Boeing was in hyper-production mode when its union went on strike in 1989. Determined to meet customers’ demands, the aerospace giant immediately outsourced much of its in-house manufacturing operations to dozens of vendors.

Among them was a small, family-owned welding shop called ACE Clearwater Enterprises. A third-tier supplier, ACE had never done business with Boeing directly.

“We were a $10 million-a-year company, and Boeing put $10 million into our shop overnight,” says Kellie Johnson, who at the time was managing the company’s human resources and administrative functions. “We grew from 100 to 275 employees. We were out of control, hiring people without doing background research.”

Like many suppliers, ACE fell behind in its deliveries to its biggest customer.

“They weren’t happy,” Johnson recalls. Boeing sent a team of people to help manage production and insisted that Johnson’s father, Tim Dodson, put someone from the ownership team in charge of managing the Boeing program — or risk losing the business altogether.

Although Johnson was just 28 years old and had never managed a manufacturing operation, she accepted the challenge. A few days later, she received a letter from Boeing, congratulating her on being ACE’s company president. “It was the first time I’d heard my title. And I think it was the first time my dad heard it, too!” she laughs.

Rising to the Occasion

Filling her new role was like climbing Mt. Everest without an oxygen tank. “I had to confront the good-old-boy culture and prove that I was more than just Daddy’s girl,” Johnson remembers. “It was rough.”

Rougher still was actually bringing the operation under control. In her first meeting with Boeing in Seattle, Johnson went in prepared to give an overview of her company. But the customer demanded a detailed recovery plan, with promises about how and when ACE would deliver.

“I was quivering,” she says. “Four men looked across the table at me and said, ‘Your plan will never succeed.’”

A few years later, the good old boys had been proved wrong: Boeing named ACE Clearwater as its Supplier of the Year for 1994. In 1998, Lockheed/Martin made ACE one of its preferred suppliers. And in 1999, IndustryWeek named the company one of America’s top 25 most successful small manufacturers.

How did Johnson do it?

“We got more customer-focused and did what we said we would do. Our main approach was never to lie to the customer,” she replies. “I hired a right-hand man to be in charge of change and progress, and we took our team through a lot of training on things like communication skills, team working, project management, etc.” That people-focused approach is the hallmark of Johnson’s leadership. “I’m not very mechanical, but I know how to deal with people,” she says. “People, not machines, are our biggest asset; I really believe that. It’s taken me years to create the culture that we have here today — we have an incredibly diverse workforce in terms of race, gender, education, skill. It’s a great place to work.”

Taking Her Place

Johnson’s grandfather, Ray Wyckoff, a welder, started out on his own after World War II, repairing bicycle frames, coffee pots and other items in his house. When he got a contract to make 13-cent igniters for an aerospace manufacturer called Aero Jet, ACE Welding was born.

After an acquisition in the 1980s and several expansions since then, ACE Clearwater is now a fully integrated manufacturer of tubular, formed, welded and machined parts for the aerospace and power-generation industries. Major customers include Boeing, Honeywell, Lockheed Martin, Northrop Grumman and GE.

Although industry is in her blood, Johnson admits that she knew nothing about manufacturing when she decided to join the family business. She’d studied international relations and political science in college, then enrolled in graduate school to become a social worker. All through school, she worked at ACE Clearwater in administrative functions.

“There was no ‘aha’ moment,” she says of her decision to switch careers. “I finally just got it — I realized what a great opportunity it was to work at my grandfather’s company.

“It satisfies me on all levels. I feel good that we’re supporting an industry (commercial aerospace) in which the United States is a leader. I make a good living, and I’m providing good jobs for people so they can achieve their dreams — buy a home, put their kids through school, go on vacations.”

Today, she’s providing jobs for 175 people at three factories in Southern California, just a few miles from where her grandfather started the company.

Staying Home

It’s a great place to live and work, according to Johnson, who lives on a hill overlooking the Pacific Ocean and hikes for several hours each morning before going into the office.

But California, the world’s fifth largest economy, is also the most expensive state in which to conduct business. So why is ACE Clearwater still here?

Johnson hears that question often. “We get a lot of pressure from our customers to move to Mexico, but I don’t want to take jobs away from the United States,” she says. “The jobs that have gone to Mexico are now going to China, and then they’ll go to India. I don’t believe in chasing the lowest labor costs — because our cost of doing business is not labor anyway. Moving to Mexico wouldn’t necessarily make us a lower-cost provider.”

As she explains, during the recent three-year economic downturn, productivity gains allowed ACE to keep its labor costs (as a percentage of sales) flat, and the company actually reduced its costs for supplies and materials.

But, like many manufacturers, ACE faces soaring non-labor costs — workers’ compensation, health insurance, energy and regulatory compliance —which account for 50 percent of the company’s overhead. In three years, ACE’s workers’ comp premiums climbed more than 150 percent; health insurance rose 36 percent; and the other two items have increased by 27 percent.

“That makes it very hard to compete,” Johnson says. “Sometimes I wonder why I’m still here. Whenever I get an economic development brochure from another state, I think to myself, ‘The only difference between a rut and a grave are the dimensions.’”

But although she’s constantly reviewing the numbers, Johnson has, so far, been able to make a convincing business case for remaining in her home state. “I’m an optimist,” she smiles. “We have a great infrastructure here. We’re close to our customers. And we have a great workforce, too, although it’s an ongoing struggle to find skilled labor. We’ve been looking for qualified welders since last fall.”

Making a Difference

With skilled laborers in such short supply, it’s no wonder that workforce development is high on Johnson’s list of priorities. And she’s giving it much more than lip service. As a National Association of Manufacturers board member and a trustee of The Manufacturing Institute (the NAM’s research and education arm), she’s working to raise funds for and generate awareness of the organization’s Manufacturing Careers Campaign. Launched last year by the institute’s Center for Workforce Success, the campaign aims to address the root cause of the workforce shortage by promoting manufacturing as a career choice among young people.

To that end, Johnson also invites local elementary school classes to tour her factory. During a half-day field trip, the kids don safety glasses and experiment with using the welding equipment. Engineers use Mr. Potato Head to illustrate the importance of design. Managers talk about the plethora of opportunities available in manufacturing. And accountants answer the all-important question: “Where’s the money?”

“I can’t believe how smart these kids are!” Johnson enthuses. “But they have such a negative image of manufacturing — it’s the old assembly line mentality.

“One kid came in and was obviously bored with the whole thing. He asked a supervisor, ‘Why would anyone want to do this job?’ The employee answered: ‘I have a high school education, I make $72,000 a year and some of the parts I’ve made are being used on Mars.’ That’s when the kid really perked up.”

Johnson has just as much zeal in reaching out to policymakers. She participates in economic summits around California and spreads the word about the challenges manufacturers face today.

“You shouldn’t complain about something if you’re not willing to get involved,” she says. “It’s up to us, on a grassroots level, to get the message out there. That’s why I’m so proud to be involved with the NAM and The Manufacturing Institute. They’ve taught me that my voice really does make a difference.”

Allison Conte is editorial director of Leadership for Manufacturers.