Beating the Odds
Posted on Friday, January 21, 2022
By Anna Raben
Research published by the Conway Center for Family Business states that 80 to 90% of U.S. businesses are family owned. While thirty percent of these businesses reach the second generation, only ten percent make it to the third. In other words, ninety percent of all family businesses fail, dissolve, or are sold before reaching the third generation. One company beating these odds is KOCH, a turnkey provider of finishing equipment for all major coating technologies.
Five Generations Family Owned
Since its founding in 1873, KOCH has evolved through organic growth and acquisition to become one of six diverse companies which comprise Koch Enterprises. Koch Enterprises is a fifth-generation family owned and operated holding company with businesses ranging across six different market sectors. The company has been named the ninth largest privately held company in Indiana and one of the top 500 privately held businesses in the U.S. The success and longevity of the business is something that Kevin Koch, Koch Enterprises’ current president and CEO, credits to their willingness to adapt. “In the ever-changing world of business, if you don’t change with the times, you’re going to fall behind,” said Koch.
From Tin Horns to Turnkey Delivery
As client lists grew so did global reach. 1990 brought a joint venture with Page-Koch Europe Limited (now KOCH Europe), a company known for completing retrofit projects for finishing equipment in the automotive industry. KOCH Mexico was later established to provide bilingual sales and technical support and enhanced service for customers in Mexico. From 2013 - 2015, the company took on anodizing, plating, and material handling equipment through the acquisition of Price Industries and Walgren Company (now merged as PriceWalgren), as well as Jessup Engineering (now Jessup Systems).
The Foundation for Success
Over the span of 148 years, KOCH has grown into one of the finishing industry’s most diverse turnkey equipment suppliers, with a geographic reach spanning across North America and Europe. The family has operated since day one with a belief that integrity, respect for people, customer focus, continuous improvement, and community involvement should be at the core of every business decision. Integration of the unique concept of H3 Lean (Figure 1), or engagement of one’s head, hands, and heart, has been critical in shaping KOCH’s culture of personal fulfillment and organizational success. Speaking on the significance these elements play around the company, vice chairman of Koch Enterprises Jim Muehlbauer shares, “Our core values are our foundation. If we burned to the ground tomorrow and had to start over, we would turn to those core values and get to work.”
Another contributing factor to KOCH’s longevity is a strict family hiring policy enforced to foster long-term success. Koch Enterprises believes that family should be held to a higher standard than non-family; for this reason, members of the Koch family are not considered for leadership positions until they have completed two or more years of outside work experience and earned at least one promotion. Other hiring prerequisites for family members include the ability to model core company values, adhere to standard policies, and display dedication, determination, and an elevated level of commitment.
Koch Enterprises’ core values aren’t just felt internally, but by all stakeholders. One value which plays a significant role in the lives of surrounding community members is community involvement. In 1945 the Koch family started the Santa Claus Samaritans, an organization that performed a broad range of charitable work. This later became the George Koch Sons Foundation (now the Koch Foundation) and merged with The Foundation for the Arts and Sciences, another Koch family charity.
Today, the Koch Foundation’s mission is to support programs which will help communities improve their quality of life and provide the best environment for team members to live, grow, and raise their families. Over time, the foundation’s range of interests has narrowed to provide greater impact through giving. Currently the top categories of support are education, human services and arts, nature, and science. The Koch Foundation has ten directors, all but one being members of the Koch family. Through grants at 5% of the foundation’s assets, the foundation can preserve and grow to help others for the foreseeable future.
As the longest standing of Koch Enterprises’ six companies, KOCH manages to maintain a family atmosphere and culture that exudes the same passion for problem solving that started it all. The company’s consistent set of core values spans from the machine shops to the executive teams and out into the surrounding communities. By operating and growing successful businesses to create value for team members, owners, customers, suppliers, and communities, the company will remain family-owned for future generations.
Anna Raben is sales & marketing coordinator at KOCH.