Business People Vermont January 2013 : Page 2

COVER STORY LIGHT Manufacturing by Will Lindner The Nathaniel Group of Vergennes designs and manufactures medical devices and innovative light sources used in industrial, scientifi c, and medical applications. CEO Joel Melnick founded the Vergennes company in 1984. Barbi McDonald, general manager and part owner, manages the company’s fi nances and operations. BR AD PE T TENGILL Optics, light, microprocessors, and electronics are the Nathaniel Group’s four elements 2 BUSINESS PEOPLE–VERMONT • JANUARY 2013

Light Manufacturing

Will Lindner

Optics, light, microprocessors, and electronics are the Nathaniel Group’s four elements<br /> <br /> The Nathaniel Group of Vergennes designs and manufactures medical devices and innovative light sources used in industrial, scientific, and medical applications. CEO Joel Melnick founded the Vergennes company in 1984. Barbi McDonald, general manager and part owner, manages the company’s finances and operations.<br /> <br /> The Nathaniel Group, although housed in a utilitarian, warehouse-style building on the outskirts of Vergennes, very likely is one of the most sophisticated design and manufacturing firms in Vermont. Founded in 1984 by then 26-year-old Joel Melnick, the Nathaniel Group will tackle virtually any engineering challenge. After all, flexibility and adaptability were the watchwords from Day One. Melnick is a Brooklyn, N.Y., native who had earned his electrical engineering degree at SUNY Buffalo and worked for Boeing in Seattle and Simmonds Precision in Vergennes.<br /> <br /> “I wanted to start something,” says Melnick, looking back, “but I didn’t have a million-dollar idea. I leaped and said, ‘I’ll find something I can do.’”<br /> <br /> In fact, he found many things he, and eventually his company, could do. These included creating a miniaturized laser range finder that attached to a hunter’s bow. It enabled the hunter to calculate for “fall distance” of his arrow and adjust his aim accordingly. Quite differently, the Nathaniel Group has developed specialized manufacturing processes for an array of products designed by DynaPower Corp., a national company now headquartered in South Burlington that works in advanced power technologies (such as commercial inverters) among other things.<br /> <br /> Despite this diversity, the Nathaniel Group has developed an important niche: It produces electronic medical devices using light to assist in “minimally invasive surgeries.” Think urethroscopes, esophagoscopes, laryngoscopes — and not just the hand-held or -guided tools, but also the equipment to control and monitor them during surgical procedures. (The company’s website features a short video of a well-lit knee exploration that’s suggestive of spelunking through an eerily pale and spongy cavern.)<br /> <br /> “We focus on technologies that use light and optics because optics focus light,” Melnick explains. “Also microprocessors. We can use software and electronics to, basically, control the light. Optics, light, microprocessors, and electronics,” he summarizes. “With those four elements, that’s our sweet spot.” <br /> <br /> Ben Anderson-Ray, co-owner of Middlebury-based Trinitas Advisors LLC, has arrived at a similar conclusion. Trinitas has served the Nathaniel Group as a business strategy consultant for two years; its website features executive-aged rowers guiding their sculls with teamwork and precision. Trinitas helps companies align their leadership teams with overarching strategies that keep their eyes on the ball.<br /> <br /> “When Joel contacted me,” says Anderson-Ray, “they were looking for someone to help them set priorities, get focused, and remain focused on a longterm strategy as opposed to letting the transactional business of the day get in the way.” <br /> <br /> It involves knowing their strengths and their market, Anderson-Ray continues. He, too, cites the confluence of electronic capabilities, advanced lighting technologies, medical engineering, and optical engineering.<br /> <br /> “When those four areas intersect,” he concludes, “they are in their sweet spot; they can do things other companies technically do not know how to do.” <br /> <br /> Yet there is another sweet spot the Nathaniel Group has consciously sought, and Melnick would probably agree it is as important to the company’s success as its widely respected technical expertise. It has to do with creating a work environment, both physically and culturally, that helps the company and its employees thrive. Melnick has brought an engineer’s analytical skill to a field usually defined in more touchy-feely language like “human resources.” <br /> <br /> It’s a path Melnick set for himself years ago. No less than engineering principles, it is based on truths, but these truths reveal where employees’ needs as human beings “intersect” — to use Anderson-Ray’s term — with the company’s performance.<br /> <br /> Melnick’s quest began when a former employer exposed its workers, including Melnick, to author Tom Peters’ book and video titled In Search of Excellence. Peters documented a correlation between workplace cultures that supported and empowered employees and those companies’ superior performance in the marketplace.<br /> <br /> “One of the keys to success in the modern company is emotional intelligence, and selfawareness,” says this engineer. “Seek to understand before you seek to be understood.” <br /> <br /> Inspired, Melnick went to his supervisor, hoping to help develop Peters’ theories in that work setting. Surprisingly (they had shown the film!), he was told, “We’re not going to be that kind of company. If that’s what you want you should start your own.” <br /> <br /> Further exploration led also to W. Edwards Deming, a statistician, author, and consultant whose precepts helped the Japanese auto industry trounce its American competitors by emphasizing technical excellence and consistency, and valuing the input of workers. (Deming was brought to Japan after U.S. manufacturers had rejected his teachings.)