Strong tie Case Summary
1. Strong Tie Ltd., located in Winnipeg, Manitoba.
2. Manufacturers of customized structural connectors used in construction.
3. Family owned corporation found in 1946 by Bill Johnstone.
4. After the death of Bill Johnstone in 1975, his son David (CEO) took over the business with his three daughters, Ellen (product design and production), Elizabeth (marketing, sales and distribution) and Audrey (company’s finance).
5. Pillar for Winnipeg business community
6. Product designed based on the input from architects, draftsmen and builders.
7. Production process is highly automated.
8. Human resource used in packing, storing and distribution.
9. Products produced based on customer specification.
10. Pride on product design capability.
11. Providing innovative solutions to unique product design in reasonable price.
12. 60 % market share, which has fallen from 70 % in recent years.
13. Universal Connectors, a US based firm owns 30% of market share.
14. Remaining market share occupied by 5 Chinese producers.
15. Sales on term of Net 60.
16. Low buying power.
17. Frequent delay of payment due to cash flow problem
18. Metal prices varied considerably.
19. Increase in demand from emerging market countries.
20. Adopted Just-In-Time inventory practices to reduce inventory levels.
21. Excellent relationship with unionized workforce.
22. Investing heavily in factory automation to improve the competitiveness.
23. Automatic packing and feeder machines to reduce labor cost.
24. New automated warehouse
25. $2,000,000, five year, revolving agreement with the Bank of Nova Scotia.
26. The loan has to be secured 100% by accounts receivable and inventory.
27. Receivables were lent to 90%.
28. 60% for inventories.
29. 40% for raw material inventory.
30. Current ratio of 1.5 or more.
31. Cash flow coverage ratio of 1.0 or higher.
32. Long-term debt to total capitalization ratio of 40% or less.
33. Financial statements have to be submitted quarterly.
34. $1,000,000 paid as