Just Hired 100 People in One Day with CEO of East West Manufacturing Scott Ellyson

ENGINEER welcome to this episode of the Million Dollar Mastermind. I'm Larry Wydell. And before we get started, if you want to know exactly how to win again and again, go to Wydell on winning.com forward/webinar now to watch something I've put together for you. Now let's get going into this episode of Million Dollar Mastermind.

I'm talking with Scott Ellison, co founder and CEO of East West Manufacturing. And Scott as how did you start your company 20 years ago? You know, you told us, you know, we've talked. You're up to 3,000 employees and eight facilities around the globe now.

And.

You know, it's kind of like people, you know, if they, if you know how many employees you have, you really don't have enough. You know, it's like if you know how many, if you, if you know how many offices you have, you don't have enough. It's like people say, what's your net worth? Well, if you know what your net worth is, it's probably not that much. And if you're a growing company, you just want to get a groove to where it's tough to keep up with it at all times. But it's the static, dying organizations that seem to know where all the pieces are and all the parts at every moment in time. And so right now, there's no telling how big you are and what all.

We literally hired 100 people in one day. That was two weeks ago.

Really?

Yeah, 100 people in one day in our Vietnam operation. And so, yeah, we have a lot more open positions today that we've struggled to fill, particularly across the US So we'd have a lot more employees if we could find. It's a tough, I know a lot of people are having these problems right now, and as are we. But, yeah, I don't know exactly what the numbers are, but it's well over 3,000 when you started.

How do you go now from working as a consultant with Price Waterhouse to you've got a head full of knowledge, you've got experience, you've got contacts, you probably have some friends that you've talked about the same things with. How does that now, how do you move forward? And did it take a lot of guts? You know, what did, what was the main thing it took?

Yeah, so. Well, first of all, I was, I was young, you know, so I was in my mid-20s, 26, I think, when I, I left, I left PWC to start my, to start a company with my brother in Hong Kong and with, with virtually no capital. But we knew at that point in my career, I knew a couple things. I knew the quality of manufacturing had nothing to do with location, but everything to do with making sure you understood the customer's expectations and you were able to translate that down to the factory floor. And so that comes with processes and controls and training and that sort of thing. And then I'd also learned that there's often a best place to manufacture a product across the world. And so there's products where it's most advantageous to manufacture it here, or there's other products that might be most advantageous to make in a lower cost, a lower labor cost environment. I also learned the power of having leveraging materials around manufacturing arbitrage. And so in starting a company in Hong Kong when I was 26, our goal was to help companies leverage global manufacturing and to help them drive down the overall cost of their product. And our, our initiative then was to really focus on electronics manufacturing and plastics manufacturing around the automotive aftermarket. So we started making, our first, one of our first products is making circuit boards that went into Buicks and Cadillacs for the aftermarket. Then we made cruise controls that went into Toyota Corollas and Camrys, which were installed at the port across the US and then I started working with the company that was in the air conditioning business, a company called Diversitech, that today the largest distributor manufacturing distributed air conditioning parts and products in North America. And my role with them was really to help them develop and build out product line across a number of different areas and really to complement what they were able to do in the US and so I was working with Diversitech to say, all right, here's a line of disconnect switches or thermostat guards or, you know, motors. And my job is to work with the diverse tech team to figure out where best to manufacture those products and how to create a differentiated product that would be very competitive in the market. And so that's really where we started. I started building out my kind of mission of helping companies develop and create products. And so that company grew very quickly. And then as you may remember, Larry, back In the late 90s, we were all trying to be a dot com and my brother was trying to move us in that direction. And I was very interested in continuing with manufacturing. I, I decided then I wanted to continue with Diversitech, where I was spending all my time. And so I, I left the company with my brother and I joined Diversitech as their vice president of offshore manufacturing. So I think I was 28 at the time. And, and we really hit the accelerator on that, on that, on that business model. We started developing more differentiated product, adding features, competing with a lot of other brands in the market, leveraging domestic and offshore capabilities, and really growing and accelerating that vision. It was very successful for diversetech. And so a few years later we saw the financial success this was creating for Diversitech. And and so then I, I went to the owners of Diversitech and said, hey, we want to, let's create a separate company that offers the same service to other industries in addition to air conditioning and H Vac. And initially they didn't want me going anywhere and I started. The other engineering officer in the company was my partner, Jeff Sweeney. He was representing, he ran all the domestic sites and R and D for commercial tech. And so he and I got together and said, well, we're going to turn this into a separate company company. And so after a lot of back and forth, we established a, we created east west and set up a joint venture which was a partnership between myself, Jeff and Diversitech. And they put in some capital to get us going. Jeff and I put up some capital. We, I ended up with a third of the business. Jeff has like 25% of the diverse tech had had the other half, and that was in 2015. We grew the company north of 20% a year organically for the next 15 years, doing effectively what we were doing for Diversitech, for a bunch of other companies and a lot of different industries. And then in 2015, Jeff and I purchased out all of Diversitech's interest and held 100% of the company.

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Ah, very interesting.

Yeah.

And so it's an evolution. And it's an evolution. So I've always heard and always believe that a well run company will grow as long as you're in a growing industry. You know, if the industry's dying, I don't know how, how good at what A difference it makes how well your company is run. But in the right growing industry, a well run company is going to grow. How do you, what advantages do you look for? Have you learned that gives you an extra edge on growth?

I mean we, we like to play in industries that have very strong tailwinds. And for us, those we like industries that we, where the products we manufacture are products that we really are proud of, products that we think make the world a better place and improve our lives. And so these are products that make the world smarter, safer, healthier and cleaner. And we've got hundreds of products now that would be great examples of that that we help other companies manufacture. And we're just on an inflection point now where we've developed several of our own products. In many cases, companies come to us and say, we've got an idea, we've got a product we'd like you to help us make and we'll work with them to create technology and innovation to go in those products and then have them manufactured in our facilities. And so now we've got some of our own products that we're going to be, that we're coming to the market with that are, that are also differentiated, that we're really excited about that have, you know, that you think, for example, high efficiency motors, if you know, Larry, something like 60% of our energy in our country is consumed by electric motors. And those motors are typically on average around 30 to 35% efficient. And just like LED lighting where you have your incandescent light bulb that was burning 200 watts of energy and that's being replaced by LED light bulb that burns 5 watts of energy, producing essentially the same amount of light. Motors are very similar in that you can now take a motor that's running 35% efficient, the rest being wasted energy, and replace it with a motor that can be 90% efficient. The thing that in order to make that work, the cost of that 90% efficient has to be, you know, relative. It can't be five times the price, but as soon as that price comes down to a one and a half to two times the price, you can, it's much easier to justify. And so we're, we're, we've developed a motor that's a motor platform, if you will, that where the motors just marginally more expensive than the 35% efficient motor and with a lot more features in a roughly 90% efficiency rating. And it's going to be the smallest motor in the market being able to achieve those results. And so we're really excited about the future of that technology and what we think we can do with it. And we're very differentiated in that we're a manufacturer at the core. We know how to make things and we know how to make things at a very cost competitive in a cost competitive manner. So having a product like this that's so unique and differentiated and being able to make it in such a way that we're able to, I think we're going to be. It's going to be a game changer for us.

Well, I think you definitely are and it's exciting to hear about those products being developed, even though I'm not even.

A part of it.

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