Springmaker Spotlight

The Foote family gathered in Boulder, Colorado for a family summit that included a hike in the Flatirons. Pictured (l-to-r): Hale, Hannah, Beth, Maggie, Andrea, Noelle and Colby Foote.

Special Edition on Succession Planning:

Sustaining Scandic Springs for the Next Generation

By Gary McCoy Managing Editor

It was nearly 10 years ago that Springs published a Springmaker Spotlight on Hale Foote and Scandic Springs (“Powered by the Sun,” Fall 2010) that focused on the company’s sustainability efforts as it had recently installed a new solar roof. The story started off by defining sustainability as “the capacity to endure.”

In this issue of Springmaker Spotlight we revisit the subject of sustain ability in a different way, as Scandic is in the early stages of a succession plan. Company president Hale Foote is beginning the process of passing the business to his oldest daughter, Andrea. There was a time when Foote was uncertain whether the business would endure to the third generation.

Known simply as Scandic, Scandic Springs, Inc. is the company’s legal name and is based in San Leandro, California. The company is known for its precision stampings, wireforms, mechanical assemblies and springs. Scandic was started in 1969 by Foote’s father-in-law Dick Lind and several partners who were engineers. Over the years Lind bought out his partners and the company became entirely family-owned. Lind recently died at the age of 91 (read more about this on page 65).

Foote, a Georgetown University undergraduate and law school graduate, met his wife, Beth, in college. As an ordained Episcopal priest, Beth never had an interest in running her family’s business.

At the age of 31 (which is coincidentally Andrea’s current age), Foote was ready for a new challenge and switched from commercial litigation to running a spring and stamping company. It also gave Hale and Beth an opportunity to be near one set of grandparents.

With no background in the industry, Foote worked alongside of Lind for a couple of years before taking over the business. “Dick was active for a couple of years after we got here,” said Foote of his father-in-law. “But he was planning to retire, so the timing was good for all concerned.”

Planning to Sell

Since joining Scandic 30 years ago, Foote has been the only family member involved in the business. In addition to Andrea, who is married to Maggie, Hale and Beth are the parents of Colby, who is married to Noelle, and Hannah.

“All our children are quite different with unique personalities and talents. But none of them had really expressed an interest in the business,” explained Foote.

Foote said all three went to liberal arts colleges and had different career interests. “They’re working people, so I thought, ‘They’re not interested and that’s fine.’”

Prepping the business for sale was an effort that Foote started about 10 years ago. “Everything from the books, which were in fairly good shape, to the layout of the plant, which included moving to a larger building. I was really spending a lot of time working on the business, to make it look sexy.”

Foote believes it was the SMI convention in San Antonio in 2012 when people started asking him if he had children in the business. He remembers replying “no,” and several people asked “Do you have plans?” Foote thought at the time, “I better have plans!”

Foote said he received lots of inquiries from larger spring and stamping companies who were interested in buying the business so they could have a presence in the Silicon Valley area of California.

As a result of that SMI meeting and the inquiries, Foote started talking to private equity firms and brokers. “I was just sort of dipping my toe in the water, because there was no rush to sell at the time.”

Foote also attended a seminar sponsored by a local accounting firm on how to value your business. He remembers saying to himself at the time, “I’m going to go. I’m going to learn.” However long it takes, Foote exclaimed, “My goal is for her to turn to me some day and say, ‘You know, dad, I got this. You can sit yourself out.’”

Coincidentally after coming out of this seminar, he got a text message from Andrea saying, “Dad, can we talk?”

I called Andrea and I said, “What’s up?” She replied, “Could we talk some time about me coming into the business?”

Foote said the inquiry, totally initiated by Andrea, “kind of blew me over.” He said the fact that she brought up the subject was extremely healthy.

“I began my career in the nonprofit sector leading youth programs,” explained Andrea of her decision to join Scandic. “So manufacturing is definitely a pivot!”

Andrea said she admired how her grandfather established and grew the company, and how her dad continued to invest in his employees and developed the business in new directions.

