Power Pack

Power Pack

It took 20 years, but Alan Rash finally got his shot at running

his own foam fabrication business. He's turned an unorthodox

approach into a success story.

ENTREPRENEURS by Dave Szymanski | Tampa Bay Editor

In 1988, after two decades of working for others in the industry, Alan Rash was looking to buy a foam fabrication company from a family-owned business.

But the family would not sell to him.

So the spirited Rash did the next best thing to buying the company. He started his own, Tampa-based Allied Aerofoam Products LLC.

From no revenue 20 years ago to $40 million in 2007, the company has come a long way. Even more remarkable: As competitors retract, Allied projects it will maintain its $40 million revenue base in 2008 and actually grow next year, possibly to $45 million in annual sales. It hopes to hit the $50 million mark by 2010.

Allied takes foam, cuts it and sells it to other people that do other work to it, like stuffing it into furniture. It also makes packing for fruit and vegetables. Over the years, Allied has added other stuffing products, such as polyester and wood chips, to its business.

It clients are national, including Pottery Barn Kids, Harry & David and Wal-Mart.

Rash's profit margins are relatively low, so he has to succeed by volume. That's why its sales force is important.

"I would be happy if we did 5%," Rash says. "I'm not a greedy guy."

People friendly

Rash borrowed about $20,000 from the bank and founded Allied in Tampa in 1988 with three other partners. He bought out his partners over the ensuing years.

Before Allied, Rash worked for two other companies in the same field for about 20 years. Eventually, he decided he wanted to own his own business.

Allied began in a much smaller building in Tampa, about a 5-minute drive from its current building. It had 20 employees back then. Rash can't remember year one revenues; perhaps they were $1 million to $2 million.

He now has 200 employees, with facilities in Tampa; Miami; Milen, Tenn.; Thomasville, Ga.; and Atlanta. It moved into a new 120,000-square-foot plant and offices in Tampa four years ago.

Rash inherited part of his people-friendly business sense from his parents, he says. His patience came from his mother, a homemaker, and his drive and savvy was handed down from his dad, a merchandise manager for a retailer in Philadelphia.

He studied business in college. But Rash considers his real education working in the foam fabrication business for more than 40 years.

"I'm one of those guys who didn't have to go (to college)," Rash says. "I loved, it since the day I started it."

Rash began in sales. Within three years, he was in management, the youngest regional manager for his employer, Foamex International in Linwood, Pa. But as time went on, his next goal was running a company.

Diversified and flexible

There are dozens of competitors in the foam fabrication industry, but the group is getting smaller.

Rash expects more to close, especially if the economy remains sluggish. The reason, besides slower sales: They do not have enough foresight. They stick with what they've got and hope for more business.

"We don't do it that way," Rash says. "We look for other products to sell."

Indeed, one strategic reason Allied has grown is because it has diversified to so many different industries.

Jabil Circuit in St. Petersburg is a big client. It does stuffing for the pet bed business as the largest supplier to Petsmart. Other clients include Target and Costco. It makes bedding for mattress companies and marine seats for boat manufacturers such as Regal, Wellcraft and Chris-Craft. Now through January you'll see a lot of green packing material at Allied, getting ready to be filled with citrus fruits for the holiday season.

Another success factor is geographic flexibility. An accountant once told Allied to keep all of its operations under one roof. Multiple plants meant costs, the chance of fires, the expenses of dealing with labor. The other foam fabricators didn't do it.

But Rash decided against it. Opening facilities in other cities would allow Allied to respond quicker to customers for the timing of production and shipping. It also would have backup facilities in case of emergencies.

For example, for Pottery Barn Kids' furniture line, Allied makes all of the products out of its Tennessee plant. The Atlanta plant does pet beds. It also makes bean bag chairs out of Atlana.

The pet business has been an especially successful one for Allied. Walmart buys one style of dog bed from Allied - at a pace of 4,000 per week.

