Fred Young & Kika Young
CEO and President at Forest City Gear
The shop was her babysitter growing up, and now Kika Young has assumed the mantle of company management from her parents, gear-industry legends Fred and Wendy Young of Forest City Gear. Learn how the family-oriented values of this company turn out world-class results.
Gear Shift: Transition to Third-Generation Management
In a family business, passing the torch to the next generation often comes with challenges, but few expect the complication of a terminal stage four cancer diagnosis.
For Fred and Wendy Young, respectively the chairman and president and CEO of Forest City Gear (FCG) in Roscoe, Illinois, the succession path seemed clear in 2019. Middle daughter Kika literally grew up in the business. The company employs about 115 people, has 40,000 sq. ft. of space between two adjacent manufacturing facilities, and is known as a world-class manufacturer of fine and medium pitch custom gears for demanding applications that include the Mars Rover.
The shop was our babysitter,
recalls Kika, now 36. At an early age, she and older sister Appy raced down the center aisle on pallet jacks, towing younger sister Mindy on a rolling caster chair tied to the back. Between races, they would steal paper clips from the supply closet office and hang daisy chains from the catwalk. On summer days, they set up a lemonade stand in the company driveway.
I'm thankful for the exposure we had to the business, which turned serious soon enough,
says Kika. We were seven, 10, and 13-years-old when we started going to the Gear Manufacturers Association meetings and attending similar events. Mom and Dad didn't get a babysitter or leave us in the hotel room. They were dragging us to these dinners and seminars with some of the upper echelon people in the industry. We interacted with many smart, well-connected people at young ages.
With neither parent inclined to focus on HR functions and the company growing from 30 to 40 to 50 people, Kika assumed the role. By early to mid-high school, she had put into place employee review practices that exist today, such as how to benchmark wages for employees. As she took on more responsibility and a bigger role within the company, the employees were receptive.
We were already in the second generation – my dad's parents founded the company in 1955 – so it felt like a normal path,” she says.
Kika obtained her B.A. and MBA from nearby Rockford University while progressing through roles that included HR director in 2010, a corporate administration role in 2013, and director of corporate management in 2018. Responsibilities by age 32 encompassed oversight and management of facilities, human resources, marketing, IT, administration, corporate policy and procedure, and community relations.
If she were not doing a good job, she would not be entrusted with greater responsibilities,
says Fred. She was ahead of her age and extremely knowledgeable in employee relations, familiar with our customers, and very comfortable speaking in front of peers who didn't know anything about gears, much less about Forest City Gear. She did a great job of presenting not only herself, but the company as well.
At the point when Wendy would be ready to step away from management of daily operations, the transition plan seemed in place. Then the world changed in March of 2020.
A New Normal
On the same day I got a call that my kids' school spring break was being extended because of COVID, our mom received a stage four cancer diagnosis,
says Kika.
Wendy suggested they sell the company, now valued at tens of millions of dollars, to avoid the conflict between siblings that statistically derails third- and fourth-generation companies. The sale would ease her mind while she battled a terminal illness, knowing that her family would be taken care of.
While the sisters had mixed feelings, they wanted to focus on their mom and help her stay as calm and relaxed as she could. As a family, they agreed to start a sale process and hired an investment banker. Unfortunately, Wendy's disease progressed rapidly, and she passed away in February 2022 at age 69.
The sales process culminated just weeks after her death, with the investment banker presenting offers from industry firms, outside companies, and private equity companies.
My job was to make a recommendation to my sisters and my dad,
says Kika. I swallowed hard and laid the sales options out in front of them and gave them my recommendation on which offer met the most of our checklist.
Kika was less than enthusiastic because, as a condition of transitioning company stewardship, the family had a list of non-negotiables that included maintaining Forest City Gear's core values. Number one on the list: Families matter ... and always will.
As she presented the sale options, the importance of that value crystalized.
My sisters also grew up in this business and love the company,” says Kika. “As they reviewed the offers, their facial expressions said, ‘This doesn't feel right. They won't treat our people like family.’ My older sister actually said, ‘Wait. Can we just not sell? Can Kika just run it like we were going to and can we just keep it in the family?’”
Fred, now 79 and with his own health issues, had his prayers answered. Kika would assume the presidency and the other sisters would also have a financial share and sit on the company board.
It was always my hope we could transition the company to family ownership,
says Fred. Fortunately, I was blessed with three very talented young ladies who had an interest in pursuing the business and helping forward it and were intimately involved in it. I was delighted that they would continue the epic journey that we've been on now for nearly 70 years.
Abiding by Family Values
Putting families first comes with a price. At FCG, that means reinvesting 10 to 25% of gross sales in people and technology, as well as making additional investments in the facilities.
Maybe some people would call us foolish, but with the way our family has run this business, the bottom line has not always been our bottom line,
says Kika. There are just certain things that matter more than money. Ironically, focusing on those things first has built a company that is stable, diversified, relatively recession-proof, and best-in-class. Making the bottom line a secondary priority actually helps the bottom line.
We invest in our employees' continuing education and training,” continues Fred. “We have some of the highest quality equipment available, but that doesn't matter if you don't educate the employees on how to use the equipment to its full capabilities.”
The company's strategy may be non-traditional, but so are results. In an industry where a scrap rate of 5% of sales is considered world-class, FCG has a scrap rate of 2.2%. That rate is even more impressive when considering the company specializes in low-volume, high-mix applications. Planned production yield (set-up loss) is even included in this calculation, making that 2.2% even more impressive.
IMTS Keeps FCG Ahead of the Curve
We can do some really cool stuff, and a lot of that is because of the equipment that we have on the floor, and we've found a lot of that equipment at IMTS,
says Kika.
IMTS is going to be the candy store where we see all the latest delicacies. I never met a gear machine I didn't want,
say Fred. We have the best gear manufacturing equipment and the highest quality inspection equipment, so that we will not miss any RFQ opportunities for manufacturing or inspection,
says Fred, who has attended the show for five decades. We have a reputation to maintain. Few other companies have the capability of manufacturing and inspecting gears to the tolerances and delivery schedules we achieve.
Kika notes that 75 or more of FCG's customers are manufacturers who have their own gear cutting capabilities.
I want to see cobots, additive, and other cool stuff, but IMTS is primarily a networking and a sales event for me,” adds Kika. “We mingle with some of the best minds in the industry. Dad always said that that industry cross-pollination is one of the best tools you can have.”
Fred's definition of cross-pollination includes collaborating with other companies, noting that FCG is often called upon to verify gear quality. With equipment such as the ZEISS ACCURA bridge-type CMM (which is accurate to about 1.5 microns by volume) and Klingelnberg P 65 precision measuring center (for just about any type of gear), FCG's inspection capabilities exceed that of almost everybody else in the industry. When it receives a request a for gear type they don't make or are a poor fit, FCG directs the prospect to others who they are sure will provide competent service.
People throw around the word networking, but it makes a big difference. By meeting people at IMTS and understanding what's in their shop, you know whom to call when you need somebody, and they learn that they can call you,” says Kika. After all, when you need a hand, family matters ... and always will.IMTS Rockstars