“Professionally, I was ready for a change in my work life,” said Andrea. “Sharing the third generation of ownership with my siblings and keeping the company in the family were all factors.”

Putting a Plan Together

That exchange between father and daughter took place four years ago. They both acknowledge that they are still in the beginning to middle stages of executing the succession plan and with humility admit they are not experts in this.

In addition to membership in SMI, Foote is a member of the Precision Metalforming Association (PMA) and has been part of a PMA executive networking group for many years. With the wheels in motion, Foote started asking group members about their experiences with succession planning.

“I’ll never forget one conversation where this executive told me, ‘Well, my sister and I don’t speak anymore.’”

Foote said he listened to many unfortunate stories of people that had bungled the passing of the torch. Common comments were, “I wish we had done this,” or “I wish we hadn’t done that.”

Foote said he started reading and educating himself about family business consultants and found that there was a whole industry dedicated to this. Foote said they ended up engaging a consultant assigned to them from The Family Business Consulting Group, Inc. (FBCG) who lives in Boulder, Colorado.

“This person has been a good fit for us and a wonderful resource,” explained Foote.

Right now, they are about 18 months into working with the consultant. The consultant has conducted family meet ings with all their children and their spouses and worked with the family to establish timelines.

As a result of the process, Andrea left her previous employer at a nonprofit in Cincinnati. She is currently working on a graduate degree in business at the University of Cincinnati. In addition, she spends two days a week as an intern at a Cincinnati area metal stamping company that are suppliers to the automotive industry.

Andrea says the internship has been invaluable. “Seeing how another company of similar size, but different management structure operates has sparked questions and conversations that have helped me better understand Scandic,” she said.

Andrea’s internship includes one day in the office and one day out on the production floor. She says her mentor has been extremely generous with his time and in facilitating his staff to work with her.

“My time at the company has been divided between a rotation through each department in the office, working in production in their assembly department, and shadowing other employees around the plant floor,” Andrea explained.

She says the experience has helped her see firsthand and connect how decisions, actions, or delays affect each part of the business.

“Especially after establishing my career first in nonprofit, I know this year’s experience both at the metal stamper and University of Cincinnati will give me a solid foundation to begin my work at Scandic,” concluded Andrea.

Foote said Andrea’s mentor at the stamping company in Cincinnati has been wonderful. “He’s older and has really taken her under his wing.”

Both father and daughter endorse the value of the internship, especially in learning from a company outside of Scandic. “A voice other than dad,” said Foote with a laugh.

They also value their work with the outside consultant.

“One of my biggest concerns was treating each of our children fairly,” explained Foote. “It does not mean identical, but fairly.”

Foote said the consultant interviewed every family member separately with total confidentiality. The consultant confirmed that Colby and Hannah were not interested in being involved with the business.

We needed to get their buy in before we moved forward, explained Foote. “That each of them was saying, ‘No, I don’t really want to be in the business. Yes, I understand that Andrea is likely to have a different career path, but I don’t want to work here.’”

Each of the three children will have an ownership stake in the company. Their consultant advised the Footes that since they were expanding the ownership pool of the company, they might want to set some new norms moving forward.

Foote said the consultant advised, “Instead of just having your annual meeting on the back porch and being bare-bones about it, why not build in some family retreats that are onethird learning, one-third on the business and one-third fun?”

The Footes had a family fly-in to Boulder, Colorado in January 2020 where they met with their consultant from the FBCG. Boulder was the natural setting because it was close to where the consultant lived, explained Foote. “And it’s where Hannah went to college. Plus, Beth loves Boulder and Colby was already living there.”

Foote deemed their first family summit a success and they hope to do it again somewhere else when everyone is able to travel again.

Lessons Learned So Far

Foote said he and Andrea both learned they did not have all the answers going into the succession planning process.

“I’ve learned that there are a lot of resources out there that can help people through this fairly complex financial, and emotional process,” said Foote. “I’ve learned that it can be a lot of fun, actually. It’s made me really look at this with fresh eyes.”

