Gary Scitthelm’s ascent of the corporate ladder literally started on a ladder.

Scitthelm, who was named president of Calgary-based Smed early last year, began his construction career in the early 1980s as an apprentice carpenter fresh out of high school.

Scitthelm is a well-travelled graduate of the school of hard knocks, having toiled in virtually every aspect of the industry in the past two decades on his way to the corner office of one of Canada’s largest interior construction companies.

That’s an education you won’t find in any textbooks.

Larry MacDougal photo, Business Edge
Smed International president Gary Scitthelm has done it all in his two-decade rise to the company’s corner office.

1. What were your interests during your youth in the Peterborough area?

“I grew up on a farm and I always liked to build things. From Day 1, I always gravitated toward construction and building. For me, the real estate side, whether it was residential or commercial construction, has always held a certain allure. I just love it. I can’t imagine myself doing anything else. In 1980, as a young guy out of school, I headed west because I wanted to make my fortunes in Western Canada. The building boom was going extremely well in Calgary and I apprenticed as a carpenter.”

2. Do you regret that you didn’t go to university?

“Looking back, I wish I had those letters behind my name. But I have to tell you, 20 years in the school of hard knocks is one of the best educations you can ever get. I tell people to take on as many roles as you can in an organization because it opens up so many opportunities. Every job is a new learning experience. You get so many folks, and I don’t begrudge them for this, who come out of school thinking the world is their oyster and they can walk into six-figure jobs. It can lead to so much disappointment. I always say that if you can get your foot in the door and prove your work once you’re inside, you can go far.”

3. How did you initially hook up with the Smed organization?

“Ten years ago, Smed purchased a wall company in Calgary (Pro West Partitions) that had gone into bankruptcy and also purchased a shell company called LifeSpace. I came on as a vice-president of that company.

I joined Smed because of the tremendous business opportunity – they were becoming a new public company and the people in management were very much go-getters who wanted to make things happen. I was also excited about moving back to Calgary.”

4. What was Mogens Smed (the company’s founder) like to work for?

“Mogens is a great guy. In all honesty, I’d say we fought real hard for the first two years, probably daily. I’ll never forget the day that changed my life with Mogens. One day, we had a really good argument, toe-to-toe. So the next day I’m sitting in his office and he comes in and says, ‘What’s wrong with you?’ I said, ‘What do you mean, we had that big fight yesterday.’ I couldn’t even look him in the eye. He said, ‘You mean you thought more than five minutes about that?’ I said, ‘Yeah, I was awake all night.’ He said, ‘Well, that shows how stupid you are.’ It was that day that I realized that Mogens held no grudges, no nothing. So we became good friends and business associates.”

5. What did you learn from Mogens?

“I’ve had many great mentors, but Mogens taught me so much about sales, marketing and business relationships.”

6. What was it like working for Smed while it was going through financial hardship?

“It was a struggle. I think that if it were not for Haworth (the company that acquired Smed in 2000), I don’t know that Smed would have survived. Smed had great products and great people, but Haworth brought a lot of great processes to the table. Haworth has experience and a presence in so many countries in Europe and Asia. This company brought some expertise and resources that helped tremendously. Our turnaround just in the last year has been absolutely phenomenal.”

7. What do you think caused the Smed business to go awry before the acquisition by Haworth?

“I think as the real estate market was growing and Smed’s market penetration was doing well, we grew extremely fast. My honest observation is that the infrastructure grew too quickly.”

8. What did you learn from that?

“When I speak at entrepreneurs’ lunches or something like that, my word of advice is never to build to your best-case scenario. I’ve watched management teams in three separate companies get very excited about their recent success, go out and build larger infrastructure and then struggle over the next several years in trying to maintain that infrastructure and become profitable. Smed definitely grew too large in 1999 and 2000.”

9. What has been your main priority since taking over as president of Smed a year ago?

“When you take over a new role, there are so many things that you have to know and understand. I realized very quickly that Smed has incredibly talented people and has put together an organization and structure that allows the people to excel in their jobs. There should be a business case study on the folks here and what they’ve done. Haworth has introduced certain tools like value stream mapping and lean manufacturing. The folks here have taken that on and improved our organization so much. The biggest thing has been enabling the team to do its job.”

10. Describe your leadership style?

“Because of my exposure in this particular industry, I love to get a lot of feedback and ideas. Then, once you get them, you definitely have to take a stance on which way the organization is going and communicate that clearly. So you can fight it out, you can scrap and get all the best ideas on the table, but then put all the egos aside. People have put their egos aside and said, ‘Let’s really dig into this, roll up our sleeves and away we go.’ It was just tremendous. There were just no egos involved and everybody was looking for the best operation for the organization. So I’m very much for teamwork. I’ve had to learn when to be hands-off and have one-on-one meetings with folks all the time, so I can understand the different leadership styles and adapt to that.”

11. What have you done to try to put your stamp on the company since becoming president in early 2003?

“We had a lot of departments that didn’t work in harmony together, so the first thing we did with the management team is take a look at the organization as a whole. We’ve really applied lean manufacturing principles to the entire organization and realigned the organization so we had accountability and responsibility in certain areas.

