Jim Carroll Jr. understands the cost of quality

Jim Carroll Jr. knows how to make a premium product—and price it right.

“Being busy is one thing. Making money is another,” says Jim Carroll Jr., MFC, owner of Hoover Canvas Products Co., Ft. Lauderdale, Fla. “So many people see neighboring businesses selling product for less and say to themselves: If they can sell it for less, so can we. Pretty soon they’re losing money.”

Carroll’s company sells fabric awnings, architectural metal canopies and walkways, and tension structures from locations in Broward and Palm Beach County, and has won more than 80 national and international awards for product excellence. And Carroll’s part in it all started in a dugout basement in Baltimore, Md. Hoping to leave his four sons the legacy of financial independence, Carroll’s father started Carroll Awning in Baltimore in 1958, in addition to working at his full-time job with the U.S. Post Office. Carroll’s grandmother taught him to sew awnings—in her dugout basement—when he was 12 years old.

While in high school Carroll worked weekends at the family business, and after graduating began working there full time during “awning season.” He did mostly take-downs and re-hangs, but because of his aptitude with numbers he also paid attention to the company’s finances. “I remember my father saying that when we have $100,000 in sales a year, we’ll make a profit,” Carroll says. “Our sales were $100,000 the following year and we were $10,000 in debt. We were still selling our product based on the competition’s pricing.”

Understanding costs

Eventually Carroll Awning did make a profit, and Carroll suggested the family start another awning business in Florida so they could work year-round. In 1978 Carroll’s uncle bought Hoover Canvas and in 1980 Carroll joined him there—and began deepening his understanding of job costing thanks to a man named Walter Pait. “Walter had worked at Hoover for 25 years and was the numbers guy for the company,” Carroll says. “He knew what everything cost and he knew what you had to sell products at to be a viable business. He taught me how to do that too.”

Though Carroll had the fabrication and installation end of the business down, he had more to learn about pricing products. “I always felt like the awning business was in my blood,” he says. “And while I was good with numbers, it was while working under Pait’s supervision that I started to excel with them. I learned there was more to business than beating the guy next door by 2 percent in order to get the job. First, you have to make a high-quality product. Then you find a fair price for it by figuring material, labor and overhead. My uncle would often say: ‘Anybody can stand on a street corner and sell $5 bills for $4.50 and be busy all day long.’ That stuck with me.”

Moving target

Pait taught Carroll how to cost jobs by hand, but Carroll now uses a computer costing program that he and the company’s controller tailored to the company’s needs. He points out that there are hidden costs that many businesses forget to add to the equation. “But it’s the overhead that really trips people up,” Carroll says. “There are no set percentages you can use because the ratio of overhead to revenue is always changing.”

Though there’s no magic formula for job costing, there is an essential element—paying close attention to the numbers on every job. Employees at each location enter the necessary information into the computer program daily, including the job number and time worked on the project. Material costs are entered as soon as they’re purchased—and Carroll personally reviews every job. He collects the contract, invoice, the sales costing sheet, work orders and the computer print-out with the costs and profit. “When the job is done I look at all of the factors and decide if we can lower our prices or if we need to raise them,” Carroll says. “It’s a constant process.”

Next generation

As Hoover Canvas prospered, Carroll began to acquire other awning companies. “Most of them had to sell because they didn’t understand their costs,” he says. “We’d generally keep the staff and they’d weed themselves out if they didn’t agree with our philosophies.” The last major purchase the company made was the facility in West Palm Beach, which his son Matt now runs, although billing and job costing review is still handled in the Ft. Lauderdale facility.

Continuing to foster the family aspect of the business and giving his son the chance to take risks and make changes to it is important to Carroll—which has resulted in the company purchasing a very expensive automated cutting machine. “For probably a year and a half or so Matt was pestering me to buy a cutting machine, but I needed to know it wouldn’t end up being something we’d just hang our laundry on,” he says. “I told him: ‘It’s a six figure investment—convince me it’s going to be worth it.’”

Carroll sent his son and company vice president to visit a company that was already using the machine to assess its potential for Hoover. “They came back and said: ‘We’re not ready for it yet,’” Carroll says. “But nine months later Matt laid out a plan for how he thought it would work for us and we bought it.”

What convinced Carroll to make the purchase was primarily the machine’s ability to store measurements for repeat projects, and its accuracy. “We could punch in 40 awnings and as long as the data was entered into the system properly it would produce those 40 awnings perfectly,” he says. “I also believe it’s going to be easier to hire computer operators in the future than it will be to hire cutters.”

The purchase has turned out to be a good investment. Carroll says the company runs virtually every piece of fabric through the machine. “Matt and my nephew Eric have the machine working way beyond our expectations,” Carroll says. He’s glad to see the next generation’s initiative and persistence pay off—and that the company’s future is in good hands.

“I probably wouldn’t have made the purchase because it’s not the way my father did things,” Carroll says. “But I was that young man at one time—pushing my uncle and father to try new things.” No doubt he did the math first.

Sigrid Tornquist is a freelance author and editor based in St. Paul, Minn. She is also the associate editor of InTents magazine, a publication of the Industrial Fabrics Association International.

Comments

Comments are the opinion of individual posters and do not reflect the views of Specialty Fabrics Review or Industrial Fabrics Association International.

  • Robert Homes

    Cost of Quality or... Management of Quotation System

    I enjoyed reading your article titled "Jim Carroll Jr. understands the cost of quality." I was a bit puzzled in that the title of your article reflects little of its content. To me, the cost of quality is not a basic Deming cycle (plan-do-study-act); the cost of quality is the value of the portion of work that is put into a product to manufacture it from design to delivery. The cost of quality is not based on whether a given job was profitable or not, it is, however, concomitant with say... a quality control technicians time (and we all know time=money) involved in an inspection. We take pride in measuring weekly the cost of quality in our business. This metric is used to determine not if we are profitable, but if we are having quality issues (process/material) which are impacting our production in ways that are above or below our standard model. In fact, one can measure a cost of quality and become concerned that it is too low! I would invite your readers to investigate the cost of quality for what it really is. Wikipedia has a basic definition: http://en.wikipedia.org/wiki/Cost_of_quality Respectfully, Robert Homes Picayune, MS


Submit a Comment

Required. Will appear next to your comment.
Required. Will not be displayed on site or used to send unsolicited messages.
If applicable. A link to your site will appear with your comment.
Optional. Will appear in bold type above your comment.