- [Narrator] Production and distribution of City Club Forums on ideastream public media are made possible by PNC and the United Black Fund of Greater Cleveland Incorporated.

(upbeat music) (bell ringing) - Good afternoon and welcome to the City Club of Cleveland, where we're devoted to conversations of consequence that help democracy thrive.

It's Friday, May 19th.

My name is Dan Moulthrop.

I'm the chief executive here, and I'm pleased to introduce the first annual Ronald B. Cohen Forum on Entrepreneurship and Innovation.

(applause) Our speaker will be Eduardo Gonzalez, the President and CEO of Ferragon Corporation.

Innovation and entrepreneurship are vital parts of any functioning and growing economy or business.

And as this is the first Ron Cohen Forum, I wanna say just a quick few words about the founder of Cohen and Company.

Ron started the firm in 1977.

46 years later, they're serving clients around the world, Fortune 1000 companies and privately held small businesses, and a number in between, all of whom rely on the firm's partners for sound advice and counsel on how to grow and how to innovate and how to succeed.

We're so grateful to be able to recognize Ron Cohen's many contributions to our community with this forum today.

Now I wanna tell you a little bit about our speaker, Ed Gonzalez of Ferragon.

He's a prime example of the entrepreneurial spirit in Cleveland and the kind of entrepreneurial spirit we're trying to celebrate with the Ron Cohen Forum.

In 1983, Ed bought a failing steel company out of bankruptcy and with five employees gave it new life as Ferragon Corporation.

Today, Ferragon has facilities in Kentucky, Michigan, Mississippi, and Texas, as well as Cleveland, Ohio.

Ed came to the United States in the 1960s when his family fled Cuba, pardon me.

He went on to study economics at the University of Michigan.

And after graduating, he went to work in the steel industry.

And then of course, he started Ferragon when he was 28 years old, as all of us do at 28 years old, start steel companies.

Moderating our conversation today is Ethan Karp.

Ethan is president and CEO of MAGNET, the Manufacturing Advocacy and Growth Network.

And if you have a question for Ed, you can text it to 330-541-5794.

That's 330-541-5794.

You can also tweet your question @thecityclub and we'll work it into the second half of the program.

Members and friends of the City Club of Cleveland, please join me in welcoming Ed Gonzalez and Ethan Karp.

(applause) - It is fantastic to be with everyone today.

You are in for a real treat.

So, so Ed's stories and that bio is just so full of the entrepreneurial spirit that this inaugural forum is about, you're gonna hear it.

And the best part is, it's not well for me, I love manufacturing, it's our backbone, is this isn't about somebody that went out and started a tech company and made their app.

No, this is about the jobs that drive our economy.

This is about manufacturing innovation and entrepreneurship.

And you know, I asked Ed yesterday about, you know, how does he define entrepreneurship?

And you're gonna see this theme woven throughout.

He said, making things better, having an idea of how to make things better, the courage to do it, the know-how to do it, and the persistence to make it happen, and you're gonna hear that through and through.

But we're gonna start way back at the beginning and you told me a story and it's stuck in my head and I just see little six year old Ed sitting on the roof of a building and I'm just, I'm gonna leave it there.

And I think you might've been hiding from a family member at that point, who might've wanted to do some washing out of your mouth.

I mean, this might've been the context, but I'm gonna start there and tell us about that moment and how it leads you into the steel business.

- What he's trying to get to is how did I get here?

How did we get into the United States?

My parents were lawyers in Cuba.

We came here December 20th, 1960, which for all practical purposes would be January 1st, '61.

If any of you know anything about Cuba, Castro took over Cuba January 1st, '59.

So this is two years after Castro had taken over and my parents were under a lot of stress.

The Castro regime was trying to identify where he was, my father, the killing.

So the family had to find places to go.

My mother took the three, there were six children, three boys, three girls.

My mother took the girls and took off.

Never saw my father until December, 29th, 1960 when I got to the United States and all the boys went to my mother's cousin who had married a naval captain in the US Navy that was stationed in Guantanamo Bay.

So we got the protection of that and three months went by and my aunt and I were not seeing things correctly, and I said something she didn't like.

She goes, I'm gonna wash your mouth out.

And I climbed through the trellis up to the roof and I'm standing there waiting to see if she'd come up six years old.

And she wouldn't come up.

She goes, I'll wait you down.

I'll wait for you here.

And as that's happening, I see a car going up in driveway in the military base.

And out pops my mother with my three sisters.

We all got in the car, took off to Havana.

This is Santiago.

So Havana's at the other end of the island.

Three days later we're on a Pan-American flight and we're headed here.

And the whole time you're asking, where's your dad?

Where's your dad?

He goes, shh quiet, you don't know who's listening on this plane.

And when we got here, my dad was in Miami waiting for us.

And from there we stayed till September.

Actually it was August, August of '61.

Now you gotta think '61, the Bay of Pigs was in March and the missiles in October.

In the next, in October, right?

So, I mean, this is a stressful period of time.

We moved to Cincinnati because my father got a job teaching at an all girls Catholic university there.

And we stayed there till I got in the car to go to the University of Michigan.

That day I got in the car to go to Michigan my parents were in the car headed to California, and I never lived home again.

As an 18 year old I went there, I graduated from Michigan, then basically started my journey to, I married my high school sweetheart Jenna.

She was one year behind me.

She was at the University of Cincinnati.