That was one of the biggest steps we’ve taken to go forward. The next thing we did was empower decision-making much more in the organization so people responsible for specific areas were able to take actions.

What that did was bring a lot of ideas to the forefront that we’ve been able to execute on. We also do a monthly recognition lunch with the teams that do best in four specific areas, measuring their impact on safety, quality, cost improvement and innovation. We have a lot of communications meetings that help out tremendously.”

12. Is Smed currently profitable?

“Ah, more or less, yes. We just had our best quarter in four years through the end of December. January and February were a little slower for us and March is booming. So our second quarter looks like it will be extremely strong. Once in a while, you get a little bit of a blip in the quarters but, from a financial perspective, we’ve not done better in a very, very long time.”

13. How has the partnership with Haworth worked out?

“It has worked out very well. Haworth has given me the opportunity to sit on their executive team, which has allowed us to have a closer and better relationship, and it allows us to learn from each other’s strength. We’ve also become more of a global organization because Haworth does incredibly well globally. At the same time, Smed has a lot of experience in modular interior construction, which is the way the industry is going.”

14. How has the interior office construction industry been faring in North America in recent years?

“Since 2000, the industry has been down roughly in the neighbourhood of 35 per cent. The industry is starting to see a slow uptick and Smed has definitely been picking up more market share.”

15. How much of your business is in Canada as opposed to the U.S.?

“Roughly 20 per cent of our business is in Canada. Calgary is an incredible market for us. We have very good market share here. Probably 75 per cent of our business is in the United States and another five per cent overseas.”

16. How has Smed’s business been affected by the rising Canadian dollar against the U.S. dollar?

“It hasn’t worked in our favour. We’ve just had to work that much harder on our cost structure as a result of that. I’m very pleased with the progress of the organization because we just had our best quarter (through December) despite a bad dollar. Basically, for every four to five cents that the dollar changes (rises), that impacts us about one per cent on the bottom line.”

17. What can you do to counter a dollar that rises even higher?

“Sourcing out business is a big part of it. Also, we can’t become too complacent when the Canadian dollar is favorable for us. Lean manufacturing principles are really what we have to focus on. Should the Canadian dollar drop against the U.S. dollar, we’ll be that much better off, but we shouldn’t hope that is going to happen. We have to make sure our organization is able to thrive at the 80-cent dollar (versus the U.S. dollar). It would have been nice if we had hedged against the rising dollar a year-and-a-half ago.”

18. What aspect of your business has the greatest potential?

“Modular interior construction. It’s an industry that still has a reasonably low market share with so many people still building fixed-in-place construction.

That fixed-in-place construction is actually becoming archaic because flexibility rates and move rates are at an all-time high. Also, the cost of building fixed-in-place has become tremendously expensive. So I think our wall products will definitely lead the charge. Our access flooring products, modular wiring and cabling are doing well and we’ve seen a real resurgence in our wood products.”

19. What do you foresee in the future of the office interior construction industry?

“In the future, I think we’re going to see a real shift where in office buildings you’ll see a trend toward maintaining that building shell as opposed to tearing it out every single time the tenant leaves. When a tenant leaves a space, seldom is that material reused. It is destroyed and thrown into the landfills. Over 20 per cent of landfills are filled with construction debris and you build new every single time. And that cycle is increasing. I think our industry is going to see radical changes in the next few years from an environmental perspective and we’ll be a big part of that.”

20. Ideally, how long do you wish to remain in this job?

“As long as they’ll have me (laughing). No, I love it. Actually, that’s a hard thing to say because I think in this industry, if there were diverse positions to be taken on, I’ve always been willing to do that and love it. It’ll be interesting to see what comes down the pipe. I’ve been fortunate to have had about five or six great mentors in my career and my hope is that, as I move forward, I’ll be able to be a mentor to some other folks. I still think I have a lot to learn to be able to do that. I’ve always said, ‘I won’t give it to you on a platter but I would love to offer a ladder how you can improve yourself.’”

IN PROFILE: Gary Scitthelm
* Title: President, Smed.
* Born/raised/age: Peterborough, Ont.; 40.
* Education: High School.
* Family: Wife Suzie.
* Career: Scitthelm has spent the past 10 years with Smed. Prior to being named president in early 2003, Scitthelm was vice-president of sales and marketing. He began his career with Smed as vice-president of the LifeSpace movable wall division. He has spent his entire career in the construction industry.
* Passion: Golf.

THE COMPANY: SMED
* Profile: Smed is a Calgary-based construction company that specializes in modular interior office construction. The company’s network of offices and showrooms includes Alberta locations in Edmonton, St. Albert and Grande Prairie.
* History: Founded in 1983 by Mogens Smed, Smed was acquired in 2000 by Haworth Inc., a privately held U.S.-based office interiors construction company. Smed employs 1,300 people.
* Accolades: In 2003, electronics and furniture industry magazine Monday Morning Quarterback honoured Smed and its Falkridge marketing centre near Priddis with the award of the best customer experience.
* Website: www.smednet.com
* Head Office: 10 Smed Lane S.E., Calgary, T2C 4T5.
* Phone/Fax: 403-203-6000, 203-6001. Toll free: 800-661-9163. Edmonton: 780-452-9991; St. Albert: 780-418-3456, Grande Prairie: 780-814-7300.