Fabricator recovers from financial crisis

The financial crisis of 2008 was seven years ago, but for many companies, it still affects them today. Mario & Son in Liberty Lake, WA, has experienced good times as well as tough times, but in the end, the company has weathered the storm.

In the 1990s and early 2000s, Mario & Son reached double-digit growth, and after several expansions, the company decided to build its own facility in 2005. In late 2008, the company moved into its now complete building, with revenues of nearly seven million dollars that year and for 2008 as well. In January of 2009 — after being in its new space for only a few weeks — the company’s business dropped over 65%. At the time, it had 45 employees, and it did its best to hold onto them — hoping that a speedy recovery was just around the corner.

“In retrospect, by trying to be good employers, this course of action proved to be a very poor decision as it drained our financial reserves to critical levels,” said Joey Marcella, president of Mario & Son. “Our company experienced a slow attrition of employees and resources through 2010 and 2011, again always hanging on too long, always hoping that a recovery was not far off. In 2012, we gave ourselves a hard reality check.”

A long history

Mario & Son’s roots started in the 1950s, when Marcella’s father, Mario Marcella, was a freelance tile setter. In the 1980s, he taught the trade to his teenage sons. Mario and his son Joey became partners in the late 1980s when they started polishing edges of stone tile to complete their installations. This led to the forming of Mario & Son in 1991, which was established as a stone fabrication shop. Mike Marcella, Mario’s other son, joined the company a few years later, and now is Joey’s partner since Mario’s recent retirement.

Mario & Son fabricates all types of natural stone and quartz products, currently producing and installing four to five kitchens a day in its market, which is down from 10 to 13 kitchens a day before the economic crash. “This year, we are doing more commercial projects, such as apartment complexes and a new hotel which has us currently producing 1,500 square feet per day in one shift, which we believe is our total capacity per shift,” said Joey Marcella.

The 44,000-square-foot automated warehouse facility features a full Breton system with a Speedy Cut CNC saw, CNC router, automated flipper, conveyors and vertical computerized warehouse. Additionally, the shop houses a Loffler KSL and Vario 6 edgers, a dual-table waterjet from Flow International, a Jaguar bridge saw and a Wizard edge polisher — both from Park Industries of St. Cloud, MN, a Bavelloni 250 and 320 CNC stoneworking center, and an EnviroSystem from Water Treatment Solutions of Hampton, NH.

“We have de-commissioned one of our three CNC machines, a Bavelloni, in 2014 to make way for a planned new Breton CNC early this year,” said Marcella. “In addition, we have enhanced our motorized Breton conveyor system with low-cost manual conveyors to assist in a faster production system to handle the current commercial workload.”

The company currently uses a variety of tooling from Regent Stone Products of Virginia Beach, VA, and GranQuartz of Tucker, GA, as well as glues and sealers from Tenax USA in Charlotte, NC. The company considers itself a complete digital shop since 2007, featuring two Laser Product’s LT-55 Laser Templators. “Digital templating is crucial to our company,” said Marcella. “It is simply faster and more efficient than traditional methods.”

Making touch changes

Mario & Son currently runs two shifts, due to the commercial workload, and has two install crews. Before 2008, the company had 45 employees, it now currently has 25. They still focus mostly on residential, currently producing four to five kitchens a week — each one approximately 50 square feet, but also have high amounts of builder and light commercial work.

In 2012, when the company was giving themselves a hard reality check, they cut their labor to an absolute minimum, dropping medical coverage and tightening expenses with an iron fist. They were able to work closely with their bank and the SBA to secure better interest rates and deferrals on their remaining loans. “In 2012, after 12 years of top-notch service, we suddenly lost our Big Box account of 16 stores,” said Marcella. “Although frightening at first, it would soon prove to be positive, as our profitability improved instantly without all the travel, high administration and low margins of that account.”

In order to adapt to the changes that were needed to continue to exist, Mario & Son had to refocus on thinking like a small company again, changing their systems and ways of doing business. “We once had a CAD department of three people, now we are processing the digital files without it, by relying on our templators to finalize the information in the field as we had before, years ago,” said Marcella. “We learned how to do more with less. We also diversified by adding a tile showroom that year, to enhance our stone offerings.”

The residential market is still weak in the company’s area, but the builder and commercial sectors are improving. In addition to its normal everyday projects, the company has done three apartment complexes this year, and is currently working on a 725-room hotel — providing vanities and furniture tops. For the first time in nearly six years, Mario & Son is running at capacity, at least for now.

“The challenges continue,” said Marcella. “It is next to impossible to find good workers, or to get them to even apply. We are paying our existing staff more in order to retain them, and are struggling with the ‘Millennial Mentality’ like never before. The customers are significantly more demanding than before, our fabrication costs have increased, as we now mill and polish our seams, we are using better — but more expensive — anchor and rodding systems, and spending more in service per each customer. In a nutshell, we are working twice as hard for half as much.”

Coming into 2015, the company is still muscling through, but is much more stable than before. The boomtown of the 2000s is long gone, but there are still opportunities here and there that are promising for the future of the company. Mario & Son has experimented with new non-traditional advertising for the last few years in order to elevate its brand, mainly through event sponsorships. “We have created a buzz by providing novelty items in stone such as a Beatles portrait for a music-themed event, a photo booth for an event at a winery, and just recently, a working chocolate fountain from Carrara marble for a chocolate trade show — trying to remind people that we can do much more than just countertops,” said Marcella.

Recently, the company was able to achieve one of its original end goals this year, by being able to retire Joey’s father, Mario, from the business. “He has since started making stone knives as a hobby, which is quickly turning into a successful endeavor, adding to the enjoyment of his golden years,” said Marcella.

Looking toward the future, Mario & Son expects a continued slow recovery in its market, having resumed importing materials again, and it is finding ways to be more profitable. “We are working on new material handling systems — enhancing our already impressive system to keep our crew healthy,” said Marcella. “Though still several years away, Mike and I’s focus is beginning to shift to our own exit strategy, by grooming key employees for eventual ownership positions.”

By: Jason Kamery
Article originally appear on StoneWorld.com