Two instant entrepreneurs say building boom will take firm to new heights
In 2012, Jashan Eison and CFO Fred Poferl at H&B Elevators were informed the company would be put up for sale. A fixture in south Minneapolis since 1921, the company designs and constructs elevator cabs, interiors, and entrances.
“At first, it was a hard pill to swallow, since I knew I could be out of a job,” says Eison, who joined the company in 2007 and been project manager and director of sales and marketing.
But then Eison started thinking about the possibility of becoming the company’s new owner. “I had gotten a master’s degree and was climbing the ranks at H&B,” he says. “Things started to click in my brain, and I decided to give it a shot, although I knew nothing about how to do that.”
Eison approached Poferl, the highest-level employee in the organization. “We talked about it and figured, ‘What do we have to lose?’”
Eison was only 33 when he closed on the purchase in May 2013, becoming owner, president, and CEO, with Poferl as CFO and partner.
Being an entrepreneur was something Eison had long considered. “Going back to high school, I always had the mindset that I wanted to do my own thing, work for myself, although the scale of what that might mean was not as clear, then. I had always liked putting things together, going back to high school shop class.”
Eison earned a construction management degree at the University of Wisconsin-Stout, spent a few years working in California, and moved to the Twin Cities in 2005.
With the economy and construction industry still struggling to recover from the recession, it was an unusual time to be taking a risk. But Eison did have more than a year under his belt as H&B’s director of sales and marketing. “In that position, I was exposed to not only the market, but to our competitors, pricing information, and forecasts, so I had some understanding of an impending turnaround in the economy. Request-for-quotes activity had started to pick up, and there was a good indication we were going to be doing some large projects — the largest Marriott Hotel in the country [in Austin, Texas] and a major project at the University of Texas medical school.”
Poferl was also ready to take the leap. “Over 15 years earlier, I had turned down a startup opportunity that turned out to be a very successful venture,” he recalls. “Since then, I have always said I would not miss the next opportunity.” Along with his background in finance and a “common-sense approach to business, I also brought my network of people to help us through the process.”
Still, “there were a lot of hoops to jump through,” Eison notes. One thing in H&B’s favor was its solid customer base, including major players in the industry such as Otis Elevator Co., ThyssenKrupp Elevator America, Schumacher Elevator Co., and Kone. “One thing I learned was that having solid multinational customers would give us the opportunity to do factoring [borrowing against accounts receivable]. Our receivables were top-notch, so some lenders were willing.”
Eison and Poferl assembled their financing from multiple sources, with the help of the Metropolitan Economic Development Association’s Minneapolis Business Center. Minneapolis-based Marquette Financial was one backer, and “there were also other financial institutions that took risks,” Eison recalls.
Eison and Poferl were able to acquire all of H&B’s production equipment and more than $7 million in production backlog through a leveraged buyout. While the company’s owner, Kraus-Anderson, wanted to sell the business’s assets, it wanted to retain ownership of the factory building in south Minneapolis. That meant Eison and Poferl would have to find a new manufacturing facility.
They spent about two months looking at 30 or more properties before signing a lease for the 50,000-square-foot-plus building at 3000 Washington Ave. N., the former home of a company called Kwik Sew Patterns Co. On a snowy day in May, “we lined up the moving trucks as soon as I could get the keys to the building,” Eison says. He’s proud of the fact H&B completed the move, over a six-week period, without any loss of production. “Looking back, it was tough, but rewarding.”
Another factor in favor of H&B’s survival was the nature of — and its standing in — the elevator industry: a relatively close-knit business dominated by a handful of longstanding companies, with substantial barriers to entry that make new competitors a rarity. “We see the same faces at the trade shows every year, and there are a lot of family-owned businesses.”
The 45-employee firm’s elevators have been installed all over the world. It provided elevators for the world’s tallest building — the Burj Khalifa skyscraper in Dubai — and for City Center Las Vegas, the largest, privately funded construction project in U.S. history. It’s also contracted to fabricate the elevators for the new $1 billion Minnesota Vikings stadium in downtown Minneapolis.
While the basic guts of an elevator are pretty standard — a steel box suspended by cables — much of what H&B does involves custom-building the components that surround it: interiors, doors, and the entrances on each floor of a building. They’re all crafted based on architects’ visions — limited by building codes, the Americans with Disabilities Act requirements, and “manufacturability,” Eison notes. Beyond that, “the sky’s the limit to design the most unique elevators.” No two elevator projects are exactly the same for H&B, as seen in the variety of design schemes portrayed on the company’s website.
The elevators built for Walt Disney Studios feature intricately patterned, metallic walls; giant Yankee logos top the shiny new elevators H&B provided to the new Yankee Stadium; elevators at the Minneapolis Club have interiors with fancy, curlicued ironwork for a vintage, turn-of-the-19th-century look. At the opposite end of the spectrum are futuristic-looking elevators at the Cosmopolitan casino-resort in Las Vegas, featuring round, glass cabs.
Cyclical building design trends also play a role. “In the ’80s and ’90s there was a lot of bronze and wood molding in cabs. Now, you see a lot of textured metals — stainless steel is a popular one — and backlit and painted glass. “When one guy does something new, someone else takes it to the next level,” says Eison.
One of H&B’s most challenging recent projects was engineering and assembling the two round-glass elevators for installation in the Cosmopolitan. There were complexities involved — and some trial-and-error — especially in developing the round elevator doors. “They had to be engineered, from start to finish,” says Eison. “We probably had to buy an extra piece of glass here and there, but it all worked out.” H&B partnered with Mankato-based Minnesota Elevator Inc., which provided the “platform and sling” for each elevator.
Since taking over H&B, Eison has received a crash course in being an entrepreneur. To succeed, “you have to roll up your sleeves, pay attention, and learn from your mistakes,” he says. “And you have to have optimism, and work ethic — leading by example. Roll up your sleeves and dig in, whether it’s getting a quote out the door or helping out on the shop floor.” A calm demeanor, too, helped us “get through some pretty rough times,” he adds. “Having been a project manager and then in sales, I have a good understanding of the products we deliver.” Customers expect a lot and the industry is always changing; that forces us to continuously be looking at how to improve.”
H&B still has a prominent place in the industry. One of its longtime customers is Finland-based Kone. Hugh Hillacker, a Texas-based project support manager for Kone, calls Eison “a wonderful young man with lots of vision. H&B is extremely well respected in the industry; they produce quality equipment.”
Attorney Adam Nathe of Minneapolis-based Gray Plant Mooty, who helped Eison and Poferl close the deal, says Eison represents “the best of the entrepreneurial world. He has a big enough vision to see where things can go in the future but also enough caution to rely on experts for certain things he doesn’t know. And he has surrounded himself with really good people.”
The cyclical nature of the construction industry makes it imperative to have a game plan, Eison says: “Change is hard for people in organizations, whether it involves new technology, or ways of doing business. But sometimes it is inevitable, if you want to improve. We had to look at every line on our income statement to understand where we could improve.” He cites supply chain and work-flow planning as key.
But even in a severe downturn like the 2008-2009 plunge, he notes, “the market doesn’t completely shut down. It changes, and you have to be able to change with it.” Orders move to modernization and replacement parts, people look to ‘clean up’ what they’ve got rather than order something new. But they are still spending.”
He expects the current boom in construction will continue driving up material costs. Still, the company has seen a 20 percent revenue increase over the past 18 months, according to Eison. “The last quarter was very good for us, and 2015 is looking very good.”