The success of Shahid Khan and Flex-N-Gate offers a new take on the old saw, "If you build a better mousetrap the world will beat a path to your door." Only in this instance, the product was a better bumper.
Khan's story is a heart-warming local-boy (almost)- makes-good saga. He began working for Flex-N-Gate (FNG) in 1970, while an engineering student at the University of Illinois. A native of Pakistan, Khan came to the United States in 1967, at the age of 16, to attend college. When he graduated in 1971, with a B.S. in industrial engineering, he remained at FNG.
Starting with the title of the talk, "Contrarian Thinking: Fumbling Your Way to Success," it was clear that the capacity audience at the Second Annual Cozad Lecture in Entrepreneurship was in for no ordinary lecture. The contrarian thinker is someone who takes a view contrary to the conventional approach, Khan told the audience. He borrowed his theory from Sun Tze, a Chinese philosopher, circa 2400 B.C., who was the original contrarian. In his book, The Art of War, Tze asks and answers the question, "How does the underdog win most of the time?" Khan made slight changes in the answers so they apply to business and came up with the following: never destroy the market while capturing it; play to your competitor's weakness; keep information to yourself; make strategic alliances to maximize strength; and get the maximum potential from your employees. These are the principles that underlie Flex-N-Gate's business strategy.
In 1972, the original owner of the company asked Khan, his hot new engineer, to develop a one-piece bumper. Keeping in mind the auto industry mantra lighter, stronger, cheaper Khan set about designing a product with these characteristics. He remained at FNG until 1978 when he struck off on his own. With the help of an SBA loan he began a new business, based on his greatest strengths, a strong understanding of design and an entrepreneurial spirit. He began designing and building bumpers with an innovative design a lightweight, continuous piece of metal with no seams to corrode or rust. This entrepreneurial adventure, which began as a one-man, one-garage, one-press operation, created a product that today is considered the industry design standard. Nearly two-thirds of the pickup trucks and SUVs have bumpers supplied by FNG.
Two years into his new venture, FNG came on the market and Khan, eager to return to Champaign-Urbana, made the purchase. He remains the sole owner. Today the corporation employs over 3,500 associates at ten manufacturing plants in Illinois, Indiana, Michigan, Canada, and Mexico. Annual sales exceed $500 million. The company's major products are bumper assemblies, trailer hitches, and running boards for a variety of pickup trucks and SUVs. The company supplies the Big Three automakers Daimler-Chrysler, General Motors, and Ford as well as Toyota, Honda, and other automakers. Until recently, Nissan tried to go it alone, but they have recently approached FNG and asked them to produce bumpers for them. To take on this new customer will require added capacity. Khan attributes his success to smart thinking. For a small company, profitability must be a constant, in both good and bad times. Happily, he reports that he has never had a bad month, financially, since starting on his own in 1978. At present, FNG has 67 percent of the bumper market and 80 percent of chrome-plating capacity in the industry. Growth during the last year has been extraordinary and the company is poised for take-off. To protect against unforeseen changes in the market, the company recently diversified its product line slightly, by moving into plastics and making other parts, such as hitches, for the automotive industry. But such moves are never far from FNG's core competencies design and chrome plating. Product changes occur so swiftly that Khan has never felt the need to patent his products. "By the time a patent would be approved," he said, "the company may have moved on to a new design."
|"Running a small company well," he observed, "requires that
you observe a fine line between delegation and abdication. You
can't bet the farm." Another essential is to develop human
infrastructure. "You don't want to have too
much turnover in personnel." Khan says the company is poised for
growth. "These are fun times ahead." Recently he moved much of
production to Mexico. All the major auto companies are
building there, and that's where FNG will be too.
Having company headquarters in Champaign-Urbana has many pluses. His company makes use of the National Center for Supercomputing Applications (NCSA) to test designs and to do crash data analysis. And, Champaign-Urbana is home, for Khan since 1967 and for his wife (Ann) who grew up here. It is fitting that this lecture series, in memory of Dale Cozad, was established by Peter Fox, a strong proponent and one of the moving forces in establishing the technology research parks on campus. The aim of Fox and his group is to keep talent, developed on the UI campus, close to home. Shahid Khan chose this path before the creation of the research parks, but it is hoped, many more will follow in his footsteps.
Greg Cozad (l) and his wife Kristie (r) talk with Stuart Meacham (BS '78) at the reception following the lecture.
Born on a farm in Illinois, Dale Cozad earned a degree in agricultural economics from Southern Illinois University and promptly embarked on a career in insurance. Although very successful, his growing interest in diversified financial services led him to found Cozad Asset Management in 1972. Today the company is a registered investment advisor with over $250 million in assets under management. Dale Cozad also was one of the entrepreneurs who founded Cozad Westchester Agricultural Asset Management, which to date has received $390 million in commitments from institutional agricultural investors.
Speaking of his dad, Greg, now the president of Cozad Asset Management, recalled that "he was always an entrepreneur at heart, always looking for new areas of financial services that would allow him to serve his clientele better. This lecture series is a fitting memorial to my dad. It combines his business interest with his commitment to the University of Illinois." Dale Cozad was a valued member of the Commerce Business Advisory Council from 1981 until his untimely death from cancer in 1993.
The family and friends of V. Dale Cozad have also established a scholarship fund in support of undergraduate students who concentrate in entrepreneurship. This year, the first recipients of the Cozad Entrepreneurship Scholarship were recognized at the Awards Banquet. They are Joseph Michael Grzeskowiak and Lavon Delloyd Singleton.