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Building Wire Harnesses
and Relationships at
Kenwood Electrical Systems
By Fred Noer
Every company experiences success and growth by being strongly committed to
competitive pricing, outstanding service and excellent quality. Close adherence to
those three
foundations of good business has led to prosperity for Kenwood Electrical Systems.
A fourth factor — and no doubt the most important — also has contributed to
Kenwood's steady growth and increasing stature in the wiring harness industry.
"People are the difference in making us successful," said Mark O'Donnell,
president of the firm. Kenwood prides itself on nurturing solid relationships among
its staff, customers and vendors.
People at Kenwood produce wire leads, electric and electronic assemblies,
wiring harnesses and cable assemblies. The work is done at the firm's two
buildings in Rockford, Ill., 60 miles northwest of Chicago.
Diversity marks Kenwood's products. They are used in a number of equipment
applications including pinball, vending and food service machines, as well as motors,
pumps, medical equipment. Kenwood products have been used in Apache helicopters
and Patriot missiles for the U.S. military. "We have a broad line," O'Donnell said.
"We're not stuck in one industry, but we also are not trying to be too much to too
many people."
Employees of Kenwood Electrical Systems show off their smiles for the camera
Doing so might compromise Kenwood's high standards for customer service
and satisfaction. "We don't want to make promises that we can't deliver on,"
O'Donnell said. "Some companies keep pounding and pounding on sales, but
they make a lot of promises they can't keep. They get the sales, but can they deliver?"
Kenwood can deliver, he said, because of its problem-solving and flexibility in
meeting customers' needs. He noted that with a staff using the latest in technology
and equipment the company has the capacity to handle almost any project or order.
"We can help with engineering as well as complete 'turn-key solutions,'" adds O'Donnell.
"We make a big difference on the personal service side," O'Donnell said. "Our
whole company is involved in that by having a can-do attitude to get the job done.
We've always tried to do what is best for the customer and go the extra yard that
makes them want to come back to us. They can count on us, and a trust and bond
have been built up because of that.
"Customers come to be friends over the years, and we have a great track record
of not losing customers," he said. "That's been a big part of our success. We feel
strongly about relationships as the key to our business. We want to build strong
relationships and grow with our customers."
O'Donnell has recognized that "partnership" is a buzzword in business, but he
stressed the importance of being involved in a true partnership rather than simply
talking about it. The difference is significant. "It has to be a two-way street that is
mutually beneficial for the customer and the supplier," he said. "We recognize
that if the customer has a problem, we also have a problem as we ultimately
serve the same end user."
Equal to people as customers making a difference at Kenwood are people as its
employees. They number 35, double that of just four years ago. The increase
began occurring when the company reached $2 million in annual sales, O'Donnell
recalled. He noted a decision was made to pay even closer attention to customer
service, a move that required a larger investment in staff members.
Another important step was taken a few years ago when O'Donnell began
building a stronger management team. It consists of the operations, quality,
production and shipping and receiving managers; in-process and final
inspectors; buyers; crew leaders; and administrative staffers.
Chrystal of Kenwood Electrical Systems soldering wires to connectors.
Rounding out Kenwood's employee roster are the production workers,
whom O'Donnell regards as "the backbone of the company." He explained
many of them are women with families. "We take that into consideration," he said.
"If somebody has a child who is sick and has to be away from work, we are
flexible and understand their problems."
Such compassion has decreased the turnover rate in an industry known for
a high assembler turnover, O'Donnell pointed out. Several of Kenwood's
assemblers have worked at the company three or more years, and a final
inspector has a nine-year tenure. "To have core staff here that long is pretty
good," he said. "Overall, we have a positive group of people working here,
and that's because we treat people well."
That treatment includes gain-sharing, discretionary year-end bonuses,
Simple IRA, medical/dental/life insurance, tuition reimbursement and
credit union. Also, employees and their families enjoy a company-paid
annual picnic — this year it was at Six Flags Great America amusement park
in Gurnee, Ill., and a Christmas celebration.
Much of the focus on people, both as employees and customers, reflects
O'Donnell's background. He graduated in 1988 from the University of
Wisconsin-Whitewater with a bachelor's degree in psychology. After
graduation he planned to work and save money for a return to graduate
school to obtain a master's degree in psychology.