So I promised her after I graduated a year earlier than her, I promised her that I would move to Cincinnati and be with her.

We got married right at, she graduated in June of '77 and we were married in July and now we have four kids and 11 grandkids.

But I promised her I would go to Cincinnati for a year, let her get acclimated cuz nobody in her family had ever moved outta Cincinnati.

Nobody.

And I was gonna take her to Cleveland.

The reason I went to Cleveland, I don't know if you guys wanna hear this stuff.

- The reason they wanna hear this stuff, wait, alright, I promise.

- I will tell you this, the reason I'm in the steel business, cuz I'm an econ major with some accounting.

You can't really start a business unless you know a little bit of both of those things, right?

And I got hired by Ernst and Ernst at the time, and they were gonna make me an accountant.

Go figure, that ain't ever gonna happen.

I'm just not that deep tailed enough.

Don't have the patience sort of metic- - Remember they sponsor of this event, right?

(laughing) - Well one of the reasons I got them is because they were the best.

They are still the best, Cohen and Company and all those guys you got working over there, they're the best.

But anyway, I was making a thousand dollars a month and my college roommate was in the steel business up here, and his father says, see if Ed will come up and work in the steel business, I'll offer him $2,000 a month.

That's a hundred percent increase in wages.

I gave my notice, I'm out of the accounting business and I'm headed to the steel business.

And ever since then I fell in love with it actually.

I fell in love with manufacturing and I got it.

When you look around, you know, one of the things about an entrepreneur, I was thinking about what really is an entrepreneur?

And you have different definitions that are floating around out there.

You can look at Miriam Webster, you can look at Wikipedia, and it has a definition, and I guess I'm okay with it.

The definition that's out there says a person who's willing to take risks that nobody else is willing to do.

And I mean, that's the definition in Miriam Webster.

And I'm thinking, well okay, but then you gotta ask yourself, well why is he, the entrepreneur gonna take those risks?

Is he dumber?

(laughing) I mean the whole investment community doesn't think it should be done.

So why is an entrepreneur willing to take a bigger risk than anyone else?

And the answer to that is because he sees opportunities, he sees the solutions to opportunities and problems completely different than anybody else.

He sees the solution, while the other people, the majority of the people, only see the risks.

And if he has enough confidence, persistence, and is willing to surround himself, willing and capable, surround himself with good people, good professionals, accountants, lawyers, and of course a bank.

You gotta treat your bank like your best customer by the way.

That's a piece of advice I'll give everybody.

Treat your bank like your best customer because you're always gonna need 'em.

They always have to be there.

But anyway, if you have that confidence, then nothing scares you, you'll go out and you will see something that nobody else sees.

I'm gonna give you an example.

Jeff Bezos, the richest man in the world.

You know the business that he's in is probably one of the oldest businesses in the world.

It's transportation and distribution.

That's the business he's in.

It's been around for 4,000 years since the Phoenicians decided to trade in the Middle East, right?

This guy is so innovative that he figured out how to do it better than anybody else.

I mean, Amazon's what, 15 years old?

20 years old.

You're talking about a guy in a business that has been around forever, but he looked at all the problems associated with connecting the dots.

And he says, I think I can do that better than anybody else.

So here we have, who doesn't use Amazon?

Who goes shopping anymore?

And then of course, then you got the tech guys, but they're in a different world, they see communications different.

They see the interactions of, they see providing a service for free, but making the money on the advertising.

They see things, they see solutions and problems differently than anybody else (indiscernible) - But that's what you started doing when you first got in the steel business, right?

- Yeah I mean in the steel business all my competitors were publicly traded practically.

And when I'm thinking about these things, people are looking at you and going, you're gonna take on publicly traded companies.

You think you can do that?

And where this other guy is entrenched?

Yeah.

And I said, yeah, I think so because he forgot this, that and the other.

At the end of the day, you've gotta have better quality, better service, a greater relationship, a lower cost in order to get business.

And the ideal is to have all four, right?

Because that's what everybody bases their buying decisions on that.

And if you can figure that out, where others can't, there'll always be an opportunity for you to make the profits and be a successful entrepreneur.

- I mean, that is so clear in how you, that 1983 date, there's a story here right?

So you're working your way up in this steel business, right?

You're applying these principles on the shop floor improving every day and you rose up.

Just talk a little bit about that.

- Well 1983, I'm gonna tell you another qualification that an entrepreneur has to have.

He has to be able to take advice and counsel, not to make decisions, but to help you in your decision making.

Because remember, the difference between you and the people that work with you or for you is that they don't see the same things you do.

But you have to challenge yourself.

You have to just, okay, I have an idea, I think I have those solutions.

Challenge yourself and make sure that you're getting honest counsel, not confirmation.

I've already made up my mind and all these guys are just gonna come tell me what I want to hear, right?

You have to have people that are confident enough to challenge it, listen to it, interpret it, and go on.

Now why does that come into play?

I'm gonna tell you why it comes into play.

Because the world is ever changing.

Even in steel.

I'm gonna tell you some immense changes in the steel business.

Old industry, everybody thinks it's easy to be in the steel business.

Well it's not, it's changing every day, just like everything else we're involved with, right?

I started in 1983, China was producing 41 million tons.

China now produces 1 billion, 100 million tons.

In that 40 year period, China was producing 4% of the world's steel.

China now produces more steel than the rest of the world combined.

Okay?

Now what's happened that's influenced manufacturing in Ohio cuz it shifted all the light manufacturing to China, the light manufacturing machine tool industry.

