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A Flooded Manufacturer Rebounds After Hurricane Sandy

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    In late October, Hurricane Sandy devastated countertop manufacturer IceStone, pushing salt water five feet up the walls of its Brooklyn factory. When President and Chief Executive Officer Dal LaMagna surveyed the hundreds of thousands of dollars worth of damage to the machinery, he contemplated closing the business forever. Instead of layoffs, he “gambled” on his 38 employees: They worked cleaning, fixing equipment (instead of replacing everything), and renovating the 55,000-square-foot factory. The bet paid off, says LaMagna, halving the cost of the cleanup and repair ordeal. In early April, IceStone was making countertops again.

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    The 10-year-old company markets itself as an environmentally-friendly manufacturer of recycled glass and cement countertops, and has built up goodwill among its distributors and vendors. They helped soften the blow by lending money, extending deadlines, and volunteering to help with repairs. Of course, it was the employees who handled the lion’s share of the work, says LaMagna: “Every single piece of anything in this factory was dried out, checked, and then we had to start ordering [new parts] from Germany, Italy. We did not lay anybody off.”

    Courtesy IceStone
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    To finance IceStone's recovery, LaMagna has used about $744,000 of his own money as a bridge loan while he waits on a Small Business Administration disaster loan for just under $1 million, which IceStone applied for in November and the agency approved in early March. He expects to receive a portion soon, and credits the SBA with helping save his company. It's one of more than 2,700 Sandy-related business disaster loans that have been approved, for a total of $279 million, according to the SBA.

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    IceStone starts its manufacturing process by mixing recycled glass (bags of glass it buys from recyclers are pictured above) and cement together in a mold (LaMagna calls it a “baking pan”). The mold sits on what’s known as a vibration table that removes air bubbles. After the flooding, employees dried 90,000 pounds of glass themselves, saving the company more than $60,000, according to Sarah Corey, IceStone's marketing manager.

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    Next stop for the slab is a kiln, where it spends the night. After that, the slab goes into an enormous machine called a calibrator for leveling. Finally, after curing for a number of days, it takes a ride through another large machine called a polisher, and then gets inspected by hand. Each finished slab weighs 570 pounds. LaMagna says the company managed to salvage most of the 400 finished slabs caught in the flood.

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    LaMagna became IceStone's first angel during its founding in 2003, investing $50,000. He eventually became its largest, ponying up a total of $3 million. He took the reins in October 2011, “when the company wasn’t going to survive,” because of the housing bust. LaMagna revamped the money-losing business’s management structure “to aggressively empower employees.”

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    When he took control, LaMagna convinced fellow angel investors to give 10 percent of IceStone to its employees, and then “embedded them in all levels of decision-making.” In addition, he pays “a living wage” to workers on the factory floor ($15 per hour), covers 70 percent of their health care, and teaches them how the company works financially. “I basically operated more as a professor than a dictator,” says LaMagna, who holds a Harvard MBA.

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    The new strategy bore fruit. “After a year, we got the company from losing $250,000 a month to only $25,000,” LaMagna says. “We were expecting to be profitable in a month or so when Sandy hit. What I like to say is we got to the door of success, and Sandy slammed it shut with five feet of water literally destroying every piece of equipment we had.” The air compressor (pictured above) is the lungs of the factory. It powers all of the pneumatics in the machines. A post-Sandy parts shortage on the East Coast delayed its repair by weeks.

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    The flooding salt water fried electrical components in the controls for two crucial machines, the calibrator and the polisher. IceStone waited months for the parts to arrive from Italy.

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    Jack-of-all-trades Manny Vargas sprays water on a slab being cut into samples. LaMagna says the company has about $400,000 in back orders and estimates it lost only about $200,000 in business because clients were willing to postpone orders.

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    Workers use the edge polishing machine to beautify the samples it sends to architects, homeowners, and builders. LaMagna has been pushing to get big jobs, where buyers order hundreds of slabs at a time: “This company only works when we get commercial business,” he explains.

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    During its recovery, IceStone “aggressively” worked to line up jobs in Houston, Seattle, Dallas, Boston, and New York. “These are places where there’s a lot of construction going on, big projects that have finally gotten green-lighted,” LaMagna says. “We have to do $350,000 a month to break even. Once we get past that, we become a very profitable company.”

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