Profile

• The business: ELF Products Inc., 820 S. Euclid Ave. (520) 622-3566, www.elfproducts.com
• Purchased: October, 1998
• The owners: Jerry & Anita Foley, Andy Small and other investors
• The products: construction materials made from recycled plastics, recycled wood fibers and natural fibers.
• Revenues: $1 million projected in 2001
• The challenge: Align management style with growth.

The Story

Jerry Foley is a 1983 Amphitheater High School graduate who attended Cochise College on a rodeo scholarship. His best event was steer wrestling.

His family has been in the building trade for 38 years and owns and operates Foley Tile And Masonry. Foley worked there 14 years, mainly as an installer. He managed projects, including one at the Westin La Paloma Resort & Spa, and worked for a time in the office preparing bids and performing administrative tasks.

Foley eventually decided to venture out and start his own company, he says. At Foley Tile, he became familiar with the pallet industry. More than 500 million wood pallets are made each year, says Foley, and 40 percent of natural hardwood is used in their production. He believes there is need for less costly, more durable pallets.

Through research in 1997, Foley found a company making pallets from recycled wood and plastic. Cheap wood pallets cost about $7 per trip, says Foley. He wanted to make durable pallets and rent them for $5 per trip to companies like Home Depot.

The company he found was Composite Manufacturing Corp., which was doing business in Canada. Foley lined up private investors and bought the company in October 1998. He and his wife, Anita, own one-third of the company.

Foley went to Canada, learned the business, packed up the assets, including intellectual property, and moved it to Tucson. He changed the company name to ELF Products Inc. Jerry Foley is president and Anita Foley was the company's first office manager.

The company opened its doors here in March 1999 and picked up its first customer in July. A plastic composite board for the boat-manufacturing industry, marketed as All-A-Board, has become the best-selling product and represents 85 percent of sales, says Foley. Nearly three-fourths of All-A-Board sales are to seven Sea Ray boat factories. The pallet program has been difficult to get off the ground.

Company sales in 1999 were $350,000, says Foley, and they decreased to $250,000 in 2000 when an important customer went bankrupt. 2001 sales will be around $1 million, thanks to Sea Ray, says Foley. There are 13 full-time employees working four 10-hour production shifts per week.

In 2002, ELF will diversify its product line by adding two private-label products: a block pallet and boards for cabinetry and motor home floors. Sales of pallets and related slip sheets to Mexico are planned. Projected sales for 2002 are $2.5 million, says Foley.

All products are made from recycled plastics, sawdust from recycled wood, flax, coffee plant fiber and chemical additives for strength and fire retardation.

The Advice

Foley's leadership style - he has been the center of the company - must evolve, says Bruder.

"He needs to leave behind being the one and only, move through delegation and decentralization, and become a renewing entrepreneurial force."

An enterprise leader who fails to make this transition runs the risk of stalling growth. Foley is very committed, says Bruder, and recognizes the gaps in his knowledge. Early on, Foley contracted with outsiders to review his product formulas and analyze company finances.

Recently, Foley hired a production manager and an office manager. Foley should give them the authority they need to manage and improve company systems and processes.

Foley should explicitly delegate responsibility to the production manager for ordering raw materials, producing and shipping goods, says Bruder. The manager needs to know he is completely responsible for quality control and crew performance.

Foley can demonstrate his support and confidence in the production manager by avoiding the manufacturing floor. The production manager should come directly to Foley when he sees issues or problems.

"They need to develop their partnership across the executive desk, not over the blender control panel," says Bruder. The office manager needs similar support in applying her experience, says Bruder. Foley's role is to direct her to make the office systems function well and tie into the manufacturing systems.

The office manager is the organizing force of the company and the official voice of ELF Products in initial contacts with customers, vendors, prospects, accountants and attorneys, says Bruder. Foley can demonstrate his confidence by giving the office manager access to all information and to any necessary resources.

In general, Foley should remove himself from daily operations of the company without appearing to abandon it. Employees will learn to distance themselves from the owner's intervention but remain motivated. The result is a dynamic, fully formed enterprise that is difficult to compete against, says Bruder.