You think about all the, Warner, Swayze, all the machine tools that used to be making, White.

And we had all these steel mills.

When I started in '83, the United States made 74 million tons, metric tons, and now they're at 90.

It's not that significant of an increase, think of 41 versus 1 billion, 100 million tons and the impact that that has had on me.

So it started, not only me, but everybody in the steel industry in this part of the country right, and actually in the entire country.

You've had to reinvent yourself.

So this ever-changing world, you cannot be afraid of it.

There is a temptation for non-entrepreneurial peoples to take a look at life and say, I'm gonna protect what I have, I don't want to change, I'm gonna ride the existing.

The best they'll do is manage the existing.

Entrepreneurs, successful business people have to obviously man the existing, but you constantly have to plan for the future and it is an ever-changing future.

So you had the China effect.

You had, listen, I don't know if you guys know this, but every pound of steel in the United States in 1993 was produced by integrated producers.

Integrated producers.

Cleveland had two big operating mills.

Okay?

Now they have one half of one.

- Can you tell us the implication about having an integrated versus not?

- Well okay, the integrators use iron ore to make molten metal and now over 60% of the steels made by mini mills, which start with scrap.

A hundred percent of the steel mill making not a hundred, let's say 90% of the steel making was Great Lakes region, Cleveland.

That's why I'm in Cleveland, right?

Great solid community of steel making and manufacturing.

Well, it's shifting now, 60% of the steel, there's hardly any Great Lakes mills.

There's US Steel Gary and then the Cliffs mills.

That's it, there's two mills.

Take Canada away.

Now the mini mills that control or dominate, they're the dominant price leader and thought leader in the industry and they're in all farming communities.

So you have to say to yourself, okay, and by the way, here's the other landscape thing, and this gets in the ever-changing world, you have to manage for that.

The temptation is just to sit tight, suck up all your profits as long as you can, but that's not gonna last if you're not innovating, if you're not innovating and changing with the markets, you're gonna be dead.

At some point you're gonna die in business.

The other thing that happened, aside from the China impact and from the steel industry changing from integrated to many, just think of just recently, ice vehicles versus EV.

All the metals and all the components that go inside that vehicle have changed dramatically.

The steel industry is no longer low carbon, malleable, formidable steel.

It's gotta be super high strength, not high strength, super high strength, super safe and lightweight.

That's the thing.

So if you had a steel making operation that addressed structural quality and low carbon steels, and today you are dead man walking if you're not making your way into the lighter, stronger, safer products.

That's another innovation that you have to be attentive to.

Geographically, the things move all over the place, right?

Heavy manufacturer, medium manufacturer, light manufacturing.

This was a huge community.

Cleveland had five stamping plants.

A stamping plant for an automotive company is the guy who's using the steel up.

The rest of the automotive industry is made up of assembly plants.

Okay?

So you have stampers and you have assembly.

What you want, if you're in the metals industry is stamping.

You want a robust stamping community cuz you're gonna ship there all the time.

Cleveland 1993 had five, had four Welling Hills, Chrysler, Twinsburg, GM, Mansfield, GM, Parma, and GM, Lordstown.

Five.

You know how many exist today?

UNO.

One.

So that means that everybody was, and by the way, those are only the direct automotive stampers.

Think of all the support industry they had around them.

All those guys are gone.

So what we've had to do, again I think these are key and crucial to an innovative entrepreneur, you look at it and say, well how in the heck is this thing going to restructure?

What are the products I can defend?

What are the markets I can attack?

Let's think about that.

Then it comes the hard decision.

Do I have to invest in additional capital in order to address those market needs or this product development that needs to be happening?

And oftentimes the longer you've been around, the more you don't want to, you don't wanna take additional risks.

I will say that one of the personality traits of an entrepreneur risk, don't deter him.

They just look at life different.

- Sorry- - And they concentrate.

They concentrate on setting up the organization to attack and defend the markets.

And then of course, if you're gonna manufacture 'em, you gotta deal with process, you gotta deal with people, you gotta deal with materials, and machinery and you have to invest in all of 'em.

- So in '83 you've risen up in the company that hired you initially.

- Yeah.

- You see this opportunity to change some things, add some technology.

You actually, because of your performance of that company, put the company into bankruptcy that you then identified, purchased, five people built up, put the original company out of business that you were working for and reinvented yourself to adapt to these changes.

What's that like?

Like what does that feel like?

And and what's it like to be reinventing all the time in that way?

- I don't see any way around it.

You have to do the reinvention.

You just have to.

You have to adapt to the realities of the world, the way they are now or the way they're gonna be evolving.

But he's right about, I was working for a company that didn't see the things that I was seeing.

And I saw that there was a risk if somebody bought the plant that I'm in here in Cleveland.

I went to the ownership group and I said we ought to buy them.

He goes you've been in the steel business five years in '78 to '82 at that time, '83.

He goes, what the heck do you know?

You know, I've been in it for years.

I said, well, I think we ought to do it and he said no.

So I got my money together, went to Reid, was one of the original partners for Cohen, this guy right here, and I was lucky enough to be alerted that Cohen was the best small business accounting firm.

Prior to that, by the way, for you prospective entrepreneurs, I had gone to every bank.

I had $85,000 I had saved.

Okay?

And I went to the bank, 50 of it, 35 was mine, 50 of it my dad borrowed on a house, took a second mortgage, which I of course paid back at multifold.

