Your Business at Risk - Surviving Under the Weight of Burdensome Government Policies - with Rob Hutton [Ep. 8]

Linda J. Hansen: You may not know my next guest, Rob Hutton, Owner and President of Kettle Moraine Coatings in Jackson, Wisconsin. But I’m fairly confident you’ve seen the work that his company does. Kettle Moraine coatings is a leading provider of electrostatic powder, fluid bed powder, and hot dip plastisol coating. Rob is representative of the millions of small business owners across this great country. And he is engaged and impactful within his community. He is also active and intentional about educating his employees about the public policy issues that affect their jobs. I’m sure you’ll enjoy this interview and gain valuable insights from Rob Hutton. We're here today with Rob Hutton. Rob is the owner and president of Kettle Moraine Coatings based in Jackson, Wisconsin. Rob, could you tell us a little bit about Kettle Moraine Coatings?

Rob Hutton: Sure, well, Kettle Moraine Coating is in the powder coating industry. We coat and cure many different metal parts for industry. So, our customer base are the tier-two, tier-three suppliers to many of the large manufacturers around the country. It provides some type of metal fabricated component that needs to be chemically coated. So, we do really four different processes of various chemical coating operations. One being powder coating, we do a plastisol, more of a rubberized type coating, as well as we do a fluidized bed type coating that is also what you need in the industry. So, we're a job shop format who's had a proud history of being in the business for roughly 40 years with tremendous history, and I feel a tremendous opportunity for growth going forward, a bright future in the ministry we serve.

Linda: That's fantastic. As we talked about the products that they coat, I think if you just imagine any big machine that you see, pretty much. I think we see their coatings every single day. Correct?

Rob: Very much so.

Linda: All across the country.

Rob: Various applications, various components around the country, and various industries around the country that all need certain parts that are coated for protection and we're in that business.

Linda: That's fantastic. About how many employees do you have?

Rob: We're roughly 60 employees. We're about two-shift operation, five days a week.

Linda: Does that ebb and flow at all seasonally or is that pretty steady throughout the year?

Rob: It's steady throughout the year. We kind of ebb and flow with the manufacturing economy if you will. So, for the most part, we see a few dips due to manufacturing shutdowns but for the most part, we are steady throughout the year.

Linda: We talked before a little bit about different policies, regulations that affect your industry? Could you go into that? What's most challenging for you?

Rob: Sure. We are in the business where we're heavily employee-intensive, labor-intensive. So, our policies that are associated with skilled labor, with wage issues, with benefits issues, healthcare issues, certainly impacts our business significantly as well as most of the small businesses. We also deal with a little bit of regulatory work in the environmental market because of the business we're in. So, we stick closely with what the EPA's doing and local here in the state with the DNR in terms of what issues are tied to environmental health, air quality issues, groundwater issues, all-important to what we do.

Linda: Right. We talked a little bit about international trade. How does that affect your business?

Rob: Sure. We somewhat get impacted by international trade because our customers are, for the most part, international in scope. So, whether they're importing raw product that we eventually coat for them, or they're producing a product that ultimately is exported. What happens on the trade route is certainly an impact on them, so correspondingly, impacts us. With on the production side as well as the costing side, because those tariffs are in place. Customers are finding that their contracts for the raw products or finished goods going out, fluctuate significantly, and so we get wrapped up in that quite a bit as well.

Linda: I was asking, Rob, exactly what might be the biggest challenges he faces as an employer.

Rob: Certainly, first and foremost would be the available source of skilled labor. We know that what we've seen in the last ten years with fewer and fewer employees, young people that are either preventing exposure to where manufacturing really needs, individuals or are pursuing a four-year college degree that may not necessarily meet where manufacturing is today. We're seeing that gap that exists there, along with the continued flow of exiting of our aging workforce, through our baby boomers, that continues to create a larger and larger void. So we're looking to, I think, as an economy of small business owners that are involved in manufacturing, we're looking to continue to really promote the opportunity for a really good career in the manufacturing industry which we're a part of that, to entice kids that there is a different path for a career that allows them to use their skills in math, and science, and electronics on a day-to-day level that is something they enjoy doing, in the environment that they enjoy doing. Frankly with a lot of upside opportunities in it as well.

