FADAL stood for Francis Adrian Dave And Larry. Francis de Caussin started a machine shop back in the 60’s. He brought in his three sons- Adrian, Dave, And Larry- to help. In the late 70’s, they grew tired of watching the Japanese take over the U.S. auto, television, electronics, and machine tool markets. They decided to do something about it. They designed and manufactured an entirely U.S.- sourced vertical machining center, and launched the product in 1981 during the worst machine tool recession to hit the U.S. To give you an idea of how bad that recession was, the U.S. machine-tool market 1981 sales were 45% of their 1980 numbers. Machine tool companies that were sending customers to Hawaii in 1980 were closing their doors by 1982.

FADAL would eventually grow from making one machining center (approx sell price $50,000 each) per month to making over 300 per month in ten years. What makes the FADAL business success story even more amazing is they were based in the anti-business climate of Southern California.

My first encounter with FADAL was in 1981 as a potential vendor (another story). It was exciting to watch and participate in their growth. Their story is quite the opposite of watching so many business train wrecks.

Following is an excerpt about FADAL Engineering, from Building a Small Blue Chip Business, © 1996, Paul R. Pease, Inc

Fadal Engineering of Northridge, California, was a very successful start-up from 1981 and became a full blown major manufacturer. They maintained incredible simplicity during the entire journey. They had a superb credit rating. Their employees were well paid and they had good benefits. Their vendors were always paid promptly. If a payment slipped one day past the net 30 it was due, it was sent overnight. They grew from $1 million in sales as a machine shop in 1981 to over $200 million in annual sales as a machine builder in 1995. With all this financial activity, they had no accounting department. They had one bookkeeper.

Fadal’s owners didn’t have a secretary. They had the same reception area and the same number of receptionists — one — for over ten years. There was no corporate or front office. The owners had more than an open door policy. Their offices didn’t have doors!

Their customer base doubled every other year for ten years. They knocked all foreign competition out of the machining center market in the U.S. and exported 25% of their product. They were the innovative leader in their market. They had no marketing department.

There were no meeting rooms. It was impossible to externally distinguish top management from factory floor workers — they all worked together. Workers and management took breaks and ate lunch together. They shipped $500,000 of product per year per employee, over five times the industry average. Their inventory turned monthly — three times the industry average. They had no middle management.

One other thing I’ll add here: FADAL had a hard-working culture. You went there to work, and there was no pussy-footing about that aspect of the culture. But they weren’t slave-drivers. They paid their people well and gave them generous benefits. They even helped some of their own employees start their own businesses by allowing them to buy FADAL machines, set them up in their garage, and make parts for FADAL as a vendor. Simply put, FADAL had the right culture to compete and succeed. While many businesses and executives struggle with how to “fix” the bottom line with a magical system or by outsourcing, they fail to realize what they really need to do is create the right workplace culture. FADAL Engineering is a case study that proves the right culture can compete successfully in any business environment.