And I was going to banks myself, trying to get somebody to loan me to, well I thought was all I was gonna need because I was gonna go in there and buy the equipment.

Couldn't get anywhere.

And I was climbing over a fence to look at a piece of property that, because you know it was locked, and I thought well, I go look in there on a Saturday and the owner came running out, what are you doing?

Thought I was gonna go in there to steal and I said, look you're kind of gated up.

I want to see if that will facilitate my operation cuz I'm gonna by the equipment move it over.

He sat down, you remember him, Alan Pearson.

And as he was talking to me, he says, you need a good accountant.

And I said, okay.

(laughing) He says, I know exactly the guy you need.

He works for Cohen.

I'm not kidding you.

And he says, Reed McGivney, he gives me his name, I take it down, I call him.

And I never went to a bank again.

He had the banks at his office listening to our deal.

So within three months we had a deal and I was in business.

I went in, he was my surrogate bidder on the equipment cuz my competitors, I didn't want 'em to know that I was going back in business cuz if they did, they would obstruct and bid the equipment up and so on.

And I drove 'em out of business eventually.

Yep.

It took me five years, but they were gone.

So was everybody else.

- So that reinvention, can you just try describe real quickly, like the phases of that reinvention, because they were different, you didn't do the same thing over and over.

- No, you have to adjust.

The reinvention is not, I think I'll just change things.

Your reinvention is driven by how the market and the products are changing.

Remember, we all live no matter what we're doing out there in an ever-changing world.

And you're going to change or somebody else will, right?

And that person is going to beat you at all times.

And since this market was shrinking, you have to say to yourself and go, okay, I not only have to make different products, but I gotta figure out how to take the limited amount to shrinking market share from people that are gonna hold onto it for dear life.

And you have to have that plan.

So really it's just listen to your markets, get up in the morning, think about it.

I get up in the morning and it's kind of weird.

I go to bed thinking about stuff.

I wake up thinking about stuff and I come in half the times, implement 'em.

So you just have to continuously think about your business.

This stuff about I'll work Monday through Fridays for eight, 10 hours, that that ain't never gonna work.

At least it doesn't work for me.

- So I asked you a question about success, right?

Because you're doing these fantastic things, five people, you now have hundreds, right?

You've built many plants and you were specific to say, Hey look, I like building these things, not just buying them.

I wanna create that value.

Describe what you see as success or I would say generally entrepreneurs, but like you personally.

How do you see yourself as successful in the world?

- This sounds cliche, successful in the world is having a great family.

If you have that you get to enjoy all of life.

Good, supportive- It does, I know this sounds like you're saying good supportive wife that will dedicate herself to the kids so that it takes that stress out of your life.

He goes, you're gonna spend most of your life, if you're an entrepreneur, you're working, you're gonna be working a lot.

And she has to figure out how to mold that so that you are still enjoying the fruits of a family.

That's gonna be success.

If you can pull the family, you can pull the business off, you've accomplished a lot in life because oftentimes one of 'em suffers.

And so, you know, I mean, it's not that complicated for me of success in a business is running a profitable operation, getting the right returns on your assets invested.

I mean there's no other success other than that in business.

- So I'm gonna push back on you on that because when you walked around your plant yesterday with me, I've walked around a lot of plants, right?

And owners often know their people, say hi to their people.

But the genuineness of the folks who were seeing you, I mean, this was greeting a friend.

This was a genuine smile.

Multiple languages being spoken that you were speaking to people about I don't know what.

They're days, it was not all business related.

So there's something deep here though about respect and fairness and the livelihoods of all the folks that you employ.

Can you just talk a little bit about how that fits into your overall journey, right?

- Yeah.

Well you have to surround yourself with great people and you start with the interview process of identifying what the criteria are for a great person.

And you start with character and integrity, hard work.

Does he work well with other people?

Is he resourceful?

He or she.

Have no prejudices at all.

Just evaluate 'em right down and whoever is best at that get it.

So you gotta to surround yourself with great people, but here's the last piece.

Even if you go through the process of recruiting, interviewing, hiring, training, then it comes to this last piece.

And that's where the way to run an enduring business is those great people have to stay there.

You have to figure out a way to retain.

So it's recruit, interview, hire, train and retain.

The retain is the last one.

The only way you're gonna retain people and you know this, this is not something, but you have to dedicate yourself to it.

And you have to look for opportunities to demonstrate that is as is you have to treat 'em fair.

And that fairness thing applies to every level of your organization.

You have to be honest with them.

You have to understand what and have a compassion for what they're doing.

And of course the utmost respect.

And it has to be consistent.

It cannot be, well, I like and respect these guys, don't that guy or this girl, whatever.

And the best person for the job, gets the job and give every single person an opportunity to excel.

Every single one of 'em.

Comes in your office, you're gonna find that a lot of people they get to a point that's where they want to go.

They don't wanna go anywhere else.

They are perfectly happy.

You know how I know that?

Cuz they're eligible to bid up to another job and they, you try to encourage 'em, they go, nope.

Dude, you're gonna earn 15% more.

Nope, I'm staying right here.

I know you can do it.

I'll spend the time training.

No, no, no, I'll stay right here.

And that's okay.

You need people in every type of job.

So respect, treat 'em fairly.

Never ask anyone to do anything you wouldn't do.

Be compassionate for the things that hurt them.

At least in today's world, you're gonna experience 40 to 50% divorce rates.

