How SRG piggybacked it’s way into the U.S. market

(Tim Roberts/Getty)

For over twenty years, Sherri Stevens, who runs an Ingersoll, Ont.-based HR outsourcing company, has nurtured one particular client relationship, with a Woodstock auto parts firm called Vuteq, which gave her firm, SRG (Stevens Resource Group), its first break.

When Stevens was just starting out, the company’s general manager called her out of the blue and offered what seemed like a long-shot opportunity: Would she take on a gig hiring workers for Vuteq’s factory, which supplies to a large Toyota assembly plant?

Until then, Stevens had built the nascent firm around finding clerical workers for office jobs. She’d launched the company in 1990, during the depths of a recession, because she couldn’t find a job as a secretary. But Stevens soon found that she was in a position to hire temps whom she could place in various businesses.

“He liked our style, and the fact that we were new and willing to learn.” Having never worked with manufacturers, she was apprehensive but the Vuteq GM took her on a tour of his plant and persuaded her to take on the job.

In 2010, Vuteq approached Stevens with another opening: the company had landed a supply contract with a new Toyota assembly plant in Tupelo, Mississippi. Would Stevens like to set up a recruitment operation there?

While SRG had seven locations in Canada at the time, it didn’t have a U.S. presence. Three years later, the firm’s two U.S. offices (the other is in Kentucky) are pulling in $9 million of revenue per year. Stevens’ goal is to hit the $20 million level by 2016 (SRG’s overall revenues for 2013 were $30 million, and the company ranked 31st on the 2013 PROFIT/Chatelaine W100). “It was a big leap,” she says in an interview from her Tupelo office.

Stevens reckoned the move was a calculated risk, but the solid relationship she had with Vuteq made it manageable. What she soon learned, however, was that Mississippi and southwestern Ontario have little in common. While Tupelo had a furniture-making industry, the labour force had scant experience with high-tech parts factories. It was, she adds, a “very different work ethic. [Vuteq] was concerned that the recruits would be overwhelmed by an auto parts plant organized around the rigorous protocols of Japanese manufacturing. Toyota’s other new suppliers faced precisely the same dilemma.

“I thought, how can I make my client’s life easier?” Stevens says. To simultaneously solve that problem and differentiate herself from other local HR recruiters, she decided to gamble: Stevens told Vuteq she would build a “skills centre” designed to look and function like a miniature version of the parts plants supplying Toyota. Besides recruiting and hiring new employees for the factory, SRG would also provide an intensive 20-hour training program, for an additional fee.

READ Lessons in U.S. Expansion

The skills centre, about 3,000 sq.-ft, had work stations, inventory storage areas and even factory-like details, such as markings on the floor and bins for the finished product. During the training sessions, recruits would learn the principles of Japanese manufacturing, complete with an introduction to some key Japanese phrases they were likely to encounter on the job. “It was meant to look like our clients’ facility.”

While SRG sought input from Vuteq and other prospective clients when it set out to design the facility, Stevens realized she’d hit on a significant differentiator on the day she invited customers to come and have a look at the finished product. “The look on their faces, it was amazing. It was relief. You could see their shoulders drop.”

Three years after establishing the Tupelo operation, Stevens grabbed at a similar opportunity in Kentucky. As in Tupelo, SRG built a skills centre, but this time the company targeted not just auto parts firms but manufacturers in other sectors, such as bed manufacturing. With that office up and running, she’s looking to open other centres elsewhere in Kentucky, as well as in Alabama and Tennessee.

The rapidly recovering U.S. economy, as well as a robust automotive sector, is clearly driving her success, as is the so-called “reshoring” trend that has seen some manufacturers abandon Asia in favour of locations in Mexico and the southern U.S. Referrals, Stevens adds, have played an important role.

Yet SRG’s best calling card remains the investment that allowed it to distinguish itself in the U.S.: the skills centres that resemble mini-factories. She brings prospective customers to see for themselves. “The clients see the value of it.”