<br /> <br /> “Deming preached that you can raise productivity if you raise quality,” says Melnick, a notion rejected by American car companies of the day who believed in full-scale, “good enough” construction. “That was eye-opening to me. One of his precepts was to drive out fear, so that people feel free to say, ‘This isn’t working.’ When I decided to start this company, I did it on the principle that people are basically good; they want to do a good job and work together to get things done. As a result, we have a respectful workplace and our quality is very high.” <br /> <br /> The Nathaniel Group recently completed a stretch of 17 months of defectfree production of all its products. When the string was broken, the workers became engaged in discovering what had gone wrong.<br /> <br /> “The quality manager put up a sign that said, ‘We’re going to figure out where the process went astray, not point fingers at someone for screwing up,’” says Melnick. “That was very emotional for me. It was about, How do we work together to fix this?<br /> <br /> “Beautiful! It’s what I was trying to create.” <br /> <br /> More engineer than psychologist, however, Melnick got his start in tinkering as a schoolboy when his father came home with a Heathkit — a do-it-yourself stereo receiver with components and an instruction book that was popular with hobbyists throughout the mid–20th century.<br /> <br /> “I didn’t go to school for a week,” Melnick recalls. “I worked around the clock on this thing. It was the happiest I had ever been. When sound came out of it, I was so excited!”<br /> <br /> He also credits a “mad scientist friend” of his father’s who fooled with oscilloscopes and electronic test equipment, and helped young Joel with science fair exhibits. Melnick was smitten — bitten by the engineering bug, the quest to create devices. Off he went to SUNY Buffalo, and then to the Boeing Co. In Seattle, where he landed not only a job but also a future wife in the bargain. It was there he met a farm girl from Minnesota named Bonnie. They had been a couple for just a short time when, in 1982, Melnick received a job offer at Simmonds Precision (now United Technologies Corp.) in Vergennes, and flew east for a visit.<br /> <br /> After the job interview they drove to Burlington, where they were charmed by the then-new Church Street Marketplace. Then they went farther north, to Sandbar State Park and the causeway into Lake Champlain.<br /> <br /> “I said, ‘Wow! I’d live here!” <br /> <br /> And now they do, having raised three children in the Vergennes area and Melnick’s having started (in a room above an architect’s office) a company remarkable for its technological innovation and cutting-edge business practices. Bonnie teaches reading at the k-6 Lincoln Community School, and is an artist whose paintings have been featured at Creative Space Gallery in Vergennes.<br /> <br /> “We’re both outdoors people,” says Melnick, an avowed bicyclist who also enjoys hiking and snowshoeing. “And we love movies. Movies are a big deal for us.” <br /> <br /> Melnick also shares his life, on a professional level, with Barbi McDonald, the company’s general manager, Nathaniel Group’s seventh employee; its roster has fluctuated, and now stands at 20.<br /> <br /> Full-time work with the Nathaniel Group rescued McDonald from a hectic life in which, she swears, she juggled 10 part-time jobs, including serving as treasurer for the local schools, part ownership of small software company, and helping her self-employed husband manage his business affairs. As of last year, she became a part owner of the company.<br /> <br /> “We balance each other,” McDonald says, as Melnick nods in agreement. “He’s always coming up with harebrained ideas. I temper that with what’s realistic and what we can afford. We’ve grown the business that way.” <br /> <br /> They’ve also grown the business by researching and instituting “Lean Manufacturing” principles. Shane Williams, a former Nathaniel Group employee now at DynaPower, has witnessed the effect of these practices from the perspective of a company that contracts production to the Nathaniel Group. (Lean Manufacturing is a set of practices aimed at reducing or eliminating waste, including wasteful motions, increasing efficiencies, and speeding completion and delivery.)<br /> <br /> “They accepted the challenge of Lean Manufacturing,” says Williams, “and it has reduced their lead time, in our experience, from 16 weeks to eight weeks.” He continues, “Joel is very advanced from a social standpoint, too. They hold monthly meetings where they not only review the company’s business and seek people’s input, they also inquire about the personal side of things, and hold celebrations for important events in people’s lives.<br /> <br /> “I think it’s quite unique, and it’s been very successful for Joel.” <br /> <br /> When Melnick kicked off what was at first called Nathaniel Electronics, in his spare time in an architect’s spare room, he looked for a dignified name for his start-up company.<br /> <br /> “My middle name is Nathan,” he says. “’Nathaniel’ sounded a little older, a little more legitimate.” <br /> <br /> In 2005 he apparently arrived at a similar conclusion about the heft of the word “group,” and changed the company’s name accordingly. It might not have been necessary. Sophisticated in its operations, its cultural practices, and its design and engineering capabilities, the Nathaniel Group has established a singular, and thoroughly legitimate, place in Vermont manufacturing.

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