Name: Charles “Wick” Johnson

Age: 69

Title: President

Company: Kennebec Technologies

About: A contract manufacturer that provides complex, high-precision components to aerospace, defense and technology companies.

Website: www.kennebec.com

What’s your biggest challenge right now?

Actually, our biggest challenge is managing growth. For the last two years, we have been managing a substantial change in our customer base. We’re going from one end of the spectrum to the other. Our business is contract-based, primarily in the aerospace and defense sectors. They have their own cycles. When they expire, even a couple at the same time, we have to adjust to maintain the volume of work and the cycle of work.

The good news is that they are multiple-year contracts, from five to 20 years.

The other challenge is that in 2016, we created an ESOP (employee stock ownership plan, through which employees come to own shares of the business). There were two drivers for that. One was to keep control of the company local. The other was us facing the No. 1 issue in small business today — succession, and how baby boomers create succession.

We have had a rate of change that is great as we have ever seen between the two. What we have now is very experienced long-term employees and a couple of key hires, people with experience and with skills we didn’t have internally. The key to hiring is turning over the right rocks. We hired a chief operating officer and a chief financial officer. We did national searches ourselves.

In our industry and others, there is so much ownership change with companies being sold and people finding themselves surplussed. Our COO had worked in a larger, more sophisticated shop in Portland. He had the experience and qualifications for where we wanted to go. The CFO had also worked in a more sophisticated financial environment.

Ironically, we had downsized in terms of employment in the last couple of years, but we have hired a dozen since the start of the year. We started with (an employee) base of the mid-50s. They are younger employees. We are more than willing to invest in them, and we invest aggressively.

What’s the best advice anyone has ever given you?

Have a board of directors. When I was on the board of trustees for the University of Maine system, I served with Wickham Skinner, who is a professor emeritus at the Harvard Business School. He said if you are going to grow this company, you have to have a group of people you can count on to give you good advice, strong skills and good perspective.

Also, I had a great-uncle (Enders Vorhees) who was more successful than I will ever be, who said the cheapest thing you can get is a skilled employee. He was the treasurer of U.S. Steel from the 1930s to the 1950s.

My father (Charles Johnson Jr.) also said if things are worth doing, they’re worth doing well. I’m not sure it was advice, but it certainly was a mantra. You are continually making choices. You have to decide do I do it in way that just gets by, or do I do it in a way that stands the test of time? In the long run, it’s more difficult to do things that will stand the test of time, but it builds a base to move forward from.

How do you foster creativity in yourself or your staff?

At this point, I don’t have a direct management role. The point of the ESOP is to transition me out of the company. But what you need is an open exchange of ideas with an idea of where you want to go — a crisp idea, but not a rigid prescription for how you want to get there.

We find that our most creative moments come about after we’ve talked about a problem and the individuals have had a chance to sort of percolate on what they have been thinking about. Machinists are introverts.

What’s your biggest concern right now?

This messing around with trade. It’s so short-term.

We’re a little company in Augusta, Maine. Every part we make could be made anywhere in the world. Our customers are global businesses and their customers are global businesses.

Like the banking crisis in 2008, everyone thinks what you do doesn’t matter until all of a sudden it collapses and they say: “Why didn’t we see that coming?” They were so busy crowing about how well they were doing that they didn’t bother to look.

We’re now starting to see inflation. We have long-term fixed-price contracts. We have some leeway on the price of materials, but if inflation starts to accelerate, the parts we’re making may put us in a difficult position price-wise.

What’s the fix for this? Common sense. It may seem simplistic, but I have always believed that things that looked too good to be true probably are.

The reason we stayed in business — almost no one is in business still who started when we did — is we have always been conservative. I have been respectful of the company, and I have never have gone head over heels in debt, although now, we’re carrying more debt because I am in the process of being bought out.

We learned how to go through hard times, so when things improved, we weren’t spending literally years trying to get over problems we have faced.

In 2008, we looked at what was happening in the economy and in a 60-day period in early 2009 we re-engineered the company so it could survive on half of what it did before. We decided to lean into the cycle. We had time and money. We re-branded the company as Kennebec Technologies and it positioned us in the market. We were not a tool-and-dye company anymore.

And last year, even though our business was slow and cash was tight, we used that time to come into conformance with AS9100 Revision D (a quality management system for the aircraft, space and defense industry). We were probably one of the first companies to do that. As a result, while our customers and competitors struggle to do the work at that level, we’re already doing it and we have been doing it.

No matter how good you are, you are not the way you need to be five to 10 years from now. We’ve talked about hiring — we’re going to start to see retirements in the next five to 10 years. We’re feeding that system right now. If they retire, there will be no one to fill in behind them and the ESOP will be a short-term play.

Companies complain about the lack of skilled employees. We look for employees with base skills with the understanding that we do a huge amount of training.

We have had in place a wellness program for the better part of 10 years. It sounds expensive, at $1,000 per employee, But we have a health coach come in and the result is a significantly healthier workforce. You can’t be cavalier about wellness. We have half a dozen employees who were at high risk for a serious medical event who are now at a low risk or a low to moderate risk. We’ve gone from 70 percent to 20 percent of employees who are at high-risk.

With some of our older employees, their health habits weren’t very good. This program is all rewards-based. Over 10 years, we have gone to a tobacco-free campus, where there is no form of tobacco consumption on the property. They used to go across the street to smoke, but it’s not cool to smoke here anymore.

We have high standards; we measure everything. We require the employees to do the job they are paid to do. Our customers won’t give us work if we aren’t crossing every T and dotting every I.

But if an employee or family member is in crisis, we cut them as much slack as they need. No one has ever been penalized for missing work. Some employees had spouses that were terminally ill. The deal was, we needed them to do as much as they could do, but it didn’t matter when they did it. It’s the right thing to do, and it’s a good business thing.

We’ve also had a set of core values since 1996. They are about being honest and good citizens and respectful, and being good partners with customers and employees. The company is also expected to live up to those values.

Where will your company be in five years?

I think Kennebec Technologies will be twice the size it is today. It will have maybe 25 percent more employees and I think the (employee stock ownership plan) will have transitioned from the early stages to the more mature version, and as a result, our options and opportunities will continue to increase.

I am very optimistic about the things I can control. It’s the things I can’t control I find terrifying.

My hunch is that Maine is starting to see the effects of the lack of skilled workers and workers in general. Maine’s failure to encourage New Mainers, whether they be from other states or outside of the country, is going to be horrible for our image nationally. In a nuts-and-bolts kind of way, it means we’re struggling to put one foot in front of the other in this economy.

If there’s one thing I would have in Maine, I would aggressively implement Medicaid expansion. Maine has more people living in poverty than a decade ago. It’s immoral from a business point of view.

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