A Global Outlook for the Global Marketplace
"The way you compete is to run faster, so that's what we're doing," says James M. Knott, Sr. of Riverdale Mills, who is bringing in key outsiders for continued growth
an interview by Kitty Axelson-Berry for Related Matters
Related Matters: Mr. Knott, tell me about your business, who in your family is involved?
James Knott, Sr.: My two boys and my wife are in the business. The oldest is Andrew, sales and marketing manager or vice president in charge of those areas. And James, vice president in charge of plant engineering. My wife Betty was the chief accountant but is now the clerk and a member of our board of directors.
Where is your business located and what do you do? How many employees do you have?
Riverdale Mills Corporation is located in the village of Riverdale, in the town of Northbridge, which is 13 miles southeast of Worcester.
We have 150 employees and we manufacture welded wire mesh, which is made from steel rod, which we buy from all over the world and bring it in here and run it through drawing machines to make it whatever gauge we want. Then we put it onto some wide, high-speed, automatic welding machines and melt it together, at about 2,200 degrees F and 100 beats a minute.
I started a business in 1956 when I got out of the Army and sold it after running it for 6 years. I ran it for the buyers for 16 years and served on their Board of Directors and on their Executive Committee. Then I wanted to be back in business for myself, and wanted to buy it back, but the company I'd sold it to wanted to keep it. It was doing about $4 million at the time.
I thought you made lobster traps...
I invented the wire lobster trap and when we first went into the business, people couldn't believe it, that you could use a wire lobster trap. One fellow, a scientist, for instance, insisted that it would "sing" underwater. I told him, "Yeah, well, it sings a song lobsters are attracted to and they crawl right into it." It took about a generation for it to become a serious business. In the early days, no one believed the wire traps would catch lobsters. But they caught more than the old-fashioned wooden ones. About 80 percent of the traps fished in New England now are wire. Trapbuilders soon went into the business of making the traps, so we stopped and just made the wire. It's a worldwide market.
Anyway, 18 days after I shook hands and said "good-bye" to the president of the company I'd sold my first business to, I had this big old building, 120,000 square feet, here in Northbridge under contract to buy. It had been abandoned for about three years, most of its windows were broken, the roof ripped off, the place was wet. But we needed a lot of inexpensive space and I had a new idea for a new machine to put plastic coating on wire. The boys and I and some helpers built the machine right here. In about four years we were buying so much mesh to coat I decided we should make our own. So I flew around the world looking at machinery, and brought the first computer-controlled wire drawing machine into the U.S. And bought the fastest, finest welder ever built, too.
Right out of the Army, you started your first business...
My father and brother were both engineers and I was expected to follow in their footsteps. So I studied it all through junior high school and high school and then one day, when I was at college sitting at my drafting board, I said, "This isn't for me," so I dropped out and sold appliances for a couple of years. Then I wanted to know more, so I went over to Cambridge, and knocked on the door at Harvard; they accepted me and I majored in economics. I was embarrassed because my classmates from high school were now three years ahead of me, so I finished all of my requirements in three years, but I decided to stay the extra year so I could go into the Army as a second lieutenant rather than a private. I was in ROTC. Then I got out of the Army and a week later I'd started a business with another fellow in an abandoned mill and that's the one I got up and going, and sold. I started it when I was 26.
What about your sons? Are they like you, on the go?
My sons are more in the staff "business." They don't get into entrepreneurial risk-taking, and they don't invent things, but they do good work in their positions.
Now that they're getting older, how much power do they have in the company?
I maintain the veto power. Right now, we're trying to figure out what to do. The problem is that the business is so [fast-moving]. We compete and buy and sell internationally, and have a very significant potential. We've been growing at 20 percent a year since we started, and so we could be doubled up in another three-and-a-half years, twice as big.
So what I'm doing is bringing in other executives, for instance an executive vice president who worked for Digital for 30 years. He was put in an empty building in Ireland and in three years he had 1500 employees. He had to start from absolute scratch, so he knows how to do it. He's a good organization and training man. And that's what we need to take on this growth. We're running 24 hours a day, seven days a week, and we're not keeping up. The demand for our product is such that we needed more building space and more machinery, and we're putting in both. We just completed a 56,000 square foot addition, and we have a general contractor I've been working with on that type of thing since the first plant was built; his name is James M. Knott, Sr. Yes, I'm a licensed construction supervisor, I love building buildings.
So, how many hours a week do you work?
Around 80. I don't really call it work because it's not work. I enjoy it. Every day there's more that comes across my desk than I can deal with so I keep some boxes handy, throw some things in the boxes, and then go to one of my vacation homes and spread the boxes out, watch the waves coming in or look out at the mountains, and I have my computer [and I organize, write replies and inquiries, send out memos] and enjoy myself.
Your sons -- do they work that much too?
They put in the hours. One son takes his children to soccer games, swimming matches, horseback riding, violin concerts and so on, but he puts in lots of business hours. The problem is, this is not a business that can be slowed down. It's not like a corner store, where the competition is limited to whatever is around. We're worldwide, out there on a battlefield, and it requires rapid growth in terms of the facilities and organization. We compete with companies like Bethlehem Steel, Keystone, Davis Walker, Gilbert and Bennett, other U.S. companies and a number of foreign companies... But the way you compete with those people is you run faster. Better quality at higher speeds. As I mentioned earlier, we buy our raw materials wherever we get the right quality and the lowest price. Years ago, this was not done. There were the tariffs and the shipping costs... but that has changed. We recently shipped high security fencing to Kuwait. We also make plastic coated wire for chicken cages. We've regularly shipped plastic coated wire for chicken cages to Guatemala, and to Spain, and there are markets throughout the world for this product, and the same is true of the lobster industry. I helped organize two international lobster congresses, and there are lobster industries in Greece, India, Iceland, Africa, South America, up and down the coast of Europe, all over the world, and most of them are still using wooden traps, and this product will be a great help. We also make security mesh, a heavy gauge wire that you can't get your fingers or toes in, for prisons, and other high security needs.
