I have been watching the roller coaster ride and subsequent agony unfolding on Wall Street recently with a sick interest.  Like driving past a car wreck, it’s hard not to stare, and I find myself checking the DOW ticker a few times each day, where before, literally months could go by without any undue concern. As a guy who is running an American manufacturing company, I thought I would add my two cents to the fray.
 
Like many people, I have modest personal savings, a company 401K program, and some equity investments in the stock market in the form of my kids' college 529s.  I have some anxiety that my hard earned money has become like water in a puddle on a hot summer day.  Still, I’m in it for the long run and I’ve got years to go before my oldest heads off to the University of Wisconsin (don’t tell my MSU Spartan wife).

While I’m no expert economist (a term recently proven to be quite the oxymoron!), I don’t believe western civilization is coming to an end.  I also don’t believe a lot of what I hear from these so-called experts.  I do believe in the innate strength of our country and in the truth of what I was taught growing up, and that is the basics.  The basics as in…

There is no easy money, hard work is good for a person, live within your means, build something over the long haul, and most importantly, if you have a problem, look in the mirror first for the solution.  My brother and I have done this with our team here at Factory Five Racing for more than 12 years.  Today we have 48 employees and have grown our company thru hard work, investing in technology, and doing something better every single day. The only financial help we have ever received has come in the form of paying customers who decide that our products and work are worthy their hard earned money.

The recent stock market and economic turmoil and now these multi-billion dollar bail-outs have reminded me yet again of these truths. From the time we started Factory Five we have wanted nothing from the government but to be left to run our business, hire our crew, and build good products for our customers. I don’t like the bail-outs one bit, and they run counter to the very core of American competitiveness.  After having said that though, I have to admit that during these times, if it helps American manufacturing jobs, then I support it.  Even better, I know that there is a focused desire in government and in private investment to move strongly towards fuel efficiency, renewable energies and technologies that will break our dependence on oil imports from unfriendly countries.  I believe that if the creative energies of companies like our own are unleashed, we will meet these goals and exceed them as Americans ALWAYS have in the past when met with a direct challenge.  Traditionally our focus has been performance and people think of Factory Five as race car guys.  The truth is that we have in our own company here, amazing abilities to re-direct our engineering talents towards products that can deliver performance cars AND efficiency… also we’re smarter than those guys putting phone batteries in a Lotus chassis!

Once the national focus is on technology applications and manufacturing, the magic will start to happen.  Congress needs to love the innovative manufacturing sector as much as it has always been in love with Wall Street.  I think the most telling thing is that the White House and the Federal Reserve delivers close to a trillion dollars to Wall Street and makes decisions to help billion dollar banks and insurance companies literally over the weekend (!), yet when car manufacturers, who directly and indirectly employ millions of hard working Americans, make a reasonable request for emergency lines of credit, it becomes the second coming of the Spanish Inquisition.  I think that is beginning to change and I can hardly contain my excitement.  If that truly happens, then sit back and imagine a GTM that runs 0-60 in 4 seconds AND delivers 55-60 mpg.  I believe we can do that with current technologies and low investment dollars.  But I think we can do much more.  Chassis weight can be reduced with increases in strength, easy!  There is so much to do it makes it hard to sleep at night.    

For years now we have seen our country turn its back on manufacturing and on the greatest asset our country has, The American Worker.  Manufacturing jobs have fled New England and the rest of the country.  They have fled to third world economies for cheaper labor and higher corporate profits.  The value of the American worker has all but been forgotten by CEO’s and tomorrows “great” business leaders being pumped out of business schools today.  Fast profit, trading paper and suing each other have become the great American industries.  In our society today it seems respect is all-too often reserved for doctors, lawyers, and investment bankers (the latter not so much these days).  But seriously, when did we forget to celebrate and respect those of us who make things, build the buildings, make the cars, drive the trucks, and deliver the hard stuff?  America, the greatest country on earth, earned its place at the head of the line with hard work, innovation, and among other things, our immense manufacturing might.  Could it be that we are standing at the threshold of a new era of innovative American automotive manufacturing?! 

Almost a hundred years ago, my great grandfather John Smith was the last of a long line of Blacksmiths.  He told his six sons, the youngest of whom was my grandfather Ted Smith, not to follow in his tradition. The world was changing and in the early 1900’s, the need for Blacksmiths was fading quickly.  My grandfather grew up and earned a living working for AT&T, and later as a refrigerator repairman and a machinist at Howmet/Misco, an aircraft supplier in Whitehall, Michigan. 
 
My grandfather Ted Smith would be proud to see that many years after John Smith told his sons to leave the family tradition, that his living legacy were again Blacksmiths… albeit modern-day ones.  Today we use computer tools and machines that were unknown to John Smith and Blacksmiths of the day.  My point is that while the tools have changed, the craft remains the same.  We form, weld, and construct our chassis and car parts as modern-day Blacksmiths, and we do it proudly as American workers. In today’s global economy, our team uses robotics and computer technology to bridge the labor gap and stay ahead.
 
At Factory Five it’s been the combination of hard manufacturing work and modern technology that has delivered the punch that has set our company at the head of the pack.  Today, no component car company in our market can really compete with the Factory Five guys.  Our products are the best out there and our team understands that we are all here only by the grace and support of our customers.  Even in this tough economy we are growing, while others have folded up shop or scaled things back.  We were recently featured by CNBC on their mid-day “PowerBlock” segment as an American automotive company doing well in spite of these economic headwinds. But it’s not luck that got us here.