So divorces are catastrophic for people.

All the things you have to deal with there, time off, you have to manage through that.

Can't treat management better than the hourly employees, but I could go on and on about that.

Fairness, respect, they're the two greatest thing.

You get that, they'll run through a wall for you.

- I just think it was so clear as day that you talk about building these businesses, but they're full of people whose livelihoods you've touched.

So, my last question here is around Cleveland, right?

You talked about the history of manufacturing and we do know that there's thriving manufacturing here, but those particular industries have changed, left, moved.

You are still here.

- Yeah.

- You've reinvented yourself.

Talk about why Cleveland, why didn't you just give up this plant and go build somewhere else?

Well, I mean, you built somewhere else, but you kept this one at the core.

- Well Cleveland has been stressful because like I said the driving metalworking community left four fifths of the standing plants and everything associated with 'em has pretty much had to leave.

So it's been challenging to retain manufacturing.

And you had to, like I said, you had to pay attention to how it was gonna be evolved and whether there were products or services you could defend and attack market share and build it.

And then try to create more revenue producing operations that match up with that.

That has to happen.

If you think about Ohio, and by the way, all the manufacturing, Ohio's been devastated by it.

I mean it's throughout the state.

Cleveland probably more than any of them.

In '83 I think Cleveland was the biggest city in Ohio.

I think now we're third.

We just lost a congressional seat in the state of Ohio.

Ohio was a manufacturing community.

I see Ohio now and I know you don't want to hear this, but that's the way I see it, I see it as a healthcare community.

And now as a result of Mike DeWine and Housted convinced Intel to put in the biggest chip manufacturing plant in the state of Ohio, if you close your eyes, I was at a fundraiser with those guys not too long ago, and I told 'em, I said, what the heck did you guys do?

I mean, every city in the world was after this plant.

Every city in the world.

Even in the United States and all over the world, we're looking for this.

This is the world's largest chip manufacturing company is going be in Ohio, outside Columbus.

So they pull it off.

Now that to me is gonna restructure Ohio completely and it's gonna affect the manufacturing because technology has to be adopted in order to be more competitive in manufacturing.

Now we have, I think there's gonna be a huge mushrooming of opportunities in development associated with this IT that's going in Columbus.

They've already announced a phase two.

Guys, we're all gonna be influenced by that.

So in my opinion, manufacturing has been under stress.

I don't think it's ever gonna come back from the automotive industry.

And there's a reason for that.

But because we still build, we're building more vehicles in this country than we did in '83.

They're just not being built, they're not being stamped here in Ohio and they're not being assembled here in Ohio.

There's a reason for that, unfortunately.

I think, if you want my opinion- (laughing) - Well how about we save that one for the questions everyone, I guarantee you ask these questions, you're gonna get very, very blunt responses.

they're very good responses and stories.

Ed, this is fabulous.

Like I said at the beginning, your idea of persistence, seeing things that need to be better, having the know-how and courage to do it, you really exemplify that.

And we are going to switch to questions from our audience right now.

So this Q and A, again, I'm Ethan Karp, president and CEO of MAGNET, and we are joined by Ed Gonzalez, president and CEO of Ferragon Corporation.

We welcome questions from everyone, City Club members, guests, students in our audience.

I know we have some alumni of Breakthrough and we have from MAGNET's apprenticeship program, early college career.

We have some students from high school.

We also have many joining via livestream @cityclub.org and live broadcast radio at 89.7 WKSU ideastream Public Media.

If you'd like to tweet a question for our speaker, please tweet @thecityclub.

You can also text your question to 330-541-5794.

Again, that's 330-541-5794 and City Club staff will try to work it into the program.

May we have the first question?

- Please tell me how being an immigrant shaped your viewpoint and contributed to your success.

- Being an immigrant does this to you I think, at least it did this to me.

When you saw the struggles of your parents and what you went through to get here, there ain't much that scares you.

So it gives you a sense of there's nothing gonna be that difficult.

So I think the greatest impact that being an immigrant does to you is it gives you strength and confidence that you can overcome any obstacle.

- Mr. Gonzalez, you've had a remarkable success.

Is there any government programs that you feel were particularly helpful?

Were there any government programs that you felt were particularly harmful in that success?

- The SBA was always a good organization.

It but for young entrepreneurs who think, well, I'll just get an SBA guarantee loan, your sales pitch, which we did, the original loan was an SBA guarantee loan, but your first sales pitch is to the bank.

Because if the bank, all they're gonna do is guarantee the loan, they're not gonna give you the money.

The SBAs not gonna give you enough money to get into manufacturing.

You have to convince a bank with a full business plan to support you.

And then the SBA comes back and helps that reduce their risk.

And after you've been successful three or four times, five or so, so many years, you've overcome cycles.

Then the bank drops that requirement kind of.

They do, they drop that requirement and they really are listening to you because by that time you've proven that you know what you're doing, you know how to assess risk and manage 'em and run a profitable operation.

So I like the SBA.

As far as, and Reid you gotta help me with this, if you have a difference of opinion, but of the government agencies that have been problematic, I don't know of any.

People in my position will say, oh, that EPA is a pain in a butt.

I've never found 'em to be a pain in a butt.

They'll work with you, they'll try to help you.

They're raising the right issues.

I certainly don't want to pollute the environment.

I want assistance in that, help me out.

So I've never, OSHA same thing.

I always wanna run the safest organization possible.

