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Written by Mike Buetow   
Friday, 29 February 2008 19:00

A third-generation, family-run EMS firm, The Morey Corp. puts the “values” into value-added services.

When first engaged, EMS companies tout their customer service, or their ability to make solder joints, or their supply-chain management and logistics expertise. What they don’t bring up is their ethics.

Well, most don’t, anyway.

The Morey Corp. (moreycorp.com) is one EMS firm not afraid to go against the grain. The family-run firm has never caught the acquisition bug that occasionally plagues competitors. Rather, it has a deliberate, conservative approach that has proved successful through the boom and bust electronics cycles.

The endless Illinois cornfields encroach Chicago from all sides. Tucked in a pristine, newly built facility in the western Chicago suburbs, Morey has reached $100 million in annual revenues by feeding off Corn Belt companies situated in a roughly 300-mile radius of its Woodridge, IL, headquarters.

ImageThe 500-employee firm has a loyal Midwestern customer base, including such blue chip firms as Rockwell Collins, Caterpillar, GE, and International and Case New Holland. The company was founded in 1934 by the grandfather of its current president and chief executive, Scott Morey.

Intergenerational squabbles have a way of bringing down many family-run companies. But for Scott Morey, one of three brothers involved in the company, having the family name on the door is a blessing, not a curse.

Indeed, it’s a constant reminder, he says, “of the values my grandfather has, and my father imparted into us. In many ways [it] gives us the ability to do what we think we need to for the long term.”

In a long interview with Circuits Assembly last fall, Morey impressed upon us the importance values have in the company’s operating approach. “We all work best with companies and people with whom we share values. Who are you friends with? It’s the same with our customers.”

This thread runs deep. The company’s mission statement includes, “To serve God by living honestly, with integrity and loyalty in all of our business and personal relationships,” to which Scott Morey adds, “by conducting ourselves in accordance with Biblical guidance and principles keeps us on track in terms of doing the right things for the right reasons.”

Not many electronics companies wear their Christian values on their sleeves. Being private gives the Morey family control over such decision-making free of the pressures of buy-and-sell shareholders. It has its drawbacks too, though. It constrains growth, especially if acquisitions are desired. But while the company is “very active in terms of finding and earning new customers,” Morey says, it never harbored the desire to grow through acquisitions. “It’s not our primary path.”

Nor did the Morey brothers attain their jobs simply through genetic luck. Scott got his start hand crimping and soldering in the plant, and he and his brother Jay, a company vice president, have electrical engineering degrees. (A third brother, Dana, is also a vice president.)

And it would be likewise injudicious to reduce the firm to a handful of pithy Golden Rule philosophies. A high-energy personality, Scott Morey subscribes to Eli Goldratt’s Theory of Constraints – the idea that every organization has, at any given point in time, one key constraint that limits performance relative to its goals – and expends most of his energy identifying and attacking constraints of the business.

Under Scott Morey’s guidance, the firm is developing strategic suppliers, ideally numbering one to three for each key commodity, and signing three-year contracts under which the supplier gets 100% of the business under agreement, plus first crack at any new business. Some firms stress diversity and large numbers of customers as a financial hedge. Morey Corp. runs counter to that, preferring, says Scott, to “put all our eggs in one basket, then watch that basket.” Likewise, he expects the same from his customers. “I’m not going to invest in someone who will shop me out at every opportunity.”

Unlike many EMS firms its size, Morey Corp. is an early adopter of technologies, despite what Morey terms “a number of false starts” at new product development. The new Woodridge campus includes a 100,000 sq. ft. production facility (Figure 1) and a 27,500-sq. ft. research and development center. It boasts three double-sided SMT lines and one prototype line, featuring MPM UP 2000 printers, Panasonic placement, Electrovert OmniExcel 7/10 reflow, ERSA selective soldering and waves, a PVA conformal coater, and Chad Industries PTH inserters (Figure 2). AOI (YesTech) is offline, and test equipment includes Glenbrook Technologies x-ray, four Agilent 3070 ICTs, and a SPEA flying probe. (Morey does not clean.) All parts are barcoded for tracking, and the company averages 15 changeovers a day and about 300 work orders per month. The company has developed much of its own test equipment, perhaps to meet the operations philosophy to “test early, test often,” chimes in vice president of sales and marketing Keith Gelinas.

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Since inception, the company has been Illinois-based, having thus far resisted the call of China. In fact, Morey downplays China’s lure – “there is no cost advantage … once you add up the logistics, freight, etc.” However, he acknowledges the extent of Morey Corp.’s activities there goes beyond buying certain components such as bare boards: The company maintains partnerships in Shenzhen to support local manufacturing requirements of its customers.

“We have evaluated the cost structure of outsourcing manufacturing to China and found that it does not make sense financially for Morey to ship full assemblies to the U.S.,” Morey says. “However, it does make sense for us to manufacture in China to support our customers with manufacturing facilities there. Caterpillar has three plants in China, so it makes sense for us to be there to support them.”

Today, the company focuses on developing a range of products based on core platforms, increasingly telematics, displays and high-level controllers. “Most of our customers provide a system or an application,” Morey explains. “We make money selling hardware. As electronics become increasingly complex and component obsolescence is more a part of the design decision, it’s difficult for a company whose business is not electronics design to keep up with it. It’s hard for us to keep up.

“Portability is nearly impossible when applications software is so wedded to the hardware platform. And that’s where all your cost is. Our approach is to let our customers put their software on each new generation of hardware.” To that end, in the Richard and Gene Morey Innovation Center, named for the first two generations of the family to run the company, Morey and Caterpillar conduct joint design efforts. “We have to be experts, and better than anyone else, because if we’re not, why come to Woodridge?” Morey says.

The family line doesn't end with Scott Morey. But before his own son comes of age, there are a host of issues to tackle. Asked about the current industry state, Morey ticks off a bevy of concerns: “The educational system; the current political environment in the U.S.; the lack of seriousness about approaching the global problems we face; Islamic fundamentalism; dramatic increases in taxes.”

Those lingering issues, plus the company’s growth under his watch – roughly $90 million over 16 years – have put added pressure on Morey to deliver results. “We have 400 families that count on The Morey Corp., so there’s a tremendous amount of responsibility, but also a great opportunity to do things as we think they can be done. Managing growth is always a challenge, but it enables us to bring in a level of leadership that we could not attract at a smaller level.”

Whether that leadership will extend to the next generation of Moreys remains to be seen. Scott, who claims his own father was “neutral” on his joining the company, says it’s “impossible to say” who will next assume the reins. “We have to ensure the long-term success. If my son has the desire, appetite and ability, it would be terrific.

“But … he’s only 16,” Morey quickly quips.

Waiting shouldn’t be an issue. At The Morey Corp., being patient and keeping an eye on the distant future has proved a successful strategy for 75 years.

 

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