Putting the pedal to the metal

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It is no small source of amusement to Terry Malley that the ambulance-making operation he manages from a 90,000-square-foot, almost-new, facility, employing 65 people, on the outskirts of Dieppe, New Brunswick, might never have launched but for a wink and a prayer. It was 1984, and for five years he and his father had been running a small company, customizing vans and building parts for campers and recreational vehicles. Then, one day, opportunity walked through the door.

“A local ambulance service wasn’t happy with the vehicle it had, and it wanted to know if we would build one,” he says from the cozy antechamber of his spacious office, overlooking the cavernous showroom where his latest products are proudly on display. “So we said, ‘why not?’”

The problem was they didn’t have the first clue about how to proceed. “After the customer left, we said, ‘My God, we’d better get down to the hospital and see what an ambulance looks like’,” he laughs. “We got out the measuring tape and just started asking questions. That’s basically how it all started. It was a defining moment for us.”

One, it’s fair to say, of many over the past 36 years. Today, Malley Industries is one of New Brunswick’s most durable small businesses, earning healthy revenues (as a private company, it prefers not to divulge much detail on its finances) sufficient for plying its trade, and selling its products across North America, South America and Europe, in a sector for which the province is not especially well known.

“Technically, we are a second stage manufacturer,” Terry says. The industry also refers to operations like his as “bodybuilders”, as they craft and customize chassis and interiors for use as ambulances, motor homes and buses, to name a few. This CEO buys vans for repurposing from five major original equipment manufacturers: Ford, General Motors, Fiat/Chrysler, Nissan, and Mercedes. “We do about 1,500 vehicles a year,” he says.

Indeed, the evidence of Malley Industries’ happy productivity is everywhere along the thrumming assembly floor where skilled electrical technicians work alongside metal and wood fabrication workers, their radios blaring amid the cacophony of industrial machinery making its own peculiar form of music. “We actually train people on the job,” Terry says. “Back in the day, the industry used to refer to these tradesmen and women as ‘coachmen’. It’s a pretty tight-knit tradition.”

In fact, a palpable sense of family infuses the place, and not by accident. Terry’s wife, Kathy, is the company’s vice president; his son, Myles, runs the plastics division; and his daughter, Kayla, is the resident graphic designer, responsible for producing the plethora of product brochures and other promotional materials company representatives use at the countless trade shows they attend, and press opportunities they invite, every year.

All of which, perhaps, has helped the company retain its sea legs during the sea changes that have rocked most manufacturing industries, especially those in the automotive sector, since the economic downturn of 2008.

In that year and the two that followed, General Motors filed for bankruptcy, as did Chrysler. In his joint address to Congress early in 2009, U.S. President Barack Obama promised to invest $15-billion in automotive technologies. He acknowledged that “years of bad decision-making” had

“pushed automakers to the brink.” He added that he was committed to re-imagining and retooling the auto industry, declaring, “millions of jobs depend on it.”

Canadian Prime Minister Stephan Harper evinced many of the same sentiments in the waning years of the last decade. He authorized billions of dollars in government bailouts to keep the industry afloat in this country. As one report by the Financial Post, out of Toronto, a year ago, declared, “In total, the Canadian and Ontario governments spent US$ 13.7-billion to bail out GM and Chrysler. Chrysler’s portion of that was entirely in loans, while GM’s was a combination of loans, preferred shares and equity.”

The report continued: “According to an analysis by Mark Milke, of the free-market minded Fraser Institute, Canadian and Ontario taxpayers lost about US$ 2.3-billion on the deal, based on the current value of GM shares, a portion of which are still held by both governments.”

Certainly, walking away from this sector was not in the cards for Malley Industries, but neither was sinking under the weight of other people’s greed and stupidity. It could even be argued that this company’s close, familial culture had actually enabled it not only to adjust, but to anticipate, the often dramatic changes in the marketplace it was facing, with one foot planted in the past and the other firmly pointing toward a future of its own making.

In fact, Malley Industries’ work on itself over the past 12 months has been something close to a leap of faith. It has begun to concentrate on niche, customized clients, as it has tried to anticipate market demands. This differs, significantly, from its long, standard operating procedure: Open the door, sign the contract, and get the job done.

Says Terry: “For the first time, we are making products that potential customers seek out before we have even approached them. This is a game-changer for us.”

In the beginning, of course, the game was just a wee bit simpler.

Terry likes to say that it took him 20 years to become an overnight success. He describes his father as a serial entrepreneur and best friend until the older man’s death some years ago. As the younger Malley once explained, “As long as I can remember, I have always wanted to be in business. My father was a dreamer and I have very much carried that gene forward intact. His and my dream was to grow our humble, family business to be a major force in the vehicle modification and up-fitting industry.”

A key strategic imperative – which remains in force today – was a strict attention to quality. “We always believed,” Terry has said, “that if a product had our name on it, it had to be the very best we could build.”

Another guiding principal was developing a sensible work ethic: “Over the years, I have seen many promising businesses come and go. Many of these quickly reached a plateau and (the ones that) ultimately fell were those run by an entrepreneur who had difficulty letting go.”

Equally important has been knowing how to motivate employees: “We are slow to hire and quick to release those who are not a fit for our corporate culture. We make it very clear that no one has ever been fired from our company for making a mistake. However, in our culture, we expect that, ‘if you mess up you fess up and you dress up’. In other words, if you make a mistake, bring it to our attention and we will work together to make it right. We make no secret of our expectations and employees seem to respond to that in a positive way.”    