Linda: Make and earn a good living and--

Rob: Absolutely.

Linda: --advance. Right.

Rob: A really good of sustaining family providing jobs in areas that maybe not traditional from what our young people are used to.

Linda: Are used to right now. When you think about educating your workforce regarding some of these policies, the impact of trade, the impact of the workforce regulations, the impact of the environmental regulations, how do you go about that, what're your best practices?

Rob: That's certainly a challenge because you find a workforce that's very committed to coming in and doing what they do every day to provide for their family, and that tends to be where their world operates. Helping a workforce understand the macro basis for what we do and what they do in it is always I think something we're trying to be better at. So, you create forums for either larger communications within the whole company or you find opportunities to engage the lead supervisors in our case to be really equipped to understand what we're seeing on the outside that impacts us internally. That they can then be liaisons to communicate to their frontline workers or why it's important for us to do what we do whether it's on an environmental perspective or a safety perspective or a production perspective that helps us really stay within our regulatory guidelines but also succeed and really improve our profit within it.

Linda: Because it is hard when those compliance costs increase, there's only so much in the money pie, is what I say, so something has to go, and that's one of the things that I think employees often do not understand. Regarding the pressures that a business owner feels.

Rob: Very much so.

Linda: To provide for their paychecks. If… you just explain some of the challenges you face as an employer, what would your employees say is your biggest challenge?

Rob: Yeah, I think our challenge would be the competitive nature of what we do and how we continue to provide distinctive service to the marketplace. We're in a job shop labor pool but also in a competitive pool there. So it's always an issue of how do we do better at what we do, and so our employees always look for opportunities I think to say as an employee, can we be, I think, engaged but also compensated and incentivized for thinking outside the box for just because we've done that today, is that what we should be doing tomorrow? So, our employees I think are looking for opportunities to be a part of the solution and not just come in today and do what they do but use their gifting and their abilities to be able to speak in the ideas that even as an owner, I may not have thought of. Because there are some really bright, intelligent people out in my workforce that help us do better.

Linda: Right. Well, I've heard it said that if you want to solve a problem, go to the people closest to the problem.

Rob: Very much so. And that's totally the case here.

Linda: And business owners often forget that. That they need to go ask the people closest to the problem. So, when you think about what it takes to provide the paycheck for your employees, and how that is affected, how do they view that, for you?

Rob: I think most employees understand that, unless the business is profitable, it's hard to sustain a workforce and to pay them competitive wages. And so, again, we engage them hopefully to be a part of the solution to say, if we are better at what we are doing today than we were yesterday, it should create more margin and more prosperity for the business. The more prosperous the business is, the more--any business has the opportunities to use the fruits of that prosperity to help employees whether that's on a wage issue, whether it's on a benefits issue, whether it's on providing additional education for those employees, whether it's offering additional insurance, but if it's all those things, that unless you can afford those things on a cashflow basis every week, it's pretty hard to operate your business, but employees, for the most part, understand that. Given the explanation for again the basics for costs plus revenue equals the margin, and with that margin really stands for what that means.

Linda: Right. Do you feel like your employees have a good understanding regarding the system of government or the economic conditions that are favorable or unfavorable to business?

Rob: That's a good question, Linda. I don't know that I would have a good handle on the percentage of the employees that some certainly do, others are really committed to coming in and earning their paycheck and going and providing for their family. But there are certainly enough that understand the economic climates that impact their ability to not only gain meaningful employment but also sustain it and also have opportunities for overtime and actually earn more than they would otherwise. So, I think that they see just by how they're impacted through our production schedules, the demands that we have for the service that we provide that also then correspondingly impact them and their ability to earn more. Those are just basic p's and q's for how they read that world and how they communicate and how we offer maybe overtime or Saturday hours that we wouldn’t normally, again what correlates to that? Well, it correlates to the fact that the economy is doing what the economy is doing. Hopefully, we as a business are providing value in driving that demand for our own little corner of the world, and so it certainly has a benefit, an upside to our employees.

