Business is buzzing at Falcon Steel Co. The designer and fabricator of power delivery structures, communication towers and roadway signage frames built a corporate restructuring plan that within nine months turned the company around.
Established and headquartered in Haltom City since 1963, Falcon Steel, as the story goes, got its name when one of its founders looked out the window and saw a falcon. The company has built a strong foundation in North Texas. Many of the skyscrapers in Fort Worth and Dallas are Falcon-made structures. The company doesn’t make steel but it cuts, bends and shapes the metal into steel structures, today primarily lattice towers, electrical substations, transmission poles and overhead highway structures. The company uses entirely recycled steel – old refrigerators, vehicles and the like that have ended up in the scrapyard. In addition to its Haltom City facility, Falcon has manufacturing and galvanizing locations in Euless and Kaufman and employs almost 300 people.
In June 2014, the company filed for Chapter 11 bankruptcy protection so it could restructure its debt. Since the filing was about loan covenants, Falcon continued to operate as normal throughout the bankruptcy process.
Falcon emerged from bankruptcy in March 2015 after securing new orders and reaching a five-year deal to refinance a $17.5 million bank loan. All creditors have been paid and the company’s existing ownership – Falcon Steel is owned by its employees – remains intact.
According to Jeff Prostok of the Fort Worth-based law firm of Forshey Prostok LLP, which specializes in bankruptcy cases, the bankruptcy result is a blueprint for a successful reorganization. Prostok and Lynda Lankford represented Falcon Steel and its affiliates in the case.
“It’s an exciting place to be. It’s fun again,” said Falcon CEO and President Jim Taylor. A turnaround ace and corporate strategist, Taylor joined Falcon Steel as chief restructuring officer in May 2014 and took the company’s reins three months later.
“We came out profitable, making money, with positive cash flow. Bloomberg wrote us up by saying this is the way bankruptcies were meant to be handled,” said Taylor. “Within a matter of a year Falcon has gone from bankruptcy to a company with a positive future and helping put a lot of people to work. That’s the objective of a good business. I’m really proud of that.”
A big-picture man, Taylor has led numerous companies through turnarounds and high growth phases. He started his career in the 1970s as a partner with Coopers & Lybrand (now PricewaterhouseCoopers), where he created and led the firm’s merger and acquisition group for the southwest region.
During the ‘80s, Taylor formed his own business, Harbor Acquisition Inc. of Dallas, and started buying companies. From 1985 to 1992, he was founder/president of Elcon Industries, a holding company in the automotive/truck and utility industry market that grew to $175 million in seven years. Taylor developed a patent on the electronic bed cover for pickup trucks, which was later licensed to Chrysler Corp.
Taylor’s next turnaround was Thomas Group, an international consulting company listed on NASDAQ. Taylor was brought in to be the company’s chief financial officer in 2001 and in less than three years, he was promoted to CEO/president to reenergize the firm after the worst downturn in the professional services industry. As a result of his leadership, the company’s revenue doubled in two years, all debt was paid off and the company began paying dividends for the first time. This resulted in the fastest return to shareholders of public companies in Dallas with a 510 percent return for two consecutive years.
In 1994, as vice president of corporate strategy, Taylor was instrumental in sourcing and negotiating the purchase of Overhill Farms Inc. for Polyphase Corp., creating the food group. The frozen food maker was named Inc. magazine’s fastest-growing public company in 1996. Taylor’s focused direction won him an international business Stevie Award for outstanding CEO in 2006 in a turnaround situation.
In 2009, Taylor became CEO/president of Edge Adhesives Inc., a maker of adhesives, tapes and glue for a variety of industries. Taylor took the company from the bankruptcy court to its highest profitability in 31 years.
“I found my skill was taking companies that weren’t performing well, which is the reason I could buy them, and turn around and grow them and then sell them to groups that were looking for more profitable operations,” he said.
Taylor was mulling over his next opportunity when Falcon Steel flew into his sights.