While the economy continued to crater in 2008, we had the courage to invest in new products and the fiscal discipline to own our inventory.  As cash flow tightened my brother and I took ourselves off payroll rather than ask a welder, who did his job, to suffer one bit.  We kept our competent and trained team intact at all costs.  And we didn’t need to beat our drum to congress about making a dollar a year salary (seems a day late a dollar short for all that!). Thru the downturn we focused on the basics and continued to invest while others cut back.  We’ve kept our customers and added new ones and our sacrifice and investment has paid off huge.  We recently launched our brand new ‘33 Hot Rod, adding it to our mix of vehicle kits.  Just last month that new Hot Rod won three major awards at the 2008 SEMA show (debuting in Ford Racing’s booth!).  Things have been better in the larger economy no doubt, but we’re solidly in the game (and back on payroll!) with a great mix of products at good prices… and that’s by design rather than luck.

We are an American manufacturing company.  We turn raw materials of steel and resins into kits that our customers build into cars of tremendous value.  We, along with our customers, are building the wealth of our nation.  By building things, we add valuable assets to the country. 

But our work isn’t limited to our shores.  We are exporting our most American of products, all around the world.  We have Factory Five’s in Canada, Europe, countries of the former Soviet Union, Central and South America, Australia and New Zealand!  As I look over the outline for our 2009 newsletter, I find myself impressed with the volume and scale of the work we’ve done this year, even in the face of this unprecedented economy. The basics, it seems, are still the basics. 

 

I don’t know how to say what I feel about our company, our crew here, and the customers we work for.  I am filled with pride and patriotism each morning when the long line of cars rumble in just before 8 am each working day.  The weight and responsibility of running this company is heavy, especially when I think about the families, suppliers, customers and community who all depend on me and the management team here to make good decisions.  But at the end of the day, it’s not the weight or the burden that I think of when I lock the front door and head home.  Instead I think of how fortunate we are to be doing this for a living.  We may be a small company, but we are fiercely proud to be carrying the torch of American Manufacturing.  MADE IN THE USA has special meaning to all of us here at Factory Five Racing.  Personally, I am profoundly thankful to be running a company whose products have brought people together in the truest sense; a company whose very existence has made a real difference in people’s lives.
 
It’s admittedly difficult for me to watch the leaders of the three great American car companies going before Congress with their hats in hand looking for money.  It wasn’t so long ago that these companies were the Leviathans that helped drive the economic expansion of the twentieth century.  Where did they/we go so wrong?  I don’t know the answers to those questions but I do suspect it has something to do with the forgetting about the basics. The wonderful thing about a small company is that there is a direct connection between cause and effect, between investment and return.  It’s hard to listen to these very bright, talented and sophisticated leaders like Paulson and Bernanke and not be impressed with their understanding of extremely complex economic metrics. Nevertheless, when did anyone ever borrow or spend their way out of debt.  It’s all smoke and mirrors without the fundamentals, and manufacturing is one of those economic fundamentals vital to real growth.  To these wizards, MADE IN THE USA is equal to SOLD IN THE USA.   

There’s no one formula for business success and I don’t pretend to know what’s best for these massive car companies.  But I do feel that any successful culture (whether it’s corporate, family or an entire society) begins with core values and true love for what you do.  Unlike many people, I don’t think there’s a quick way out of all this mess.  I think we, as a country, are going to have to work our way out the old fashioned way.  Hard work, discipline, and real innovation are the medicine for this flu.  These values are things that won’t make the news and are typically ignored by pop culture and the 30 second sound bite media.

Politicians, paper traders and bankers on Wall Street may have caused much of this grief for the rest of us, and certainly more than just they are to blame… but the rest of us are busy building the companies, parts, and machines that will save them from themselves.  Count on it.  Count on the American worker.  Count on American ingenuity and innovation.  The uniquely American belief in the individual over the collective is the foundation of innovation, discovery, and winning.  Count on us as Americans to rise to the challenge and build a greater country than ever… and if you can, join us.  Join us and build something.

For our part we are doing everything we can to be competitive in this market and to deliver real value to people who are justifiably weighing their coins more carefully. We are not asking for any help from anyone other than from those who pay our salaries, namely our customers.  Our promise to you is that we will continue to build this great American company of ours and to always faithfully serve those who share the dream of building their own cars.   

One last thing.  While these economic issues are very important, we can’t allow ourselves to forget that it’s all still just about money.  Not to be cheesy here, but Lee Greenwood said it so well in his song “God Bless the USA.  I remember hearing this song performed at the republican convention for Ronald Reagan.  Times were tough then and I think of all Reagan’s real talents, first among them were the ability to remind us who we are as a nation, and in knowing that, start acting like it again!  Lee sang…

            “If tomorrow all the things were gone I’d worked for all my life

            And I had to start again with just my children and my wife

            I’d thank my lucky stars to be living here today

            ‘Cause the flag still stands for freedom and they can’t take that away”

Brave American soldiers are right now doing the hardest work of all and many of them have suffered and died to give us the right to pursue our own individual ideas of happiness.  If you see an American Soldier in uniform give him or her, the respect and thanks they deserve. We are all in their debt. We all share an obligation to do our very best for our country in our own way.  At Factory Five, our idea of happiness has to do with building very fast cars and hanging with like-minded gear-heads who see car parts as artwork and things of beauty.  Today we might start to look beyond performance and see what contributions we can make to this great new national effort. 

Thanks for listening and on behalf of the great crew here at Factory Five Racing, have a peaceful and meaningful Christmas season. 

Dave Smith