O'Donnell, 38, worked a year at Mercy Hospital in Janesville, Wis., as a psychiatric
technician and counselor. But, he was not happy in that position, so he worked next
at Manpower as a salesman and trainer.
In 1990 he was hired as a buyer at Kenwood. "I looked at the wiring harness
industry and about becoming involved in it," O'Donnell said. "I realized it was a
unique niche industry." After doing buying, he handled accounting and then sales
before being named the general manager.
Charles Claflin, the owner at the time, gave O'Donnell and another executive
"the opportunity to take the company and run with it," O'Donnell said. "We
have had good success as sales have increased almost 600% since 1990.
"When we started the process, Kenwood had always been very customer driven,
but it did not have a focus of who it wanted to serve or what it wanted to be," he said.
"We had to define who we were."
Carrying out that definition proved challenging for O'Donnell. "We were not real
sophisticated at first, and we had to go through a lot of trial and error," he said.
"We went through the pains of deciding to get more equipment and more expertise
in manufacturing and adding more employees to help grow the company."
Julio operating Komax Wire Cutting/Stripping Machine and inspecting work.
Company growth under O'Donnell's direction impressed Claflin so much that
O'Donnell became a partner in 1995. In February 2000 O'Donnell bought out Claflin.
Claflin was a businessman who also owned Rogers Brothers Galvanizing, another
Rockford firm. He purchased Kenwood in 1988 from Barbara Wood upon the
death of her husband, Ken, company founder.
Ken Wood began the company in 1983 in his garage after working as an engineer
at Honeywell Microswitch in Freeport, Ill., and Pacific Scientific in Rockford.
Kenwood Electrical Systems sold products through catalogs such as whips, fittings,
wiring harnesses, conduits, printed circuit boards and cable assemblies.
"Back then Ken Wood recognized what would be the wave of the future in the
wiring harness industry, and that was outsourcing," O'Donnell said. "He found
a niche and had a broad line of products and services."
After Claflin acquired the company, he was not involved in its day-to-day
operations, which were handled by a general manager. Claflin concentrated on
sales and planning. Upon his retirement he sold his interest in Kenwood to O'Donnell.
"When I first got into the wiring harness industry, I never thought of it as a long-term
career. However, as time went by and I learned more about the industry, and in working
with different people in the industry, the more I realized that I wanted to purchase the
business from Claflin and take Kenwood to the next level," O'Donnell said.
Realizing the benefits of partnerships, O'Donnell has acquire a minority partner.
He concentrates on the engineering and manufacturing at Kenwood. He has been in
the industry more than 30 years, having worked with such companies as Boeing and
Intel, run his own company (Da-tech) in Ohio and done consulting.
O'Donnell focuses on general business administration and sales. He often calls
on customers in northern Illinois and southern Wisconsin. Sales also are made
by Ed Lacerra, a manufacturers representative at Kriscott Sales in Rockford.
Lacerra, who has repped seven years for Kenwood, visits customers in Wisconsin,
Illinois, Iowa and Indiana.
Monsina surrounded by wire harnesses while working on a harness board.
Sales are expected to continue to increase as part of the company's plan for
growth "in a nice, manageable way," O'Donnell said. "We always want to do a
good job, and when we are comfortable doing that, then we will grow at what
we call a smart pace." He defined that as 10-25 percent a year. He would like to
achieve $5 million in annual sales in 3-4 years.
Plans have been made for Kenwood to attain such a number. For instance, the
company is striving for ISO 9001 certification this year. "We already have tight
quality standards that always pass audits by companies, but we must take our manufacturing to the next level," O'Donnell said. "We're doing ISO 9001 for
growth to show customers we're committed to continual improvement. Not a
lot of people in the industry are 9001 certified, so we are encouraged that it
will open up more avenues for us.
"We want to have the processes in place to be able to take advantage of the
situations where another company can't do a job," he said. "We as a company
will stand out to a customer if we can perform. There are a lot of competitors,
so we must offer more than them to have an edge."