Nothing hurts you more than one of your employees getting hurt.

I don't know of any government agency that I've had a problem with, not one.

- I will add walking through your plant, right?

Folks, these are massive plants and massive steel rolls and this is very large scale things.

And you walk in there and he has bays of putting tens of millions of dollars I'm sure in there sparkling white that he's revamping.

You talk about the pollution working with the government, but you also are at the front end of saying what's right for my employees, what's right for my technology and all those sorts of things.

So next question please.

- Thank you.

Ed, workforce is the buzzword nowadays because we either have it or we don't have it.

You and I have had conversations about immigration and how maybe that could be a solution.

Can you give us your views on how to reform it?

How to help?

How to make it better?

(laughing) - Political question.

No, well obviously being an immigrant and knowing full well that almost everybody here is (indiscernible) is immigrant as well.

I'm always gonna be pro-immigrant.

But I do think the subject, look, I think it's a talking point for both parties and they don't want to really address a problem.

Cause I bet if 20 of us got in a room together, we'd come up with a plan.

We really would.

I mean, any 20, just grab 20 here, get 'em in a room and we're gonna come up with a solution.

Okay?

That's gonna be reasonable.

And it always starts with this, and by the way, if we did, we all need employees.

Does anybody in restaurants, retailers, manufacturing, everybody needs employees.

And we're sitting here saying, well, we wanna prevent or obstruct the people coming.

We all wanna be legal.

They all have to be legal.

So the first thing you gotta do is start with how many do I want to come in legal or illegal?

Doesn't matter.

When you start with that number, then you gotta set up the organization to vet 'em because we only want good people here.

And good people is a definition of a hard work and honest, not a criminal.

But anyway, if we had more people, look, I have 23 immigrant classes in my company, 23, and this is a small company, 300 people, whatever, 23 immigrant classes.

And I don't mean that their parents were born there.

I'm talking about they were born there.

I can go right down the list of thinking of it.

So I think the word got out that we're immigrant friendly over there.

So, and by the way, some of those guys are incredible.

I mean incredible.

Talent and work ethic and integrity and attention to detail.

I mean, they are crazy.

You hate losing them.

They don't leave their job, take their lunch breaks at their machine.

I mean, it's like crazy.

- You also treat them well.

I mean pay is a big deal here in all these feeds.

Yeah, I mean what's your guess around your starting wages for- - It's over 20 and then we train from there to up to 30.

We have a very formal training program that is unusual.

I think that's one of the most unusual things I ask colleagues of mine in the industry.

I don't think anybody has the training program that we have.

And that's another thing that a blue collar guy wants from you.

And don't forget, the typical blue collar, not all of them, but the typical blue collar guy has been told that he is, I don't wanna say a failure, although some of 'em have been told they're a failure, if they don't go to college or if they don't aspire to do something else, right?

And they're coming in with no skills and high school diploma and they struggle to get that, right?

The thing that will give them the highest level of pride is if you help 'em develop a particular skill and you go through the process and then you show them how skillful they are.

Some of these guys can't even read or write well.

They can't take an essay question correctly.

So we'll give it to him a verbal, but once, once you, it's 200 questions.

So we'll train the guy and we'll spend the time and we'll test him because the only way to verify learning is through a test, right?

There's people who say, well, train, train, train, train.

The guy leaves out the shop he goes.

Gave him a test and he doesn't know a single thing that's relevant.

So we'll continuously test and if he doesn't get it, we'll instruct him and so on.

But once you give him that, look, here's, here it is.

You can take that anywhere in the United States that's in the my line of business and you show 'em this test score that you know the answers to all this, I guarantee it they're gonna hire you.

Those guys love that because you've now given 'em a skill and you've worked with their brain and their self-esteem.

- Hi, I'm Brandon Peck, I'm with Breakthrough Alumni.

I'm also a owner of a video and photo company in Cleveland, Ohio and just wanna say thank you for coming out and sharing your story, your success about your rise in the manufacturing industry.

You spoke on innovation and that without it, you're essentially a dead man walking in your industry.

I was wondering if you could share your thoughts on the rise of AI technology and how it's affecting industries across the world.

- That's a great question.

That is a great question because we identified that as a very helpful tool if we had it.

Now I have an operation in Detroit, Gibralter, Michigan, but that's Detroit.

It's a huge operation.

600,000 square feet on 40 acres that has the most innovative piece of equipment in the world.

We Ferragon Corporation in (indiscernible) has the most technologically advanced heat treat line, I'm serious, in the world.

It's the only one that's hydrogen quenched.

All the other heat treat lines, US Steels, Cliffs, everybody else, SSAB in Europe, they are water quench.

The company that we work with, which is the world's greatest.

They are recognized as the foremost authority on heat treating.

So there's an Austria company called Edar, they designed this, we work together to design it.

We got it in place up there.

Now that line is the one that produces lighter, stronger, safer materials, which is the evolution of where we're all headed with steels, right?

And we are the first toll processor in this hemisphere actually, but in this country, who thought it was a good risk to take.

Jury's still out on that.

Okay, cuz it's a lot more complex to bring that into operation, but lemme tell you what we did.

First of all, you take a piece of steel and you bring it up to an elevated temperature and it's going at a particular speed.

Remember it's so thick and so wide and the chemistry inside is different.

You got chemistry inside is different.

It's the variation in thickness, the variation in width, the line speed you go and the temperature you hit it and it goes through three different distinct zones.