Foote said his dedication now is to answer such questions as: “What does Andrea need to know? What sort of head start can I give her?” He said his goal is to make sure Andrea is equipped as best as she can be to take on this challenge.

In addition, Foote said he learned that he had been under a microscope at Scandic without knowing it. Importantly, Foote said he did not realize that company employees, especially those with more than 20 years of service time, had been wondering, “What’s he going to do?”

The Footes recently made the announcement to company employees that Andrea would be joining the business. The plan is for her to be on-site in San Leandro sometime later this year.

Foote had meetings with top managers who all reacted positively to the news, and among all the employees, there was a sigh of relief.

In chatting with employees, Foote said they told him things like, “O, thank God, you’re not going to sell; you’re not going to liquidate. All those other competitors we’ve heard about are not going to be here.”

There is no definite timeline of how long Hale and Andrea will work together before Andrea permanently takes over. Foote said part of this depends on where Beth’s career takes her. “She’s happy where she is in San Francisco,” explained Foote, “but her next assignment is unknown.”

Foote said the transition to new leadership could be as soon as 2 ½ years. “I could be wrong. There’s no external imperative that says it has to be done in one year or in five years.”

Of the transition, Andrea says she’s excited to learn and work with her dad at Scandic.

“I’m sure there will be challenges, but I don’t anticipate any pertaining to the generations,” said Andrea. “I’m grateful we have been proactive in setting up this succession plan intentionally, to hopefully be successful and healthy for the years to come.”

However long it takes, Foote exclaimed, “My goal is for her to turn to me someday and say, ‘You know, Dad, I got this. You can sit yourself out.’”

Foote believes the transition between he and Andrea should be gradual, “because I think there are things that take time to learn. But it shouldn’t be open-ended either.”

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tel. 847.537.2881 toolkinginc.com Wheeling (Chicago), Illinois 60090 USA He does not envision the transition lasting forever, “because then the incoming next generation never really feels like they ran the show. They never feel like they had the power to do what they needed to do.”

He does not envision the transition lasting forever, “because then the incoming next generation never really feels like they ran the show. They never feel like they had the power to do what they needed to do.”

To help in the transition, father and daughter are utilizing internal communication technology in the onboarding process. Foote said it was Andrea’s idea to setup a Google drive so the two of them could share notes, schedules or anything related to the business. Foote also said he is now including Andrea on emails, “either by carbon copy or a blind carbon copy, I want her to have a sense of how people talk to each other.”

They are also using external technology to participate in such things as SMI and PMA webinars. Foote sees the wisdom in paying for any and all college/graduate school tuition to help the next generation arrive with good tools. “It’s such a tiny expense in the context of your family’s ongoing business asset,” said Foote.

Spouse Considerations

Hale and Andrea are both married to Episcopal priests. Before Dick Lind died in April, he joked that his son-in-law and granddaughter would be part of the only springmakerpriest couples in the country.

Because most couples today are career couples, Foote said factoring in your spouse’s career is an important consideration in any succession plan, especially if you are going to make a cross-country move from Cincinnati to the San Francisco Bay area that Andrea and Maggie are making. “The move needs to work on a timeline for each spouse,” said Foote.

“As an Episcopal priest, Maggie was approached last year to help with a big project to turn a Latino community center in the Cincinnati area into a full-fledged parish,” explained Foote.

The year-and-a-half project for Maggie should end about the same time that Andrea finishes graduate school and her internship, so they can make the move out west.

Though a formalized succession plan has not been writ ten, he said they are taking their time. “We’ve etched out a big picture of where we need to go,” explained Foote.

He said at some point they will formalize everything with buy/sell agreements and other legal and financial documents. “In a business as big as ours and as complex as I think it is, I would advise others not to rush it,” said Foote. “Take your time. Call in help. Talk about it.”

Those three statements sound like a formula for success to help sustain a business to the next generation. n