Concrete Steps Toward Diversification

Simpson Strong-Tie refocuses its construction products and markets as it seeks to expand its manufacturing business worldwide

You may never have heard of Simpson Strong-Tie or seen its products, but there’s a good chance that your home is held together, in part, as a result of them. The company produces structural connectors, anchors, and other fastener products for new construction, retrofits, and do-it-yourself projects. After being in business for sixty years, the company is now in the process of diversifying. Its plans include the continuous expansion into Europe and the Pacific Rim, and the addition of concrete repair-and-strengthening products to its existing line of wood connectors and fasteners.

Karen Colonias, Simpson Strong-Tie
Karen Colonias, Simpson Strong-Tie Photo: Joe Way

The need for change started in 2009, when US housing starts had dropped precipitously, resulting in a reduction of company revenue by more than 35 percent. “This wasn’t the first downturn of the housing market, but it was a clear indication we needed to be more diversified,” says president and CEO Karen Colonias.

Expanding the company’s focus presents tremendous opportunities beyond its traditional residential business. It opens the doors to a huge worldwide market that, unlike the United States, builds primarily with concrete, not wood. There also are extensive possibilities for infrastructure-repair projects. In Europe and North America, Colonias estimates there to be $3.5 billion in market opportunities.

A Two-Pronged Approach to Successful Risk Management

Simpson Strong-Tie is pursuing diversification through organic growth and acquisitions. This means developing new products, many of which are designed for seismic areas that require retrofitting. Both wood and concrete products are developed and tested in the company’s laboratory, where it simulates earthquake and wind forces. It’s also able to investigate the performance of entire systems rather than focusing exclusively on its own products. “We don’t just look at single connections, but approach our solutions from a holistic perspective,” Colonias says.

The tests are carried out in conjunction with 3-D printing technology and finite element analysis—software that models stresses that connections experience in the field. All of these tools help identify designs that might need to be reevaluated and expedite the development process.

Simpson Strong-Tie acquired S&P in Switzerland and Baltimore-based Fox Industries to help build momentum in its concrete business. When asked what types of acquisitions are appropriate for the company, Colonias explains that she looks for product lines that can be differentiated from competitors and that are complementary within the targeted company’s offerings.

For example, S&P produces a highly designed carbon cloth that requires a complex manufacturing process. After being saturated in epoxy, it is wrapped around columns or placed on walls to provide added strength. By contrast, Fox makes a lightweight, nonstructural grout used to level surfaces during concrete repairs. “We need products that provide a balance between meeting high-level structural capacity and code requirements, and those that are less engineered but assist in creating system solutions and entry into a variety of markets,” Colonias explains.

These diversification and expansion efforts have already started to produce results. While the US housing market has regained only half of its 2006 volume, the company’s revenues have already recovered to pre-recession levels.

How the Legacy of Simpson Employees Adds Value

Simpson Strong-Tie has a remarkable record of retaining employees for much longer than average for just about any industry. Colonias herself has been with the company for thirty-two years and has been CEO for the past five. The average tenure is fifteen years, and many on the senior management team have been employed there for more than twenty years.

To ensure that personnel are fully engaged in the company’s growth and diversification—and to capitalize on the strengths of internal talent—quarterly face-to-face meetings are used as opportunities to update everyone on ongoing business strategy and new company initiatives. In this area, goals are clear to employees and they understand how their projects are tied to specific objectives. In addition, performance review conversations provide a way to keep track of employees’ strengths and interests as new jobs and responsibilities become available.

The company’s human resources department is also in the process of implementing new software to track employees’ aptitudes, capabilities, and career aspirations against new jobs as they arise. Colonias points out that the program provides a great tool for recording and archiving details from the reviews, as well as coordinating candidates and appropriate training for staffing needs in the future.

“Our employees are our ‘secret sauce.’ Their dedication and commitment to customer service differentiate us from our competitors,” Colonias says. “So we make sure to maintain an open circle of communication with them about all our strategies and positions they might be interested in.”

Employees’ responsiveness and attention to detail with customers—which the company refers to as “The Simpson Strong-Tie Experience”—is illustrated by one instance. A particular item that requires substantial lead time to custom fabricate was overlooked due to a client’s vacation schedule and a missed e-mail. The Simpson Strong-Tie sales staff was able to coordinate with production, shuffle other pending orders, and deliver the item on time to meet the customer’s original deadline.

The company also provides testing services for clients whose jobs have been red-tagged by inspectors. “At no expense to customers, we duplicate the job-site installation of our product and run tests on the component, then send the results back to the engineer of record,” Colonias explains. “It’s a way to help resolve issues and get construction back on track.”

Colonias also continues to help guide Simpson Strong-Tie through its worldwide expansion and diversification. “It’s important that we are known not as a manufacturing company that does some engineering,” she says, “but as an engineering company that manufactures essential, high-quality building materials.”