You have a heat treat, then you have quench, then you have post heat treat and final cool in and out that comes.

Hopefully by the grace of God, you have a piece of steel that meets all the properties and conforms to all the requirements of the customer.

Well tweaking all that stuff.

So they have 72 burners, three different quench components.

The what's called the over aging section.

It has a whole bunch of complications, valves opening and closing and speed.

All kinds of stuff happening.

We went to Case Western Reserve and the Colorado School of Mining and said, would you work with us to create a program so that we just put the inputs and all these things happen by themselves.

And then not only that, if something changes, that's where the AI comes into place and that's why we need it.

We talked to the dean of engineering at Case and at Colorado School of Mining and said well I need you to build the logic so that if I put inputs and I want a particular outcome that's different than the other one, will it make the adjustments?

In other words, does it have the metallurgical knowledge to make those adjustments?

I'm here to tell you that both of them gave up.

He said it's too tough.

So we basically are ground zero even though we work with 'em for a year trying to figure that out.

It also broke down because then there's a conversation, well who owns the intellectual property once it's developed?

So at some point, once they start making prize, they go, well, you know, I want some of the intellectual property rights.

And you go, hold on a minute big guy.

I'm the one that's paying for all this.

(laughing) No, it's gonna be mine.

Right?

Gonna be mine when we get done with it.

No so, but it's very difficult.

AI has a future.

I can see it.

We saw it, but it's not gonna be easy.

It's not gonna be easy to implement when you have so many input variables going into the production of a conforming output product.

Not gonna be easy.

- That is a brilliant example of in manufacturing, these are the types of technological challenges that are being innovated on, right?

These are what the entrepreneurs are working on because it's really hard to do, but it will revolutionize.

That's this whole industry 4.0 thing you hear about, right?

That you Ed, that is such a great example of it.

Next question.

- I'm Jose Feliciano, and Ed knows, that the remainder know it And at the risk of being a one trick pony, I'm interested in expanding the entrepreneurial spirit in the Hispanic community.

So, and from my perspective, I've taken the advocacy role, all right?

And I feel that I have met with limited results both in the broader community and like you were saying, especially with the governmental community.

So what is it that I should be thinking about and others in my situation to help increase the entrepreneurial spirit in the Hispanic community?

- Jose, you may not like this answer, but I don't think you can.

I think entrepreneurs, it's in their soul.

Once they get into business, yeah and listen, I broke my femur, I'll tell you how crazy.

And I think everybody like me is this way.

I broke my femur in a championship game in the eighth grade and they put me in bed for 10 weeks cuz breaking your femur as a kid, all kinds of bad things could happen.

And I didn't go to school for 10 weeks and homework had to be brought to me.

And my dad would come in and say, son, is there anything I could get you?

And I said, yeah, how to start my own business.

So I'm the eighth grade trying to think this, right?

And he goes, well, what kind of business?

And I said, well, I guess farming.

(laughing) He goes okay, I'll bring you farming books and books on starting a business.

I think entrepreneurial spirit is in the people, but whether you're gonna be successful or not, I'm telling you it depends on, he sees solutions to problems and opportunities that nobody else is seeing.

When he looks at something, he goes I can do that.

And I have the requirements to be successful is you gotta know basic accounting.

You've gotta know basic economics.

You really do.

If you don't, you better have a lot of people.

I don't think an entrepreneur cannot have those and be successful.

He's gotta have some, you gotta know if your demand curve is flat, if it's inelastic, elastic, marginal returns, where do I price these things at?

And the debits and credits and liabilities and that you have to know how your decisions are gonna influence your income statement and your balance sheet.

- How you doing?

My name's Emmanuel Gainer.

My question is, as an experienced entrepreneur, what what would you say is a hard truth for new entrepreneurs that they need to get through their heads if they want to continue with that career path?

- My council is don't be deterred.

If you're the guy that I just talked about, the person who genuinely sees a solution to an opportunity that's different than what's being discussed.

You know how to do this, you figured it out and you're looking at it, like I said, like Jeff Bezo saw it, or the information guys or Steven Jobs or Bill Gates or anybody they see things that nobody else is seeing.

Okay?

If you have that, I'm gonna tell you what you gotta have and you gotta be persistent.

You cannot be discouraged when you know you're right.

And I say that because you will be opposed.

The first level of opposition to you and fight you're gonna have is with your competitors.

They are going to fight you tooth and nail.

If you think you got a better business plan and so on.

So persistence to me is incredibly important.

Don't be deterred.

Don't be discouraged by the fact that you have opposition.

Your consulting group, the consulting group that I talked about, listen to 'em, but they're not gonna make your decision.

You just, what the value I've seen in them is that they force me to evaluate everything.

Did I actually think of everything or did I overlook something?

And these two words don't ever confuse.

There's a difference between I am confident and I am stubborn.

(laughing) Okay?

- Where's the line?

(laughing) - Be careful with that one.

That one will get you in trouble.

(laughing) - Next question.

From right here.

- So we have a text question.

Based on your sector and the business coming to Ferragon, where is the economy headed?

And do business owners like you worry about the debt ceiling debate?

- Yeah, we always, of course we all should worry about the debt ceiling debate.

Can we do anything about it?

Nope.

(laughing) I had a son who tried to get involved in solutions and he ran up against a brick wall.

So, and he was part of the organization up there.

So let's hope it gets resolved.

As far as the economy of the United States, I think there's a lot of great things happening in the United States.

