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Kathy, left, and Terry Malley of Malley Industries Inc. (COURTESY OF KATHY MALLEY)
Kathy, left, and Terry Malley of Malley Industries Inc. (COURTESY OF KATHY MALLEY)

CASE STUDY

Ambulance maker hits bumps on road to expansion Add to ...

THE BACKGROUND

Within days of moving into a new facility in the summer of 2003, Terry Malley, president and owner of Dieppe, N.B.-based Malley Industries Inc., a maker of specialty vehicles and custom components, realized that the company would soon grow out of the new space.

It took five more years before he began to explore a new site for the company, but timing is everything, and Malley had to overcome a few challenges before it could make a move.

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The company was started by Mr. Malley’s late father, A.J. Malley, more than three decades ago.

The senior Mr. Malley, who had a passion for recreational vehicles, built truck campers as a hobby, but soon grew big enough that he decided to turn it into a full-time occupation and invited his son, who was studying business at the University of New Brunswick, to join the fledgling enterprise as a part-time salesperson. He came on board in 1979, moving from part-time to full-time up the ranks to become president in 2000.

The business initially stayed relatively small, with the son taking care of sales, his father doing the building and his mother handling bookkeeping and upholstery.

In 1985, the company produced its first ambulance conversion, which set it off in a new direction, establishing Malley as a leading supplier of emergency and mobility vehicles in the Atlantic region.

THE CHALLENGE

Mr. Malley and his wife, Kathy, a company vice-president responsible for communication and business development, with previous responsibility for human resources, realized that, to grow their enterprise, they needed to take a long-term view.

The company had an excellent reputation, a solid customer base, a dedicated work force and a healthy war chest, but was confined by space limitations.

So, in 2008, they started to explore new building sites that would provide higher visibility and allow them to triple their production capabilities.

In January, 2010, Malley committed to the construction of a 100,000-square-foot manufacturing plant on a newly acquired 15-acre parcel of land in an extension of an industrial park in Dieppe, near Moncton.

Unfortunately, the decision coincided with a couple of ominous events.

The first was a delayed effect of the recession. It hit Malley like a sledgehammer, with a dramatic drop in sales in 2009 and through the summer of 2010.

As a result, the company began to make a serious dent in its war chest.

To top it off, some of its key staff, including its production manager, faced health and personal issues, causing holes in the organizational setup.

In the shadow of these events, Mr. Malley was faced with whether to go ahead with a million-dollar payment coming due for a supply of steel for the new facility, and essentially, whether to go forward with his overall expansion plan.

His gut instinct encouraged him to continue with the project. But he knew this meant the company could no longer conduct business as usual.

So in the summer of 2010, the husband and wife team identified three key issues they needed to resolve to take their business to the next level.

The first was a need to overhaul their management practices, moving from a flat structure in which they were involved in every aspect of the business to one that would develop a professional management team, and leave them more time to focus on the bigger picture.

The second was to find ways to more aggressively market their products and services.

Third, they needed to find efficiencies to make them leaner and more competitive.

THE SOLUTION

Mr. Malley knew that change would be difficult but he also knew it would be critical to the company’s growth.

To create the needed professional management team, the company moved aggressively and hired a general manager, a professional chartered accountant and a human resources specialist.

It also hired a new sales manager and added to its sales staff. While its sales team had previously been acting like farmers, harvesting what came their way, it looked to create a team of “hunters” who could find new business to feed the new facility.

The company also hired Grant Thornton LLP to offer advice on Malley’s corporate structure, practices, productivity and other efficiency improvements.

The company faced some resistance to change -- surprisingly to Mr. Malley, more from management than on the shop floor -- but nevertheless, it moved into its new facility in mid-December, 2010.

The transformation of the business is coming along well, with a healthy order book for existing product lines and growth in new business opportunities.

The new executive team is engaged, positive and forward-focused, Mr. Malley says, which is allowing him and his wife to concentrate more on the long-term strategic vision of the company.

Asked if they would do it again, as true entrepreneurs, their answer was a resounding yes.

Special to The Globe and Mail

Nauman Farooqi is a professor and head of the department of commerce in the Ron Joyce Centre for Business Studies of Mount Allison University.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.

Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT

 

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