friday.

Led by Fiat and Chrysler CEO Sergio Marchionne, the company had earlier named new heads of each of its three brands – Chrysler, Dodge and Jeep. It has also put a new face on its parts-and-services business, for example, and has shown a number of top, longtime executives the door.

Write to Alex P. Kellogg at alex.kellogg@wsj.com

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