Career winds down for Krames

WHITTIER, Calif.—William Krames has said more than once that the trail he has traveled in the rubber industry has been a rags-to-riches-to-rags story. He was jesting.

He did start out with little and climbed the ladder to success in the rubber industry pretty quickly, but he never really fell off that perch even though he went from a top slot at a large firm to the presidency of a small troubled company he purchased—Santa Fe Rubber Products Inc.

Krames led the company out of the red and into the black within a few years. Despite some downturns in the economy and recessions during the last three decades, Santa Fe Rubber has continued to prosper.

After almost 30 years at the helm of the custom rubber product producer, Krames has stepped down as president and CEO. He'll continue to serve as chairman of the company but will not handle the day to day operations.

He selected Michael L. Peterman, an experienced executive manager who joined the firm in 1999, to manage the firm's business development, as his replacement. For the last four years, Peterman has served as general manager of the Whittier-based company.

As for Krames, he won't simply fade off into the sunset.

In a recent interview, he said his wife of 51 years, Ginny, "has been on my case to pull back from SFR for several years so we can spend more time traveling and just hanging out. I will have a very limited role as chairman of Santa Fe Rubber and will continue serving on a couple of company boards, which should keep me involved and feeling somewhat productive.

"Of course, I still have acreage (to tend to on his ranch in California) and the animals and horses that should provide me opportunities for a good dose of manual labor."

Krames has been involved in the rubber industry for more than 53 years. Fresh out of West Virginia University in 1963, he was hired by Shell Chemical Co. in California. He remained with the company in technical positions for six years before going to work for Reeves Rubber Co. in San Clemente, Calif., as a chemist.

He was promoted to technical director of the firm before Reeves bought rubber floor tile maker American Rubber Co. in Albertville, Ala., in 1969. Krames was put in charge of establishing a mixing operation, establishing mixing cycles and setting up extrusion and injection molding at the acquired firm's San Clemente, Calif., manufacturing site.

He then became plant manager and later vice president of manufacturing, and in 1977 was named vice president and general manager of Reeves. While at the firm, he received an MBA from Pepperdine University in 1975.

Krames remained with Reeves until 1980 when it was sold to Fluorocarbon Co. Inc. of Laguna Niguel, Calif. Fluorocarbon asked him to stay as vice president of its rubber group, which was a $20 million operation when he took over. During the next seven years, he was responsible for acquiring several companies, and the group grew to nine divisions with $90 million in sales.

In early 1987, the owners of Santa Fe Rubber of Whittier, Calif., were having difficulties and approached Krames about selling the company. It didn't fit well with Fluorocarbon and his plate was full, so he passed.

But after being contacted by a friend who served on Santa Fe Rubber's board, he thought about it further. "I liked the smaller business environment (of the custom rubber product producer) so I left Fluorocarbon (despite the fact that he was a fast-rising star) in July and acquired Santa Fe Rubber in December 1987," he said.

"It was a step down of sorts, moving from the big corporate trappings, atmosphere and all the perks," he admitted. But he saw the acquired business as a way off the merry-go-round.

"I put up a significant amount of my own capital in addition to incurring substantial debt to make the purchase of SFR," he said.

The company was losing money at the time. It needed Krames to right the ship, which he did.

However, Santa Fe Rubber's turnaround was more difficult than he originally anticipated.

Initially, he had serious doubts about leaving Fluorocarbon for a new venture and entrepreneurship. And in spite of exhaustive due diligence prior to the acquisition, he admitted he didn't know how hard it would be to get the firm on the right track "until I began kicking the tires and opening the closet doors."

Taking the company from years of stagnation and lack of growth in revenues and profitability was extremely difficult, Krames said. "Overcoming a less than stellar reputation in the industry was a monumental challenge in attracting new business."

He created opportunities to gain additional business, initially through aggressive pricing, he said. Once the firm got its foot in the door of a company, he added, it was able to demonstrate that it could satisfy customers' expectations and establish itself as a credible supplier.

In addition, Krames said, significant investments in new process capabilities enabled the firm to reduce its manufacturing costs substantially and make it far more competitive.

But he did turn it around in a relatively short period of time. "I was able to retire the debt in less than four years and have operated the company without any debt to this day." Some 30 years later, it remains a solid company with a strong financial foundation.

There have been numerous pitfalls along Santa Fe Rubber's path since Krames purchased the business, but perhaps the biggest came after several years of substantial revenue and profit growth. That's when the company began to experience what he termed "the NAFTA malady."

During the late 1990s and early 2000s, he explained, a number of long-term customers began leaving Santa Fe Rubber for cheaper-priced Mexican suppliers. And in 2001, China became much more of a factor on the global front.

"One by one, both the Mexican and Chinese producers began picking off our high volume business. Needless to say, adjusting our business to accommodate a 30 percent drop in revenue was a real challenge." Santa Fe Rubber overcame the losses with high quality products that molders in China and Mexico couldn't provide.

Krames said that while there still are many challenges, small- to medium-sized businesses can manufacture products in the U.S. successfully "and the prospects of a bullish Trump presidency in favor of business will continue to assist that effort."

Another significant hurdle has been what he termed excessive government regulations and mandates.

"The primary impediment to firms over the last eight years was not just increased competition overseas with their cheap labor, subsidized tooling/equipment and devalued currency. It was the regulatory and tax burden of both state and federal governments that drove costs up significantly for American business."

As an example, he cited the growing combined cost of health care and workers' compensation on companies during the last 16 years. Prior to 2000, he said, the combined cost of the two insurances averaged 3 percent of his company's payroll. During the last 16 years, the cost jumped to between 8 and 10 percent. He hopes that figure will drop under a new administration.

On the positive side of the spectrum, Krames said his greatest satisfaction has come from the growth and viability of Santa Fe Rubber and the reputation it has earned as a quality supplier.

"As a result," he said, "the company has been able to provide its staff with opportunities for personal growth and development with the skills necessary to lead the company forward in what continues to be a very competitive environment."

Looking back, Krames said the purchase of Santa Fe Rubber has overall been a rewarding experience. "To take a troubled business with little to no recognition in the industry and losses to profitability and respectability has been most gratifying."

And he would do it again "in a heartbeat," he said.

"When I look back over my 53-plus years in the industry, I have no regrets. The many experiences and the people with whom I've crossed paths over the years have been most edifying and rewarding."