Systems integrator grows and thrives across six generations.
It’s been 165 years since William and Oliver Cross founded Cross Bros. Co. in Rochester, New York. It is safe to assume that their namesake company doesn’t look like what they envisioned more than a century and a half ago. The brothers founded the business in 1845 to provide leather products, including leather belting for pulleys. These days the business comprises two market groups—about one-third of the company’s revenue comes from sales of power transmission equipment, while the integration of material handling systems makes up the other two-thirds.
Cross Bros. is privately held and a family-owned business. Vice President of Sales Bob Frost represents the sixth generation of the family working in the business. President/CEO Tom Pavone came on board in 2008 as only the third non-family president for Cross Bros. in its 165-year history. The company was looking to hire someone with outside expertise, and Pavone, whose background is in engineering and project management, was intrigued by the potential of Cross Bros. as a company and the chance to be part of a special business.
Tom Pavone, President/CEO
Scott Lee, President
Scott: Wow, 165 years. You know, I started Conveyor Solutions 14 years ago, and I thought I was doing pretty well! It’s unusual for a small business to last past the first couple of generations. Do you have a formal succession plan in place?
Tom: Not yet. It has been a family business passed down through the generations. I’m currently helping the owners develop a more formal succession structure, which would include stock ownership for key managers and possibly for employees in the years to come.
Scott: Is there a seventh generation on the way?
Tom: We’re looking to have a business with family members in it instead of a family business. It will have more of a structure that separates ownership from management in order to have more non-family members help with the management team and the operation of the business.
Scott: How has the company changed in size and structure over the years?
Tom: The structure and size haven’t changed all that much. We have 24 employees now. Certainly our product lines, offerings and projects that we work on have changed, but not necessarily the company structure.
Scott: How many employees do you have in each of the company’s departments?
Tom: We have six in sales, six in engineering, five in our fabrication and assembly shop, another six in sales support/administrative/accounting and one in marketing/business development.
Scott: And what’s the average tenure of your people?
Tom: Somewhere between 10 and 15 years. We had one person who just retired last year after 43 years. He still comes back part time when we need additional help. We have a good group.
Scott: What do you do to make people want to stay at the company?
Tom: We try to take care of our employees as best as we can. It’s a nice environment. We’ve made it more of a team atmosphere, less departmental, between the dif ferent parts of the business. Plus, I think it’s interesting work. If I was a mechanical engineer, I would like this work. It’s very creative; no project is the same. We tend to take on engineering challenges more often than trying to provide a standard product, so there are unique opportunities with each project.
Strategies for Success
Scott: Economic indicators point to some capital expenditures being made in 2011. What’s your business outlook for next year?
Tom: Our forecast is very positive heading into 2011. Beginning with the First Quarter 2010, we saw an upturn in some systems integration projects. We’re also adding some product lines to the power transmission side of the business to try to increase sales and diversification.
Scott: How are you trying to increase your exposure?
Tom: We did a strategic planning session at the beginning of the year, and one of the things we found was that, while the power transmission and component sales could be very different in both size and complexity to an integrated system, much of our customer base revolved around manufacturing. We provide components and parts. We still do a lot of belt replacements and belt repairs for conveyors. We decided to try to have both sides of the business work together as more of a team with customers where there is overlap.
Scott: What are the specifics of the planning process you mentioned?
Tom: We were very concerned with making sure that employees believe our plans are attainable. So, instead of setting some lofty goal, we said we needed to be able to act on our plan quickly. We conducted monthly reviews at first and now have shifted to quarterly reviews. We keep our goals very action-driven.
Scott: What are some of the strategic goals you’ve set as the result of that shift?
Tom: In addition to diversification, which I mentioned earlier, we hope to grow through both business development and marketing. We have been around so long that we tended to just rely on word of mouth to find new business. We’re lucky to have some longstanding customer relationships, but we need to increase our visibility as the industry becomes more and more competitive.
Scott: How are you going to be doing that?
Tom: In recent months, we’ve tried to implement more processes and structure while retaining the family environment that has been successful for us. A big key to that is creating more of a team atmosphere. When I say team, I mean the collaboration between both the power transmission and systems integration sides of the company. We’re cross-training both sales teams to look for opportunities for each other. Also, we are involving more people early on in the quoting process so everyone knows what to expect when an order comes in.
Scott: Would you say you’re developing a new culture?
Tom: The three keys to the new culture are team, innovation and responsiveness. Innovation is important because we need to be able to create solutions for customers. And in a challenging economy, we have to look at things differently. We have to be very responsive and agile, quick to get back to customers and vendors. Technology is pushing us that way and so are our customers.