Malley Industries’ track record would seem to bear out the efficacy of these management approaches. Over the years, the company has broadened its product lines – and reputation for quality – as a manufacturer of specialty vehicles, including ambulances, and those for people with disabilities, police cars, prisoner transports, and utility trucks for a wide variety of clients, such as Aliant and NB Power.

As business blossomed, Terry and Kathy oversaw the requisite expansion of their operations. In 2010, they opened their state-of-the-art facility, deliberately situating it close to major roadways, air and rail links. “Actually,” Terry says, “I had had my eye on this Ferdinand Street location for years. We’ve been based elsewhere in the area, but I just knew that this location would be perfect. It was always very strategic. This is the busiest intersection in Atlantic Canada.”

Still, even as they settled into their renovated digs, and despite their approaches to building a sustainable business in a notoriously tough industry in a decidedly challenging part of the world, fate and fortune had a tendency, as it always does, to intervene in the most unwelcome and inconvenient ways; indeed, the Malleys could soon see the writing on their industry’s wall.   

Though they didn’t suffer much loss of business or opportunity during the 2008 downturn, the delayed reaction began to hammer them in late 2010. Toward the end of the rebuild of their industrial digs, they experienced that worst of entrepreneurial travails: bottleneck. As Kathy explains, “Despite having customer orders, we were unable to fulfill them as projected. In some cases, vans (for customization) arrived six or more months after scheduled delivery dates. The sluggish economy and delays in the original equipment manufacturers’ ability to supply us with vans had an enormous negative impact on our company.”

For one thing, the Malleys had to lay off staff. For another, it endured what Kathy calls a “retraction” in its actual business over a three-year period – all while the company assumed the enormous financial risk of maintaining a massive, new facility. It was a circumstance, she says, that “will be remembered by our management team as the darkest period in our history.”

Yet, with challenge came change, and the Malleys were not about to take these marketplace assaults lying down. They marshaled their forces, rallied their tight-knit family and staff and began to generate innovative and workable solutions to their problems.

As a result, over the past year, the company has engineered a course correction, shifting its focus from being custom manufacturer of a broad range of products to becoming a lean, mean purveyor of four distinct product and service lines: ambulances, wheelchair accessible conversions, thermoformed plastics for vehicle interiors, and specialized, commercial vehicles.

Of these, perhaps, the Malleys are most enthusiastic about their new line of ambulances, using a RAM ProMaster van. The company is the only one in North America to deploy this chassis and interior design, which, it insists, offer emergency medical personnel more room and better safety features.

Certainly, someone’s buying what the Malleys are now selling.   

To date, the New Brunswick government has adopted the vehicle for its future needs – the first jurisdiction in North America to do so. Moreover, the Malleys have secured ambulance sales distributors in Massachusetts and New York. They have hosted in-depth training for a well-established Ontario-based company for sales and service in that province. They have hired an experienced ambulance service operator, as a consultant, in the U.S. Based in Florida, he will be responsible for distributor development in that country.

Malley Industries is also the only Canadian manufacturer of what it calls “a lowered floor Ford Transit Connect conversion for wheelchair accessibility”. This provides the nimble company with a nice entry into a promising, new market. As the company’s strategic plan notes, “Many cities are tabling new legislation requiring taxi services to substantially increase the number of wheelchair accessible vehicles in service.”

Then, there’s the initiative to goose the company’s specialized commercial vehicle product line. This simply means that what the Malleys have been learning over the years – and especially in the past 12 months – about new vehicle design, sales and marketing will be applied to their customization process. They are embarking, in effect, on a sate-of-the-art refit of their manufacturing procedures to accommodate high-end orders from anywhere in the world.

Finally, the product line this enterprising family believes will cradle some of the best, long-term revenue streams is plastic interiors for all the vehicles they produce. “Our mould manufacturing process enables us to enter the market with new products that are significantly more cost-effective and faster than a number of the plastics manufacturing companies that were providing mass-produced, lower-quality van-liner packages,” Terry says.

Common to all of these moves is a sense of timing and strategic vigor. Rather than take orders as they come through the door, the Malleys are identifying holes in the marketplace – either existing or anticipated – and moving swiftly to fill them before the next player on the custom-vehicle block does.

To their relief, with such sweeping changes underway, both Terry and Kathy believe they have turned an important corner. They have come through the manufacturing recession, weathered the downturn in the automotive sector, and begun to hire skilled workers again. Although they are loath to talk about their financials, they are now projecting strong growth in their new, higher-margin product categories and are breathing, let’s just say, more easily these days.

And if the lessons were hard-won, they won’t soon be forgotten.          

“We can’t afford to stand still,” Terry says. “In fact, that’s never been part of our corporate culture, anyway. That wouldn’t be like us in anyway.”

If it were, the chances of Malley Industries surviving its infant few years, let alone its most recent ones, would have been slim to none.

As it is, it’s hard to imagine Terry Malley telling that very first ambulance customer, “Thanks, but no thanks. . .we haven’t got a clue about how to proceed.”

Then, as now, it’s full steam ahead for Malley Industries. Opportunity, once again, is walking through the door.

Note: This piece originally appeared in the November issue of Atlantic Business Magazine

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