Built To Last

Turned Down By Area Banks, The Owners of MDS Manufacturing Wouldn’t Take No For An Answer



When Dave Skaggs went into a bank in 2009 to ask for a business loan to launch his startup manufacturing firm, the bank was quick to say, “No way.”

The economy, after all, was in the midst of the Great Recession, and starting a manufacturing company in that environment seemed way too risky to bankers. But Skaggs didn’t stop with one bank. He went to another. And another. And another. The message was the same: No.

“People told us we were crazy,” Skaggs says. “Almost every bank told us we were nuts. Some didn’t give us much chance to succeed.”
Despite the naysayers, one thing kept Skaggs and his family moving toward their goal: the quest to be the best. “We wanted to build the very best injection blow molding facility in the country,” he says. “When someone says they need something made out of silicone, they were going to call us. My dad always taught us that if you are going to do something, do it at the very highest of your ability and you do it the best.”

That’s exactly what he has done. Skaggs finally persuaded a bank to take a chance on him. Now, seven years later, MDS Manufacturing has grown to $7 million in business with 36 employees. The company is on its way to becoming the “go-to” liquid silicone rubber manufacturer. MDS currently manufactures most of the famous Dr. Brown baby bottle nipples. In fact, the company makes 3.5 million silicone nipples a month in its South City warehouse.

Skaggs is a partner in the business with his two brothers, Mike Skaggs and Steven Skaggs; his wife, Ginnie Skaggs; and his mother, Barbara Skaggs.

The family started the business to capitalize on the future of liquid silicone rubber. Liquid silicone rubber is a high-purity platinum-cured silicone with a low compression set, great stability and the ability to resist extreme temperatures, making it ideally suited for the production of parts, where high quality is a must. “There was no one else around using this product,” says Skaggs. “Most were outside of the country. We knew we could compete with this product.”

“This product is where the growth is,” says Ginnie Skaggs. “It is expected to double or triple in the next five years. Things that are currently not made of silicone are expected to be changed over to liquid silicone. It is more durable and long-lasting.”

It certainly wasn’t easy building the business. When the family started the company, it had only a handful of employees. Dave Skaggs was even working the overnight shift on the manufacturing floor and then working a day shift in the office.

All the partners are quick to point out that the company’s success didn’t come without help from both their advisers and their employees.
According to Dave Skaggs, one of the smartest things the company did early on was surround itself with great advisers, including SCORE (Service Corps of Retired Executives), an accountant, an attorney, a banker and an economist. Unlike most firms, MDS brings all of its advisers together once a quarter to discuss the company’s operations and future.

“We know how to manufacture, but what we don’t know are the things our advisers can bring to the table,” Dave Skaggs says. “Why pretend to know? We sit down as a collective group. We bring in outsiders, and they sit in our quarterly meetings. We throw everything we do on the table and ask them: ‘What are we doing wrong? What direction should we be going?’”

As the SCORE counselor helping MDS with its growth, Suren Khanna has seen firsthand the challenges the family has overcome to become successful. Several years ago Khanna and SCORE performed a business scan for MDS. The scan helped determine where the company stood in key areas and what areas needed improvement. “The scan showed us that the family is doing a great job,” Khanna says. “It also showed some areas where we could provide some help. We saw some areas, like accounting and marketing, where we could bring in some experts and really help the company grow.”

Employees have also played a key role in the company’s growth. MDS fosters a family atmosphere, with no job titles and a flat organizational chart. In fact, it’s not uncommon to see Dave Skaggs, the company president, emptying out the company refrigerator.

“This is personal for us,” Dave Skaggs says of the employee-employer relationship. “They know we are all going in one direction. In most companies, walls separate departments. Not here. Everyone is considered a vice president.”

Retaining their culture is one of the biggest challenges the owners face as they continue to grow the business. MDS went from 12 to 36 employees in less than a year. The owners went out and hired experienced silicone and quality “gurus,” but that decision backfired when the new employees brought a buttoned-up, corporate philosophy to the firm. “That was one of our growing pains in the last year,” Ginnie Skaggs says. “They brought a culture in that really didn’t work here. It was breaking down the culture we had established.”

The owners are excited about the future, which they believe will include more diversification in the silicone industry. “We’re trying to build something different here, not just with our company but for manufacturing in general,” says Dave Skaggs. “We’re trying to set a different standard for manufacturing. We are building something different here that others can use as a benchmark and emulate.”

To learn more about how SCORE can help your business, contact Gary Deeken (garydeeken@gmail.com) or call 314.800.1527.

Meet The SCORE Mentor
Suren Khanna

How long have you been a SCORE mentor?
I have been with Score since 1998.

What do you like most about being a SCORE mentor?
I like helping business owners in advancing their knowledge so that they can become even more effective in managing their businesses. I like to think that I help identify gaps for them to fill, and show them ways to fill the gaps.

What is your best advice for business owners?
1. Find a qualified business coach to work with even when your business is running smooth to bounce off your ideas. 2. Prioritize continuing business education as part of skills advancement.