Scott: You mentioned technology. One thing that’s impacted the culture at Conveyor Solutions has been our younger generation’s understanding and use of the Internet. Has that been the case at Cross Bros.?
Tom: There are certainly some people who are taking longer than others to embrace the Web. We brought a new business development manager on board to do just that—to utilize the Internet, our website and other technology. We’re using technology, especially in sales, to reduce our costs and be more efficient. The sales process on a large integrated system can be quite involved. Streamlining a few things will help us stay competitive.
Scott: Competition is certainly increasing in material handling. Is that why you switched from conveyors to more automated systems? Do you see more value in systems?
Tom: No question. We’ve seen some customers in the last couple of years who are interested in turnkey projects. We now integrate a lot of equipment outside of what we typically would provide so that the customer only has one company to go to for everything on their manufacturing floor. There’s a lot of competition with component and conveyor sales that you’ve probably seen too.
Scott: Absolutely. Too much. As a whole, where do you see the industry going and how are you going to take advantage of it?
Tom: As the competition increases, we’re looking at our costs and how we’re doing business. That goes back to that idea of innovation. As the economy recovers, a lot of companies will look to automation projects as opposed to hiring more employees to become more efficient. We’re also looking at service. We don’t have much of a presence in the area of service contracts or reoccurring revenue from maintenance, so we are looking at that as a potential growth area down the road.
Scott: It’s amazing how much change you have on your plate, even after 165 years in business.
Tom: Whether you’ve been in business for 165 years or 14 years, there are still improvements to be made.
Scott: How do you avoid stagnation from setting in at such a mature company?
Tom: I think the biggest thing is to provide a visual for people so they can see where we need to go. We set metrics and measurable goals. For instance, we break a three-year plan down to a year, to a quarter, to a month. That helps us stay fresh and focused on our goals.
Controlling the Product
Scott: Do you have any facilities besides Rochester?
Tom: We have two here in Rochester. Our base facility is 25,000 sq. ft. and houses our power transmission division, our fabrication shop and our administrative staff. We also have a rental facility about three miles away that we use for setting up and testing our integrated systems prior to shipment and final installation.
Scott: Do you do a lot of testing before you ship in that type of environment?
Tom: Yes. We have an electrical and controls person on staff so we’ll do a lot of runoff and testing here before we ship.
Scott: Do you do your own controls?
Tom: Yes, we not only provide a conveyor, but all the electrical wiring and build the power panel and interfaces for an operator to automate the process. All programming equipment is integrated into one turnkey system package.
Scott: What are the main material handling product lines that you represent?
Tom: This is our 30th year as a distributor for Hytrol Conveyor Company. We also represent Span Tech Conveyors, MK USA and Fanuc Robotics.
Scott: During your time with the company, has the number of lines that you represent increased or decreased?
Tom: I’ve been with Cross Bros. now for two years, and we’ve added Fanuc and Span Tech in that time. It had been fairly steady over the years, but one of our strategies has been to diversify the business a little bit more than we have in the past.
Scott: We went through a similar process. We decreased our number of lines significantly in order to represent our core products better. But since the downturn, we’ve focused on expanding to help grow our core lines.
Tom: Diversification has been one of my strategic goals since I’ve been here. We’re also diversifying our customer base.
Scott: What are your primary end-user markets?
Tom: The end-user markets primarily are food and beverage, medical/pharmaceutical, aggregates, durable and non-durable goods. We didn’t have as much coverage in some of those areas a couple of years ago.
Scott: Is that base primarily in the Rochester area, or do you branch out further than that?
|Cross Bros. Co. turned 165 years young in 2010. Learn about more companies reaching milestone anniversaries this year.|
Tom: Our power transmission business is pretty regional for us—mostly New York and Pennsylvania. On the systems side, much of our business is outside of New York, though primarily in the northeastern United States. We go to Ohio, Pennsylvania, the New England states and New Jersey. Also, we do work for some of our larger customers with multiple facilities in places such as Mexico and Germany.
Scott: Does a significant portion of your business come from overseas?
Tom: Not yet, but we are starting to see more of that. We’re not setting up base in those regions; we’re just doing installations in multiple facilities in Mexico and Germany for large customers.
Scott: Has the robotics line allowed you to get into a couple of different vertical markets?
Tom: Definitely yes. Particularly in the food industry, the robotics are a key part of bringing different systems and equipment together into one integrated system.
Scott: You have a fascinating company. Congratulations on your anniversary—I envy you!
Tom: Thank you, Scott. Good luck to you, too.