Linda: Right. One of my lessons in Prosperity 101® Breakroom Economics™ program is I hate being micromanaged. It talks about how in life we hate being micromanaged. Whether we're teenagers growing up and want to spread our wings, or whether it's at work, or whatever, but I try to help employees understand that sometimes their employers are micromanaged in ways that affects their ability to provide for those jobs. When you think about your business or other businesses that you've been involved in in the past, what do you find is most detrimental to business prosperity?

Rob: I certainly think probably a couple of categories. Number one I think the tax obligation at a state and federal level has a significant impact on what taxes are really a burden and those taxes that are necessary for our general economy and wellbeing. We looked at overall tax burden first it was constant, where we are ranked on a state by state basis. We look at the fact that most small businesses are passed through into general Wisconsin, so it's not the business that's paying those taxes, it's actually the owners that are paying those taxes. So, all those things play into how a business stays managed and run and the direct correlation to cashflow and being able to not only infuse the business with the resources it needs, but also to meet obligations there afterwards, certainly in the area of taxes. We know wage scales have an impact in terms of upper pressure that the government puts on wage scales versus the free market. We talked a lot about the issue of minimum wage and what is dictating and driving the minimum wage discussion both at a state level and at a federal level versus we know the economy being strong today and we know wages are really directly correlated because of the shortage of workforce and we see upward salary pressures continue to go up. That's a good thing for our economy. That's a good thing for our workers that have an opportunity to earn more and to use those earnings to provide for their family or to get an education to improve their position in the workforce. So, those are probably two of the direct areas that we see, that we need to be very, very cognizant of in terms of the small business world.

Linda: You mentioned minimum wage and that's another lesson I have in the Breakroom Economics™ program, is will a higher minimum wage help me? A lot of times people think that if the wages increase, they're mandated to increase, which will make sure everyone is more prosperous. But in reality, that can sometimes make a business to cut jobs or eliminate jobs, or sometimes it causes a business with small profit margins that may cause them to close. Those jobs are lost. So, I described minimum wage laws as almost like an unfunded mandate. That it's something the government makes a business do, but they don't provide the funding for it. So, it's great when the economy is thriving and businesses can increase wages freely and with autonomy and that they can compensate their employees accordingly like you do. Which is fantastic.

Rob: It's part of the free market that we live in, right. It's the ability for any employee to go and improve themselves and improve their position in the economy. To look at our area you can see various companies who are expanding or moving to the area that are offering very, very competitive starting wages. Significantly above the minimum wage. We also know in the state of Wisconsin, the average worker that starts out at minimum wage is typically a summer part-time job. Someone that is there to have the opportunity to gain some experience of what it means to be an employee in the workforce before they go back into their school environment or go on to something better. I think the latest statistics I saw show that the average workers stay at a minimum wage if they even start at minimum wage stays there for about six months before there's either an increase or a raise, or they go on to something better. So, I think our economy is allowed for folks to come in and begin to experience employment at a formal wage for a company that really benefits well that company in terms of inexpensive labor, but also benefits that employee by giving them an opportunity to say, "This is what I'm being paid to do. How do I improve?"

Linda: Exactly. If you could have one tip for employers in terms of educating their employees about these issues, what would you say?

Rob: I think you have to be very deliberate, number one, and I think you have to pick out those four or five employees that you know are really engaged, that have shown their commitment to the company, that are demonstrated leaders out in the shop whatever the case may be that can help you carry that message, that you can pour into those. In my case, we have roughly five or six frontline supervisors that are very talented, very committed people. That really have a passion for what our business is, but also a passion for the employees that they were seeing that can be a great vehicle for sharing information, whether that's inner company information or external demographic or industry information, or even government information to say. If they can narrow it down into a simplistic message and say kind of here’s one plus one equals two in terms of what the impact is on this issue in our business. It tends to be very helpful. We have in the past we'll continue going forward, have company-wide meetings to share broad information around issues that affect our business and certainly the government regulatory issue, will be a part of that.

