There wasn’t much about Winland Electronics, Inc., that could have taken Tom de Petra by surprise when he became CEO two years ago. Like a prospective homebuyer with all the inspection notes and disclosures in hand, he knew about the cracked foundation and the water heater that would soon need replacing. He’d been a director on Mankato-based Winland Electronics’ board for 13 years. De Petra knew that the small contract manufacturing firm qualified as a serious fixer-upper.
For 36 years, Winland had been plugging along, “stuffing” circuit boards with integrated circuits, resisters, and diodes, and making other electronic components as well. Its customers were original equipment manufacturers (OEMs) in several industries: transportation, industrial instruments, and especially medical devices. But its biggest customer was Plymouth-based Select Comfort Corporation.
Winland made pump-assembly and hand controls for Select Comfort’s adjustable air-mattress beds. Select Comfort, a customer since 1995, accounted for 60 percent of Winland’s revenues. But that was a few years ago.
In early 2006, management at Select Comfort had given notice that, to diversify their company’s supply chain, they would pull half of their business out of Winland’s shop. The two-year process was nearing its end when de Petra succeeded Winland Electronics cofounder and CEO Lorin Krueger in January 2008. (Krueger still serves on Winland’s board of directors.)
Revenues reflected the drop-off in Select Comfort orders: $37.9 million in 2006, $34.7 million in 2007, $28.7 million in 2008. Landing business that could replace Select Comfort’s was proving tough.
De Petra thought he knew why. He looked at Winland Electronics and saw a company with a highly automated 58,000-square-foot plant, but despite that, a company that wasn’t set up for high performance—not in its plant and equipment, not in its supply chain and manufacturing processes, not in its business processes. He made it his mission to change that. Now he’s waiting to see if his changes will turn the company around.
“I knew that we didn’t need to change just a little,” de Petra says. Winland Electronics needed to scrap its old ways and start over. “We needed to become dramatically better than our competitors.” In a sense, Winland even needed to change who its competitors were.
