CUYAHOGA FALLS, OHIO (June 30, 12:30 p.m. EDT) — Mike Caporale, president and chief executive officer of window and siding extruder Alside Inc., is shooting high. The former General Electric Co. official spent 17 years in several divisions of the conglomerate, including posts with Aircraft Engines and Power Systems before venturing into building products.
Now he has a goal to grow his company to more than $1 billion in sales in five years. Cuyahoga Falls-based Alside was purchased last year by New York private investment firm Harvest Partners Inc. Caporale stepped in as president nearly three years ago and was named chief executive officer in 2001. Caporale is the first president and CEO who is not a member of the Kaufman family, which started Alside in 1947 as a maker of baked-enamel aluminum siding.
“I think one of the biggest issues I have is to keep the momentum up,” he said in an April 10 interview at Alside headquarters. Caporale cited the company's sales of $611 million in 2002, compared with $435 million in 2000. He also noted a challenge “to put the infrastructure in place to really support that sales growth.”
Asked about management changes that included surrounding himself with his own people, he said: “The people that I brought in the company, none of them wanted to run a $400 million company when they got here. They all wanted to run a company significantly larger than that. I would suggest to you that the people they might have replaced were satisfied running a $400 million company.
“I don't see it that way. So you've got to have people here that have the skills, the competency, all those things to really make things go, so we've really been working on making sure the right people are here, the right infrastructure is in place, the systems, the processes, those kind of things.”
Still, looking at the number of new people among the firm's 3,000 employees, Caporale said it's a small percentage overall. His goal as a newer leader is to make sure people who have been with the company and newer employees are working together.
“You just kind of make sure that everyone plays in the same sandbox and isn't kicking sand in each other's face. If you can do that and you can get everyone working together, that's when you can really significantly make a change and really grow a business,” he said. “I think we've been very good at doing that, and that's helped with our growth as well.”
Q: What are the most significant changes you've made?
A: We spent a lot of time and said, “We don't want to have just a customer-focused strategy. We want to have an operational strategy so that we can fix those kinds of things operationally inside the business and then have very high levels of customer service.”
We had great products, the vertical integration, the plants; we had the supply centers. We just really needed to work on the service piece. So I think that one of the main things we've done is really work on the operations of our company. That's an ongoing piece. And that's really helped us significantly grow the business. There are 1,000 other things inside that, but from an overall standpoint, it's something that's pretty important to us.
Q: How did you put that into practice?
A: The first thing we did was really worked on fixing the window business. Having bad service in windows was negatively impacting our siding business as well. We've fixed that, and as a result, we have significantly grown the window business from an overall standpoint.
Q: Do you feel that Alside is at all untouchable because of its company-owned supply centers?
A: I don't think any company is untouchable. You have to continue to grow and develop and do new things in order to be successful. You can just look over the last two years with all the companies that were untouchable and whose CEOs are in jail right now.
I think we have a significant competitive advantage. Our company was very entrepreneurial in the past. And we don't want to lose that entrepreneurial spirit, but really wanted that spirit to be focused in on the front end of the business, in our sales and marketing end of the business, to really go out and grow. We've given our people a lot of latitude to be entrepreneurial and to work that.
But I have to tell you, from an operations standpoint … you have to do the same thing over and over again in order to do it well. We want that to be very structured. We want people to understand the processes. We figure out how we want to run the business, then we go after that. It's an important piece to how we run the company.
Q: What about the fence, decking, railing and garage door business? Where do you see that going?
A: That whole market is exploding. The products are being accepted more and more. We were producing both in Ennis [Texas] and West Salem [Ohio]. We've consolidated and put everything in West Salem. The number of extruders has grown as a result of that. We've refocused it. We've got the factory in West Salem. We do our routing here, and ship kits out of the facility right here. That's where we've got the business structured. Our fence, deck, railing and garage door business is about 5 percent of our total business. We're trying to grow both those business segments.
Q: The company believes that with planned capital projects in 2003 it will have adequate capacity to meet sales expectations. Can you tell us what you're doing in this area, companywide?
A: We're working on process changes inside our extrusion operations, as we should be, from an operations standpoint. We have the capacity we need to grow the business. Are we going to have to add extruders in the [coming] years? Absolutely. Are we going to have to add more window lines? Yes. I've basically told the investment community that somewhere between $12 million and $17 million is what we'll be investing as an ongoing basis.
Q: For a change from all the other talk that we hear, China is not top of the agenda. What is the biggest concern in your world?
A: The turn-on in this business is that all the drivers, I think, for the next 10 years, are just headed in the right direction. This is still a young industry, even though some would say it's been around since the cavemen put the first hole in. We can change our service levels, we can change the quality of the products and types of products, and we can really make a difference in this industry. To me that's what's so exciting about being in the building products industry. I've had more fun over the last eight years than I had in the previous 19 years of my career, and I've had some wonderful, just wonderful, opportunities and assignments, and I've done some really neat things. But this is just pure fun. I lay awake at night and wonder when this period is just going to pass.
Q: If everything is so rosy, do you expect the number of competitors to increase significantly?
A: No. With six companies having over 70 percent of the marketplace, I just don't see competitors coming in. Anybody can go out and buy extruders. But we have relationships with over 35,000 contractors. We have a distribution network established. We have computer systems that allow us to take orders electronically for windows and have that window shipped 10 days later. The barriers to entry are not what's sitting on the shop floor. I'll let any of our competitors walk through our factories. We all can get the same equipment. But it's the processes, the systems behind that which give us a competitive advantage in the marketplace. Those are where the barriers are.
Q: What about the impact of the war? How has that changed how you manage your company?
A: I think it has something to do with consumer confidence levels being as low as they are. I think right now all the drivers of the industry are headed in the right direction, whether it's remodeling or new construction. We've just got to get through this consumer confidence, we've got to get through this short period of time. We had the weather thrown at us. This year vs. last year, we lost an amazing amount of store days where we were shut down, the lights were off, nobody was at work. Last year, I didn't have one day like that. We just have to work our way through this.
We're not doing anything crazy. We're just going to wait it out. We're going to continue our strength in remodeling. It's a real strength we have. We've been trying to grow our new construction business. We've got products and services that we've offered as of late to go after and grow that segment as well.