Linda: Well, it's often said that they don't care how much you know until they know how much you care. So, when employers exhibit a concern for their employees and their families and their future prosperity, it gains trust. So, they're more likely to listen and understand and I always say, too, all politics is local, and there's really not much more local than your family or your place of employment. It goes even more so than your neighborhood or your city. But for employers, and with the Breakroom Economics™ program, we don't want to be political as such or partisan. It's just basic economics of job creation and providing paychecks every week or month for your employees. So, it really doesn't have to do with partisan politics. It has to do with basic economics of job creation. And so, you mentioned autonomy, you tried to give your employees autonomy, which I know is a very important thing to so many people. The fact that you communicate with your supervisors and help your supervisors communicate with their teams is really a great way to do it. I mean an employer is like a family in a sense, you have your work family. And when I understand that you care at that level, they’re more likely to listen to what makes the business profitable, or what types of economic systems or conditions will actually help the business thrive.

Rob: Very much so. I think you’d find that most employees do want to make an impact. They do want additional opportunity; they do want an additional areas of responsibility. Certainly, that’s not entirely the case but for the most part, I believe in the human makeup, in the human herds. Individuals want an opportunity to do more. They want to be able to grow. They want to be able to personally prosper as what they're involved in prospers. So I think any type of business can find those employees who really want to engage, who have certainly the ability to engage and do more to put them in the position of some form of leadership to be able to use their gifts and abilities to help that business or that department, or that factory cell, to do better at what it does. I think the business is a better for it. Of course, all of these comes with different layers of leadership and different structures of leadership to know that those employees are being given the direction that they need. I think we've heard a lot about the word empowerment over the last 20 years and I think there are different spectrums of empowering employees. Some employees really want that, some are well-equipped for it, and others aren't. Others are want "Give me the direction and let me do my thing" and both are really important and critical in an organization. So, I think you can find those employees and say, "Here's what we're looking to do with you in terms of stepping up your level of engagement but also your level of responsibility, also your level of impact to the organization." Find those employees who are really excited about that. You can build into them, pour into them, give them opportunities and then equip them to do the job that you’re given them to do. I think the worst thing I've ever seen happen is we're asking employees to do things but not equipped them to be successful at it. So, I think as an employer, you're responsible to do both. You'll be able to equipped employees and say, "What do you need from me as an employer to do your job better?" What does that look like? It may be additional training, it may be additional resources, it may be additional tools for them to really carry out their function well. Think that we can marry both of those things, we've got a home run.

Linda: I know you're concerned about helping your employees be active and engage citizens. Helping them to understand how they can impact the policies that affect their jobs. Have you ever talked to your employees about voting or being involved in the community in that way or contacting elected officials?

Rob: We have done some of that here, we'll continue to do more of that. It kind of goes back to your comment, Linda, that all politics is local and so, I'd say there's no greater impact politically than where communities reside, and where those employees reside in those communities. So, helping employees understand their role to be a part of not only the economic fiber but the government and regulatory fiber in their communities. It means a great deal. It's our responsibility as citizens. So, it's the whole issue of how do you help and educate individuals and employees around their role as a citizen in our country and in their community in this case. Some employees understand that and have been involved in it. Others are more removed from it, and so, simply drip-feeding in the importance and the impact we can all have. We're participating in our really unique privileged democratic republic process to me, is an obligation we have as employers. Wherever we can and however we can.

Linda: That's fantastic. I thank you so much for that comment and just a disclaimer here, Rob does currently serve in the Wisconsin State legislature. How long have you served in the legislature?

Rob: I was first elected in 2012, Linda.

Linda: Why did you decide to run?

Rob: I really think our legislative process is well serve by private sector individuals. Many of whom have strong business backgrounds. Playing a role in the state legislature, in this case, to help drive economic policies that really help our state thrive. Because I believe that prosperity comes from families, it comes from businesses, and as those families and businesses thrive, our communities thrive, our states thrive, and our country thrives. So, folks that can say they've lived through that and understand what it means to make cashflow on a week to week basis and cut payroll on a week to week basis, tends to have a different perspective when you go look at how does public policy impact what those individuals have been doing. And so, I thought it was important for, like many do to go and give back into play a role at a state level to say, "How can I bring my perspective as we really craft public policy?"

Linda: That's fantastic. Thank you for serving. What have you found to be the most challenging with being a legislator who is also a business owner? Have there been positives and negatives with your employees?