I'm incredibly bullish.

I think manufacturing may start to come back a little bit.

Technology is certainly coming back.

I just told you about Intel.

Remember everybody was putting these plants overseas in Asia.

Now that Intel's just started something, a trend maybe.

The economy of the United States.

One thing that I don't know how it's gonna play out is commercial and retail construction.

Because what COVID did to all of us is they made us realize we can do certain things without going to an office building.

And what Amazon did is convinced everybody they don't have to have a store.

Okay?

So those two things, that commercial, industrial construction industry that's gonna be under some stress.

Oil country is gonna be under stress, but it's not in my lifetime.

Maybe in his, but we're not getting rid of fossil fuels.

- Next question.

- Hello, my name is Isaiah Jenkins with Breakthrough.

So I listened to you talk, you told us your story from start to finish from working in the college dorm thousand to 2000 to now.

And clearly the growth has been exponential.

But I wanted to know what kept you going throughout the whole process, all the little in betweens when things got tough, when things were going well, what was it that kept you moving and helped you stay focused on the goal?

- Like I said, there's no substitute.

I'm serious.

It sounds cliche.

There's no substitute for a stable, peaceful home life.

No entrepreneur can come home and fight the family after they've spent 12, 14 hours a day fighting the marketplace.

It's tough.

- We have a text question that's a direct follow up to that answer.

You say finding a good wife to stay home with the kids, but not all entrepreneurs are men.

How can we all better support women?

(applause) - And wait a minute, say that again, I didn't say so home with the kids.

I said a family life and you implied that it meant she had to stay home.

She's a schoolteacher by the way.

She graduated third in her class.

She was a lot smarter than I am.

- That's great.

- I was a C student.

- So the question is, how can we support women as entrepreneurs?

- Women are not all the same any more than men are, right?

Some of 'em want to aspire to do lots of things and society is stupid if they don't let 'em, support 'em, give 'em the opportunities.

But don't think that all of 'em wanna do that anymore than that guy wants to get off (indiscernible).

Some of 'em enjoy the heck out of raising kids and they can't think of anything but raising kids.

Like I said, my wife is graduated third in her class and I don't know, 3.8.

I got a daughter that was Magna Cum Laude, Sigma Cum Laude at Leola.

- How about some advice for the entrepreneur who's trying to slow down?

Do you see that in your life?

(laughing) And how do you think you'll handle that?

- Oh, is that a hint to me?

(laughing) Are you talking to me?

- I'm talking to you.

- You talking to me?

Dis somebody tell you- - And secondly, as you're thinking of that, you work hard, play hard.

Where is your very famous and favorite place to go that you can relax?

- Okay, okay, okay.

If an entrepreneur wants to slow down and the business has been as prospered because of entrepreneurial innovation, sell it.

Okay?

Get the cash and distribute the cash later.

Because remember, if the prosperity was dependent upon innovation and entrepreneurship, it is very unlikely that there's another entrepreneur in your company.

So if the success of that and the prosperity is dependent on that, then sell it, give 'em the money.

But if it isn't, it isn't dependent, it's just dependent on good management in place, then you can decide at some other things.

I forget the second phase of that question.

- You haven't sold your business?

- No, I have not sold my business because I don't know that I, when I get tired, I see a bunch of opportunities in my head.

Drives my guys crazy by the way.

My bank kind of likes it cuz I've always paid them, even during the tough times.

2008, 2020.

They've always gotten the principle interest so- - And the last question was, what's your favorite place to go relax?

- Oh, in Ohio, Putin Bay.

But the winters in Naples aren't that tough.

(laughing) (applause) - Thank you so much Ed Gonzalez and Ethan Karp.

City Club would also just like to take a moment to welcome guests at tables hosted by Beyond Breakthrough, Cohen and Company, the Cohen Family, KeyBank, MAGNET, Early College Early Career, and the Northeast Ohio Hispanic Center for Economic Development.

Thank you all so much for being with us today.

(applause) Our forum today is the first annual Ronald B. Cohen Forum on Entrepreneurship and Innovation.

Mr. Cohen's firm, Cohen and Company continues to thrive after more than 40 years in business and is grounded in helping its clients, employees and the community to be successful.

Mr. Cohen's vision and passion have continued to drive success in northeast Ohio and nationally.

This forum was established through a generous gift from Cohen and Company, the Cohen family, and Mr. Cohen's many friends and supporters.

The City Club is very grateful for all of your support.

Thank you for joining us today, Ron.

(applause) It was an exciting forum.

Tomorrow, Saturday, May 20th, presented in partnership with the Cleveland Orchestra is 2023 Mandel Opera and Humanities Festival.

It's tomorrow afternoon and it's at the Tinkham Veale Center at Case Western Reserve University.

You can find out more @cityclub.org.

You can also see some other information about upcoming forums, including a midweek forum next week about the future of women's basketball in Cleveland, Ohio.

We hope you'll join us for that.

You can learn, again, that's all at cityclub.org.

Thank you so much once again to Ed Gonzalez of Ferragon Corporation and Ethan Karp at MAGNET.

Thank you very much.

Members and friends of the City Club, our forum is now adjourned.

Have a wonderful weekend.

(applause) - [Narrator] For information on upcoming speakers or for podcasts of the City Club, go to cityclub.org.

Production and distribution of City Club forums on ideastream Public Media are made possible by PNC and the United Black Fund of Greater Cleveland Incorporated.