“I was starting to look at my lake house, to playing golf and going fishing when I got a call from an investment bank about Falcon Steel,” he said. “It was having some covenant issues. Could I come and advise them?”
As Falcon’s chief restructuring officer, Taylor was only going to stay a couple of months.
“The more I got involved in Falcon the more I was intrigued. The more value I saw and the more desire I had to make sure this company would survive,” he said. “We had to double down and figure out how we were going to supply and survive. When I came here, Falcon had been able to do that but was struggling. That’s what intrigued me to come.”
When Taylor discovered that Falcon Steel is the only manufacturer left in the United States that supplies lattice towers, transmission poles and substations to the utility industry, he was fully committed to helping the company survive and thrive.
“When an industry like that becomes the last one, you run the fear that not only will that ability leave this country but that the knowledge will leave this country,” he said. “When you don’t have the knowledge to design and fabricate a lattice tower, then this country is going to be dependent on India, China or Turkey. We’re inclined to hang on.”
Taylor’s turnaround strategy at Falcon included streamlining operations, expanding the in-house transmission pole production, adding fitting and welding stations, repurposing some handling equipment and hiring more production personnel. The company-wide process-improvement program reduces delivery times and ensures scalability to meet future demand, Taylor says.
“Increasing requirements for power delivery structures nationwide is fueling a significant growth cycle for Falcon Steel, not only in our steel pole business, but for our lattice tower and substation production as well,” he said. “We’re making the moves we need to provide turnkey solutions as demand continues to grow.”
Falcon Steel also has developed exclusive partnership agreements with qualified steel fabricators across the United States. Falcon’s output has increased 100 percent because of its partnerships, Taylor says.
“We’ve been able to partner with others and double our capacity of production in the last four months. We can now produce twice as much as we could a year ago. That’s from partnering rather than investing in new equipment,” he said. “Our volume has increased so much we’re subcontracting out to them. We’re helping other companies now that are having financial difficulties. We’re keeping them employed by subcontracting.”
Taylor attributes the growing company’s success to its employee-owners. Issues now are solved by the whole team from across the three facilities. Employees designed a new logo, refreshed the mission and vision statements, redirected their focus on the customer and changed the culture. Employees gather now for company barbecues and events. The barbecue grills, of course, are made at Falcon Steel.
“One of the things coming out of this is we felt different. We were a new Falcon,” said Taylor. “We wanted to get that message out with a new logo, new image, new vision and mission. Falcon is an old company with deep roots but with a new attitude going forward.”
Taylor said that since Falcon has increased its capacity, it no longer wants to be thought of as a regional firm but as a national firm.
“Albeit we’re small, we still want to be noticed out there that we can supply the utility or highway industry whatever structure is needed. Falcon is here and ready to serve,” he said. “We’re bringing value and new value to an industry that hasn’t seen a lot of new things.”
Falcon Steel Co.
4201 Old Denton Road
Haltom City 76117
817-581-9500
www.falconsteel.com
Not quite a falcon
Falcon Steel isn’t the only success story. In 2011, a pair of bald eagles was spotted nesting in a lattice tower next to the John Bunker Sands Wetland Center and Falcon Steel’s nearby Kaufman facility. Workers from Oncor, the Dallas electricity delivery company that owns and operates the power lines, became concerned for the birds’ safety.
A plan was hatched. Oncor, one of Falcon Steel’s largest customers, partnered with the company to build a replica tower away from the power lines. Although it was going through a bankruptcy, Falcon Steel donated the new tower while Oncor paid for other costs.
The old nest was relocated to the new, safer tower and in October 2014, the eagles returned and began building in the new tower. By late January, eaglets appeared. A live webcam was installed to watch their progress.
On Sept. 20, the nesting eagles returned to their replica tower. Falcon Steel sent out a company-wide email stating simply, “They’re back.”
“Everybody knew what that meant,” Taylor said.