by Joe Romanowski
Chairman & CEO
Machinery Systems, Inc.

How Does a Job Shop Owner Retire?

There are only a few things a job shop owner can do with their business when it is time to retire.  They can close it down and sell the assets, find someone interested in a merger, or sell it to an employee(s) or someone outside the business.  Actually, there is one other option — sell or gift it to a close relative. If the owner is really lucky, perhaps their children are ready and willing to take it over.

I visited with Jerry Dohe, President of Dies Plus, Inc., www.diesplus.com, in Itasca, IL and his two sons, Neil and Craig.  Jerry’s company manufactures stamping dies.  I saw two parts lying on Jerry’s conference table.  Jerry pointing to one and said, “This part would require a 5 ton press and this one a 600 ton press.  We make close, precision tools under three feet, “but” Jerry quickly added, ‘we’ll build anything.’”

Jerry’s retirement strategy is to transition his business to his sons by gifting the stock of the company in accordance with IRS rules.  Jerry, presently 59, started this gifting program about ten years ago. 

As I got to know Jerry and his sons, I quickly concluded that Jerry’s strategy is quite sound.  Dies Plus is truly a family business. Along with his sons, Jerry’s wife, Candice, works in the company as well.  For Jerry, “Family is what the whole thing is about.  I’m amazed at how great it is working out for us.  Transitioning my shop to my sons is an important part of my retirement strategy.  Before the boys joined me, I was basically a grind/mill guy.  When the boys joined me full time about ten years ago, Neil started to grow the Wire EDM side of our business and Craig the machining side.  Both are very talented and they work well together.”

I asked Jerry to describe some of the things he is doing to make sure the company is strong and viable for his sons. “One thing we’re doing is buying the best equipment possible.  We recently purchased a Mazak VCN 510C Vertical Machining Center with a pallet system and a 48 station tool changer.”  Craig quickly pointed out, “I have 47 tools in the tool changer, which is every tool we will ever need to make a die plate.  That tool changer is our tool crib.  The pallet system allows us to run this machine completely unattended.”  The entire time I was in the plant the Mazak was running and nobody was paying attention to it.  I asked Craig about the Haas machining center (which wasn’t running) next to the Mazak, (they also have an older Mazak VTC 20 vertical machining center, which also wasn’t running).  Craig said, “We can do the work of three machining centers on the new Mazak.”  I asked how he felt about the Mazak compared to the Haas.  “The Mazak is like driving a fine car, it just feels better.  When we calculated the costs of all the options that Mazak considers standard, the Mazak was only 15-20% more than a Haas.  We have more confidence in the Mazak and it is more productive.  I don’t want another Haas.”

Jerry continued, “I believe having good, reliable, productive equipment will allow Dies Plus to transition smoothly to my sons.  I know they can be competitive and that the company will continue to grow and prosper."

“Neil took over the EDM operation when he joined the company,” Jerry said.  “When I first put Neil in charge of the EDM Department, he was very nervous, even scared, particularly when I told him that the EDM Department was the heart of our business.  He has since told me that it’s the hardest thing he’s ever done.  But, he’s now better than anyone else at programming and running the wires (EDM).”  Jerry also related a story about Craig, “In high school he was a B & C student.  When he started at Northern Illinois University, he worked for me 35-40 hours a week and was an A student.  I asked him, ‘What’s happening here?”  He responded, “I wanted to do this.”  Jerry is proud that both his sons are college graduates.  Their degrees complement each other quite well. Craig has a business degree and Neil an engineering degree.

I asked Jerry how he developed such a strong relationship with his boys.  He said (video link), “Candice and I have been married 37 years. I suppose we did a good job raising them.”  He continued, “We had dinner together, and we always talked a lot.  We stressed our value system when the boys were young.  We’re very proud that they have embraced our values. They saw me work hard and saw what hard work can do.  In fact, they used to complain about me working too hard, but now they’re doing the same thing."

Over my career, I have seen hundreds of job shop transitions.  Most don’t work out as expected. It is harder to do than you might think and can’t be done quickly with a high probability of success.  If you know someone looking to retire and transition their job shop business, I have a recommendation for them. Start working on the plan at least ten years before they expect to exit the business, perhaps 15 years is even better.  The odds of success significantly increase if you start the process early.

Based upon my observations, I predict that Jerry and his sons will experience a very successful ownership transition. 

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