SBDC advisor assists search for financing to fit manufacturer’s growth, aspirations

SPOKANE, Wash. – Family-owned Washington Equipment Manufacturing Company has grown steadily since its founding by John and Karma Rouse in 1989. Son Juston joined at age 20 in 2004, followed by his wife Lisa in 2016. WEMCO built a new facility eight years ago, averaged 84 employees throughout 2021, and, with recent hires, now employs 89.

WEMCO designs, builds and services massive machines and structures for industries such as aerospace, hydropower, construction and agriculture. But the business struggled to get its bank to understand and finance it as a manufacturer rather than a contractor, said Juston Rouse, vice president of business development. “We have seen consistent growth, but we had a minute line of credit compared to what we needed to continue,” he said. “We needed to move to a different banking relationship.”

To start the process, Lisa Rouse in 2018 contacted Alan Stanford, an advisor with the Washington Small Business Development Center in Spokane.

The Washington SBDC is a network of more than 40 advisors in more than two dozen communities across the state working to help owners and entrepreneurs who want to start, grow or buy/sell a business. Advising is confidential and is provided at no cost to the client through a partnership between the U.S. Small Business Administration and Washington State University. Additional support is provided by funding partners including other institutions of higher education, economic development agencies and business and civic organizations.

Analyzing, presenting information that lenders look for

“Alan had been a banker his whole career,” Juston Rouse said. “He had worldly experience in banking and a quick understanding of manufacturing. This made him very easy to relate to and work with.”

“From a banker’s perspective, I saw WEMCO’s potential,” Stanford said. “But the bank was not seeing it. I wanted to help the family see what their financial statements were telling the bank and why the bank was not realizing their company’s potential.”

Stanford used the financial statements to run monthly and quarterly reports that tracked business ratio improvement. Ratios use myriad components – like working capital, cash flow, liabilities, and more – in order to analyze larger-scale characteristics like efficiency, profitability and leverage.

“WEMCO’s ratios continued improving,” Stanford said, “so I worked with them to find a lender who saw it the same way.”

He provided the company with a list of possible banks and bankers that he believed would understand WEMCO’s ratios, vision, goals and potential. The company investigated and visited with some options and selected a large bank with a global scope. “Our new bank has refinanced us and set us up to continue to grow,” Rouse said.

For example, with a larger line of credit, WEMCO can take advantage of discounts offered by its suppliers when they are paid sooner, Rouse said. Stanford added that the company now has sufficient working capital to make a name for itself in aerospace – one of WEMCO’s newer areas of manufacturing.

Building in opportunities for employee training, advancement

Not so new is its commitment to employees. WEMCO’s website explains that Juston Rouse has “made it his mission to grow the business so he could share his knowledge and give the same opportunities to as many other people as possible.”

Lisa Rouse, director in WEMCO human resources, “is not really an HR manager, to keep the company from trouble,” Juston Rouse said, “but she’s an employee coach. She works with employees to help them make more money, take on more responsibility, determine how they can advance their careers.

“This is part of why we promote so much from within,” he said. It’s not a hard-and-fast policy, but “has just worked better. Employees tend to follow someone who has also done the job and worked it alongside them.

“We value employee retention; ours is averaging about 75 percent on an annual basis,” Rouse said. “We track employee satisfaction, and we always try to improve.”

As part of Washington state’s nonprofit Aerospace Joint Apprenticeship Committee (AJAC), WEMCO trains employees in aerospace and advanced manufacturing during a two-year program, increasing the salary as employees progress to the rate of journeyman at completion.

“The Rouses always talk about sustainability,” Stanford said. “They want their employees to take ownership, to be a part of the business more than just a worker at a job.”

Strong family, good communication set pattern for success

As part of expanding that investment in human capital, WEMCO just added four new positions, including its first two internal accountants.

Rouse is pleased to have continued job creation, but he acknowledges that a decline in workforce availability may slow future hiring. “We will continue to introduce more automation,” he said, “especially since many employees today want to do more of the computerized work.

“We will hire, but some will be employees to run the machines that do prep work,” he said. “For that, sometimes machines are more efficient.”

WEMCO’s future likely also will include working with more customers who export, said Stanford. In order to better serve them, he anticipates WEMCO benefiting from advising from his Washington SBDC colleague in Spokane who specializes in international trade. “There is a lot to understand about the exporting process – supplying materials, opportunities, compliance,” Stanford said.

But he is confident the company will master the new material. “Working with the Rouse family, it was evident they are all on the same page,” he said. “They communicate well, partly because they are family but also because they want to work together and be open to ideas to continue to grow their business.

“They’re taking their time with things,” he said, “and working systematically to prepare for future growth.”

Learn more about WEMCO at https://wemcoinc.com.