And your children are totally into it, like you. Did they always want to go into it?
They did and I have a daughter, too. Now my daughter, Janet Knott, is a world-renowned photographer, works for the Boston Globe, won an international first prize for her photo of the Shuttle disaster. We went to Amsterdam and watched her get her prize. She's not in the business but has definitely been a model for all of us because she does things with a high degree of perfection and a high level of energy.
What with the plastic coatings, and the international marketplace, your business could be involved in some touchy areas, environmentally with waste products, internationally with political and human rights concerns. Your sons are middle-aged and you're getting on in life. Do they think differently than you about these things?
We agree on issues because we understand them. One of the assets towards understanding environmental concerns is my oldest son's wife, who has a master's degree in environmental engineering from MIT. All of us know a little -- I know a lot about chemistry and physics because of my engineering education and that's why we understand what's going on out there in the environmental world.
Does she work for you?
Yes, when we need her, but most of the work she does for me and the rest of us is taking care of those three grandchildren.
And human rights issues in foreign factories?
In the steel business, the demands are pretty well set. It has to be run in pretty much of an international manner. We send out the recipe we want used, and get back samples from different companies, which we test thoroughly. We buy from all over the world, Czechoslovakia, Trinidad, Belgium, Canada, Brazil, U.S.
OK, but what about disagreements? How do your sons work together?
One is sales, one in production, so I ask you, Do sales and production ever get along? Of course not. The one in sales wants one thing, the one in production wants another. They try to get along and sometimes they do!
What is your plan for the future?
Maybe we'll have a CEO whose name isn't Knott, that's my plan. I'll do what I have to do to keep it running.
These boys started this business with me, which is somewhat unusual. When I decided to do the business, I hung up my pinstripes and put my wingtips away, and shoveled the place out with them. So they've seen the growth of the business with me and can understand better, maybe, than most [family members] coming into an older business. They seem to be accepting the influx of new management personnel and, with the passage of time and the continuing expansion, they may feel they can move up into the higher ranges or they may feel, well we need to bring someone else in. They both have good past references. Both went through college, both majored in economics, both were captains of teams, one was a state wrestling champion, the other a state squash champion; they played one-man sports rather than team sports.
Both have taken the Owner President Management Program at Harvard Business School. I went into it in 1989 and they went later. It was a tremendously helpful experience. This course tied together a lot of things I already knew, but hadn't related to one another.
And your board of directors?
We're in the process of putting together a board of directors of outsiders. One potential fellow is involved in international trade in countries all over Europe; he's just coming up on retirement and I want him here to tell us what he sees. Another is in marketing, and another has been in organizational consulting and is also an engineer. I want other people to help with strategy and growth and globalization.
Your wife, you said, is on the board...
My wife has a mother's perspective on the organization. She was involved in the beginning, in charge of the books, set up the initial accounting.
What about the women in this family business and the role of women?
I've never ever said "that job is not for a female." They've run the machines, been on the splice end of the production lines and some of them run whole departments. Ever seen the little gates you spread in a doorway to keep the dogs and kids in? We make the wire for those, and one of the young women runs that department and has a group of women working for her. Occasionally they bring in a man! I have a female lawyer working for me. There're lots of bright and strong business women out there!
Tell me about the structure of your formal business meetings...
We'll sit down, about five of us -- me, sales, production, accounting, and the executive vice president. We often hold those meetings off-site, and we have an agenda and go from point to point to point. Everyone listens and if we come down to a log jam or a point where things can't go any further, we have a log jam breaker, and his name is James Knott, Sr. Like, do we want that type of welder or this type? After a few hours, which might have been part of several meetings, and reading all the books, I say, "This is the welder we are going to buy."
As a family business, how flexible are you? What about the needs of your employees, which are often family-related?
I always keep my door open. When I come in at 10:30 at night and I meet the custodian, I'm perfectly willing to listen to him for 10 or 15 minutes. If someone has a problem, they can come and talk to me about it. If something needs attention, I'll bring it up at the next meeting. We keep communicating.
Is it your company style to let things slide and try to orchestrate some balance or to talk everything out?
We do both. We do a lot of talking and if that doesn't work, we just do it -- use the gavel -- and I take the full responsibility.
Do they mind that?
Of course they mind it! That's the way of the world.
Have they ever wanted to leave the family business?
I've encouraged them to go off on their own. I've said, "You know, if you'd like to try something of your own, go right ahead and I'll support you. If you have some ideas about a better way to live and make a life, you're welcome." That's because I don't think people should be handcuffed to a business.
But working 80 hours a week, that seems pretty handcuffed to me!
You used that word again -- working. I could have retired in 1978, when I started this business, and gone to the farm, go sit on the beach or travel around the world, but I like what I'm doing, I enjoy it. It's not work.
Again, when you have disagreements, what goes into the decision-making process?
It has to be run like a business, and business comes down to the numbers. How does the arithmetic look? How much will it produce? and What's the payback? That's what we do at these meetings. If one wants it black and one wants it white, that's not important. What's important is, How is it going to impact the business? I think of this business as being not only the Knott family but it includes those 150 people who work out here. When we have our annual clambake, those 150 bring another 200, so there's a large group of people living off this company and I want to do the best I can for all of them.