All along, Allied has watched costs. Rash closed his Ocala plant when he found he could ship out of Tampa for less cost.

A third strategic reason for the company's success is investment. Allied has continually invested in better, faster machines that cut foam and other insulating material. It recently bought a machine that does precise cutting by using a high-pressure water jet that can cut through high-density foams and even steel.

This allows Allied to do very precise work, within a 16th of an inch. Clients like the military warrant it. Word got around.

"As soon as we announced it, our phone was ringing," Rash says.

It also recently ordered $60,000 in machines for Atlanta and Tampa to take scrap product and melt it together into usable product, saving money.

Despite its growth, the biggest challenge with Allied to date has been the current economic slowdown. That's why it has invested in equipment and looked at costs, to prepare for better times.

"When the good times come back," Rash says, "we'll be better."

The future

Rash, 61, has a future of growth and diversification for Allied in the next five years with him at the helm.

"I'm a young 61," he says. "People would love to see me retire. But I get high on the growth part. Walmart took on two more beds with us. I get nuts, really get off on it. Success stories keep me going."

Allied is looking at acquisitions in the future, things that relate to the foam fabrication and packing business.

"I'm not going to open a deli," quips Rash.

One area of future growth could be the military. Allied prepares the padding for elbow and knee pads for service people. Those have to be specially die cut and Allied has the equipment.

"There are many things to add to our umbrella," he says. "We want continued growth. We can do $100 million."

Rash doesn't golf because he never got into it, even though all his friends play. He and his wife bought bicycles for exercise. But mostly, he's still enjoying his work.

"I'm so fortunate," Rash says. "If you talk to a dozen people, 11 out of 12 are not happy. I've never said that. I love coming to work every day. Every year, something different comes across my desk. There's always a new project to work on."

REVIEW SUMMARY

Company: Allied Aerofoam Products, Tampa

Industry: Foam fabrication

Key: Finding new ways to fabricate foam for more clients, more profitably.

Retention Attention

Allied Aerofoam in Tampa has virtually zero turnover.

How does it do that? Paying attention to people, says Alan Rash, president and chief executive officer.

When Rash worked for another foam fabricator earlier in his life, he walked through the factory once with the CEO and noticed the executive did not acknowledge the employees.

"He never said a word to anybody," Rash says. "I don't think I ever forgot that."

Rash, a sociable person, decided he would never do that.

He acknowledges everyone and has set up a popular bonus plan for employees.

So instead of employees leaving, Allied has people who want to go to work for the company, including those who worked for other foam fabrication companies for 10 years or more.

"My father always told me, and I tell my kids, if you treat people fairly and honestly and work hard, you'll be successful," Rash says. "I guess he was right. I'm trying to project that to our upper management team."

- Dave Szymanski

Keep an open door

One of the biggest lessons Alan Rash has learned as chief executive of Allied Aerofoam Products in Tampa is that business can come from unlikely sources and at unlikely times.

One day near the July 4 weekend in 1993, a man in madras shorts in his early 50s showed up at Rash's office door. At first, Rash nearly didn't meet with him, for fear of getting tied up in a long non-business discussion with a stranger. But Rash had some free time, so he let the man in.

The man pulled out a plastic bag of Q-tips and wanted to know if Rash could package, seal it and ship it for him. After Rash questioned him, the man verified that he had an order for 50 truckloads of Q-tips for Consolidated Stores. He agreed to pay Rash a nickel a bag. Rash agreed to try it for 30 days.

Rash hired 40 to 50 temporary workers a day to do nothing but packaging Q-tips. After running a time study, Rash asked if he could get 11 cents a bag. The customer agreed.

Eventually Rash started doing it under the Allied name, "making very good money," selling it for 50 to 60 cents bag. It cost him 40 cents. The original work led to other business with Walgreens and Wal-Mart.

The business moral: See everybody. Never, says Rash, refuse a salesperson.

- Dave Szymanski