In a Niche by Itself

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Burgaflex North America (BNA) reaps big rewards in a specialized market with powerful appeal

The birth of B2B media took place in a Navy ordnance warehouse during WWII when an enterprising young officer redesigned the humble warehouse shipping pallet and created a newsletter to connect users of the new design. That effort grew into a publishing and media empire based on the surety that consumers would be hungry for targeted content and products. No doubt that the late Norman Cahners (of Cahners Publishing and Reed Business Information) would love to see how the concept he cultivated — the power of the niche — impacts today’s business world. In particular, we think he’d be eager to chat with Brian Kaminski, CEO of Burgaflex North America (BNA).

We certainly were, given that Kaminski is transforming a good company into a great one, navigating the 15-year-old enterprise to its fullest potential through savvy niche service.

A leading worldwide manufacturer of specialized tube and hose assemblies used by highway and off-road OEMs and the aftermarket, BNA’s products are used in the medium and heavy-duty truck (Class 5-8), agriculture, forestry, construction, and aftermarket segments. BNA is a global force, specializing in a high part number product mix with mid to low volumes — an intimidating sector in any industry.

“Low volume/high mix for many companies means extra labor, more setups, more overhead, increased inventory, many more SKUs, but I saw this as an unbelievable opportunity for the company to embrace the low volume/high mix niche and perfect the model which will bring increased sales, higher margins, and the ability to be the premium supplier in our current markets and grow significantly in new ones,” Kaminski explained.

When BNA appeared on his radar, Kaminski was considering other opportunities, but found the struggling manufacturer to be the most compelling. BNA had strengths, but was by no measure in a position to become an industry leader. Every one of the company’s customers’ assembly lines was on hold for lack of product, and without immediate management and process intervention, 800 employees would soon be on the streets. “We were flying components in from suppliers and finished goods to our customers on a daily basis,” he recalled.

“Working seven days a week for two years was crippling the company and the employees. For every employee, there are another four or five people counting on that income to provide for their family, which meant 3,000 to 4,000 people were depending on me to help steer the ship. I knew I had to take on this role and take massive action in order to save the company and the employees, otherwise everyone would have been out of a job.”

That Was Then ...

As for those 800 jobs at risk? A phenomenally high turnover rate was just one of the first challenges Kaminski tackled. “The company hired 1,181 people in 2018 and only 25 people stayed.” Poor facility conditions, low wages, lack of training, no vision for where the company was going, and the absence of a 401(k) provided little motivation for workers to stick with the firm.

Despite an extreme cash crunch, Kaminski increased wages across the board for the direct workforce, instituted a 401(k) plan, and improved the facilities within the first few months of taking over as CEO. “Our retention rate has dramatically improved, which has, in turn, improved our safety, quality, and productivity. In the past year, safety incidents are down over 50 percent, quality defects are down by over 60 percent, and productivity has improved over 100 percent. Our plan is being executed at a very high level because we have a laser focus on making sure our employees go home safe the same way they came to work, attacking quality issues so they don’t repeat, and being relentless on continuous improvement.

“BNA, as did many suppliers for the heavy-duty industry, saw record volumes begin ramping up in 2017, and that created significant capacity constraints. I had to make some tough decisions and tell certain customers we could no longer serve them in order to ensure I secured my key customers’ business. We had to hit homeruns on every decision, otherwise Burgaflex wouldn’t be standing today. “A weekly business review brings the company’s leadership teams together to report on KPIs and ongoing improvement plans.

“We will never become complacent, and being a mediocre company isn’t an option. In every turnaround I’ve led, the teams and leaders at some point accepted the fact their quality was subpar, productivity improvement or process adherence wasn’t important, and safety and cleanliness weren’t a focal point."

Kaminski implemented sweeping changes to the manufacturing facility. “We’ve made significant changes to the shop floor by investing in new technology to help increase the velocity of product through our shop by improved inspection equipment, automation, and developing new and revolutionary methods to decrease lead time. All of our capex spending centers around improving our quality, efficiency, and ensuring we always deliver a premium quality product, on-time, every time,” he revealed.

Rebuilding supplier relationships and smarter communication strategies were needed to shore up BNA’s sputtering supply chain. "We weren’t giving good forecasts or paying our suppliers on time, which created a shortage of product, impacted our manufacturing efficiency, and created animosity between us and our suppliers,” he said. As grueling as recapturing trust often is, BNA has done so, and pays its suppliers promptly, and treats them as valued partners. "Going forward, we are looking to strengthen our key suppliers by consolidating our supply base and giving our suppliers more volume which in turn should give us better pricing, terms, and control of inventory.”

This is Now ...

Six months ago, the company hired a new VP of sales and development who is tasked with rebranding the firm and boosting its social media presence. In addition, Kaminski said, “We are currently working on developing an online catalog which will allow our customers to look up their fitting requirements on our website and buy direct, or partner with a distributor. The key aspect of this catalog will be that the customer will be able to cross reference a competitor’s fitting and be able to match it to our fitting part numbers, which will make the customer experience that much easier when purchasing a replacement fitting.

“In the past, BNA only promoted itself as being an AC tube/hose supplier, when based on our capabilities and applications, we can offer a much wider range of products to our customers," he stressed. Penetrating the heavy-duty aftermarket segments is now a high priority, including targeting tube/hose assembly, repair kits for leaking AC lines, and catalog fittings.

With the turnaround has come a spirit of collaboration. “Internally, we are teaming up with several aftermarket distributors and jointly analyzing what parts in the heavy-duty market have the highest replacement rates, which will allow us to have a strong confidence in what parts to keep in inventory in order to satisfy fill rates. ... We are beginning to engage with our customers’ design teams to help remove as much waste and cost out of the program up front to save our customers money and time. We want to be viewed as a solution provider when working with customers which will separate us from our competitors.”

Kaminski added, “We are looking to advance in markets for military applications, recreational, consumer, and also in our current markets for heavy duty construction by adjoining our capabilities with our current customers’ requirements, which will lead to us diversifying our product mix."

Once on the cusp of failure, BNA is thriving. Employees now are eligible for quarterly bonuses, and fresh ideas are taken to heart. “We reward people for their suggestions which can help safety, quality, or productivity. One of our employees suggested a way to increase our productivity by 500 percent and improve quality. We trialed the idea in-house and the results were better than anticipated, so we invested over $300,000 of new equipment because of it, and we paid the employee a good bonus." Kaminski revealed, “I couldn’t be more proud of how our leadership team and employees have worked together through long days and weekends in order to position Burgaflex to become a world class supplier. In our weekly management meetings, every discussion centers around how can we take the next step to become the best in our industry.  We are just getting started and we have limitless opportunities to take Burgaflex to the next level.”

Low volume/high mix businesses can bedevil the most well-intentioned leaders in every industry, but when great products hit the right targets at the right time, they become standout opportunities for innovation. Norm Cahners knew it, and so do Kaminski and his teams at BNA.