Rob: I don't know that there's been positive and negative with the employees. I think the struggles are always the pace of government, tend to be distinctively slower than the pace of business. For some reason, that's a good thing, and other reasons, it's not a very good thing. So, you tend to look at business and you are there to solve problems and implement solutions and move on. That takes a whole different pace at the government level, and so you have to have a different layer of passion for it, but also a heavier, heavier layer of patience to get through that process because it is a collaborative. It is a much like partisan process depending on who's in power to weed through all that to not only determine what good public policy looks like, then how to actually put it into place.

Linda: Right. How does the sausage get made?

Rob: It's a good way of saying it.

Linda: Exactly, and it's challenging and I know employers on all sides of the fence have said so many of the same things regarding economic issues. It doesn't really matter if you're republican, democrat, libertarian, anything this is about the policy that's really committed to providing prosperity for all. So, do you have any other closing comments that would encourage other employers who want to educate their employees about public policy issues that would affect their jobs?

Rob: I think most employers would agree that the more educated an employee, the better that employee is. So, I think it takes a considerate effort for all of us in the business of running a business to figure out how do we continue to engage employees with important information that helps them not only to become a better employee but also a better citizen in their community. That can take on various forms, but either way, it has to be very deliberate. It has to be very consistent and very well-thought-out. So, I think I'm hearing more and more from the employment community of the need to do that and the desire to do that. Hopefully, some additional equipment to do that as well.

Linda: That would be fantastic if more employers actually spoke about that in the workplace and help their employees understand. I think too, correct me if I'm wrong, have you seen a decline in that understanding over the years? In terms of how the policies at say the national or the state level absolutely affect someone's job?

Rob: I think I have seen that decline at the level of the employee. I think I've seen it just the opposite from the level of the employer because employers today are almost by default having a need to be more engaged to understand what policies coming out of DC, what policies are coming out of our state of Wisconsin that impact their business. To be as proactive as possible. To understand how do we...

Linda: Navigate.

Rob: ...navigate that. Right. And steer through that process to know what adjustments may require for my business to continue to operate and flourish because of it. I think from an employee standpoint, employees tend to, again, because all things are very personal and local there, they are very concerned about the day to day sustainability of that business because they know it impacts their ability to be able to support their family. And so, policies that play into growth and additional sustainability in those businesses. I think most employees are really, really--not only stooped in, but also attuned too. Because to them, it's what impacts my wallet. It's probably going to gain my attention, and I think that applies to all of us. So, I think you're seeing more and more engagement at the micro-level to where employees are. I think as an employer, the more we can do to help them understand the macro-level. Again, it goes back to I think they'll become better and more informed in their own decision-making which helps them as an employee as well.

Linda: That's fantastic. And in your business, what do you think would be most helpful in terms of resources that could help you do that?

Rob: That's a great question, Linda. We talked about that a little bit. I think direct communication with them really is critically important. I think you can look at ideas, whether it's in a company-wide meeting format or individual breakout discussions on work compensation issues, on health insurance issues, on wage scale issues. You can almost break those out in almost different types of topics and segments as you knew with employees to say, "Today we're going to talk about this issue, what it means, where that issue regulatory-wise is coming from, and what it means to you as an employee, and what it means to me as an employer and..."

Linda: And how they can impact it?

Rob: Absolutely.

Linda: How they can impact that for the future?

Rob: Very much so.

Linda: Right. Well, I just want to say thank you so much--

Rob: No, thank you, Linda.

Linda: --for the time that you've given us. We're really excited to promote your business. What is your website? So, people want to visit your website and learn more about your business?

Rob: We'd love it for everyone to visit our company through our website. It's www.Kettle MoraineCoatings.com.

Linda: Could you spell Kettle Moraine?

Rob: Sure. K-E-T-T-L-E, M-O-R-A-I-N-E, C-O-A-T-I-N-G-S dot com.

Linda: Thank you. Just in case those who are listening may not be familiar with the Kettle Moraine area here in Wisconsin. But we thank you so much, and with Prosperity 101® Breakroom Economics™, we really want to take people through the foundations of prosperity, the policies of prosperity, and how to protect their prosperity by becoming informed, involved, and impactful. So, thank you for being an employer who tries to help your employees become informed, involved, and impactful. Thank you for giving us this time today.

Rob: Perfect. Thank you for what you're doing, Linda.

Linda: Thank you.

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