There is some concern with competition in the industry from companies
in Mexico and Southeast Asia. "This is a huge market, and there's a lot of business
available," he said, "but I wonder in many cases how much companies are saving by
going outside the United States. I've heard some horror stories, particularly because of
communication problems. Sometimes it's working out better for us back here when
companies realize it's not a smart move to go to Mexico or Asia to save a couple
hundred bucks by the time they figure in freight, customs, customer service problems,
quality issues, and long lead times. It sounds good in theory but reality doesn't
always match the perception."
Hang inspecting wires as they come off an AMP CLS Automated
Cut/Strip/Terminating machine.
Should more companies realize the value of doing business domestically,
Kenwood will be ready to accommodate them by having not only a customer-
focussed staff but the latest technology. The firm has the ability to use bar
codes on materials and shipments. Additionally, they will be starting to use
the codes to track all labor steps to determine levels of productivity and profit.
Also under consideration is a new building in the next two years. O'Donnell
said land will be purchased in Rockford in 2001 for the structure, which will
measure at least 30,000 square feet and be expandable to 75,000 square feet.
The building would consolidate Kenwood's operations that are housed in two
buildings (10,000 and 6,500 square feet) on a Rockford city block.
The new building will represent another example of Kenwood's commitment
to pleasing customers and employees and recognition that people do make the
difference. "We are proud of what all our people have accomplished," O'Donnell said.
"Everybody has played a part in making us successful through the years, including a
number of fine vendors that we have had solid relationships with for a long time.
But we can't stay still too long or the competition will eat you up. We have to
get better and smarter and offer more to our customers."
How customers' projects progress constantly intrigues O'Donnell. He compared
the process to planting seeds and then waiting for the flowers to bloom due to work,
effort and patience. "Many times the initial phases of a project can last longer than
expected but it is rewarding once a project comes to fruition for both Kenwood and
our customers," he said. "There's a lot of excitement in seeing a new project for an existing customer take off or starting a relationship with a new customer as a result
of our combined efforts."
O'Donnell also is excited by socializing with customers. "I love to entertain people,"
he said. "We have a lot of fun with customers, such as going to University of
Wisconsin football, basketball and hockey games. That way I get to know people
and their companies on a different level, away from the stress of day to day business.
We don't like to let our friends down when it comes to business!"
As O'Donnell first said, people are the difference at Kenwood.
Mark O'Donnell and the Wiring Harness Manufacturers Association
Both Mark O'Donnell and the Wiring Harness Manufacturers Association
(WHMA) have benefitted from his service on the organization's board of directors.
Kenwood Electrical Systems, O'Donnell's company in Rockford, Ill., is a
founding member of the association, and he was at the first meeting in Novi,
Mich., six years ago.
For the last three years he has served his first term as one of eight directors.
They are joined in administering WHMA by four officers and a nine-member
advisory committee.
"The association is a great group of people," O'Donnell said. "I've learned
a lot from these guys, most of whom have had a tremendous number of years
in the industry. The networking is an asset for everyone. We learn from and
feed off each other. It's like having a number of consultants on staff and not
paying their big fees."
As a board member, O'Donnell serves as the co-chairman of the
Statistical Benchmarking and Human Resources Committee. He helped to
develop the association's first wage and benefit survey. It categorizes compensation
for such positions as assemblers, machine operators and solderers. The compensation levels are arranged according to companies' sales volumes.
His responsibilities also include attending two board meetings per year.
They are held in various U.S. cities, and the all-day sessions often last 2-3 days.
Decisions also are made via approximately six conference calls during the year.
Board members are not paid for their service, and they must pay their own
travel, lodging and meal expenses.
"It's nice to be on the board because I have a say in what's happening," O'Donnell said.
"We work well together to make sure we have good programs for the membership.
We try to continuously improve what we do. There's a real cooperative nature
among the members as far as sharing ideas."
Among the improvements are stand-alone trade shows, alliances with
IPC in training videos and an educational track for shows. Obtaining
health insurance for all sizes of companies is being addressed.
"We will become a stronger organization with more members. I like the
feeling of accomplishment at seeing the association grow," O'Donnell said.
"We can always do more. It's hard to devote your full attention to the group
because you have to focus on your own company. I just hope I have offered
some good ideas to move the association forward."
Kenwood Electrical Systems is located at 1904 20th Avenue, Rockford, IL 61104.
Phone (815) 399-0282 or Fax (815) 399-1984. E-mail: marko@kenwoodelecsys.com.
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