Thanks to one engineer’s vision, a single-shop Delaware metalwork business once threatened with closure is, today, turning out award-winning work for high-profile projects all across the eastern United States– all from its modest facility down a long rural road deep in southern Delaware’s farm country.
And from its new fabrication shop in Hatfield, PA.
And from its new fabrication shop in Memphis, TN.
And from its new fabrication shop in Manila, Philippines.
It all started in 1992 with engineer William Lo’s dream of business ownership and a Wall Street Journal ad – “Business for Sale” – advertising a Delmar based steel fabrication facility for sale. And it could have ended there, too. It was impossible for Lo to secure the conventional bank financing he needed to buy the business, despite Lo’s impressive professional credentials, entrepreneurial drive, meticulously-drafted business plan, and ability to pledge a healthy cash infusion to purchase the business. Banks were wary of lending to aspiring business owner’s like Lo, who had no business ownership experience and no direct steel industry experience.
As lack of financing threatened to derail Lo’s purchase of Crystal Steel, jobs were on the line at the Delmar steel fabrication facility. Lo’s own dream of business ownership hung in the balance. And the 350 jobs and counting that Crystal Steel would create by 2015 teetered on the brink of never coming to be.
Enter: the SBA.
The Dream Takes Shape
In 1992, a building recession set the steel fabrication industry at an ebb, Delmar, Del.’s, Crystal Steel fabrication facility was up for sale, and engineer William Lo was up for a new challenge – business ownership. That year, Lo and his father, engineer John Lo, set their sights on the Delmar facility as an ideal opportunity to purchase and operate a family business. Together, they crafted a realistic and workable business plan to set Crystal Steel on a path to success, and to secure purchase financing. Crystal Steel’s plan forecast that, like many businesses under new ownership, the business would take a loss in its first several years of operation. That forecast, along with the Los’ lack of steel industry and business ownership experience, made financing the Los’ purchase of Crystal Steel too risky for conventional lenders. Without purchase financing to buy the business and a working capital line of credit to finance its operation, the Los’ dream of purchasing and growing Crystal Steel together dimmed. And, left without a purchaser at the height of 1992’s building recession, the struggling facility’s prospects for a future grew dimmer still.
Just when it seemed that lack of financing would kill the Los’ purchase, Bank of Delaware (now PNC Bank) stepped in – backed by the U.S. Small Business Administration – and provided the financing that the Los needed to purchase Crystal Steel. To help the Los secure the purchase the building, the bank joined with Mid-Atlantic Finance to provide the Los with an SBA “504 Program” loan. SBA’s 504 Program provides businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. Then, to finance the Los’ initial operation of Crystal Steel, Bank of Delaware (now PNC Bank) signed the Los on for an SBA “7(a) Program” loan. SBA’s 7(a) Loan Guaranty Program is the SBA’s primary financial assistance instrument. Through conventional lenders that are certified in SBA’s 7(a) lending program, like PNC Bank (the eventual buyer of the Bank of Delaware), SBA provides loan guaranties on business loans, giving lenders the confidence to provide qualifying entrepreneurs secure financing on reasonable terms. The “7(a) Program” operates through private-sector lenders who provide loans.
Finally, thanks to SBA, the stage was set for growth, and Crystal Steel was on the rise.
From Learning Curve to Growth Curve
In November 1992, John and William Lo officially took the reins at Delmar’s Crystal Steel. As is “par for the course” in a construction-contract-related business, it would be six months before one of Crystal Steel’s initial rfp responses landed it a contract. So, as predicted by the Los’ own business plan, Crystal Steel posted a loss in its first year of operation. But the Los were up for the challenge and were hard at work mastering the learning curve of their new industry.
By 2003, Delmar’s Crystal Steel was going strong. So, with the steel fabrication industry heaving under another building recession, Crystal Steel swung full-force into a bold expansion. That year, Crystal Steel again tapped SBA’s 504 loan programs (this time, through DelVal Finance) to purchase a Hatfield, PA, metal working facility. Through that purchase, Crystal Steel secured the 15 jobs already in place there, and went on to add nearly 40 new positions at that Hatfield site.
2004 brought continued expansion for Crystal Steel, this time overseas. That year, Crystal opened a steel detailing center in Manila, in the Philippines.
In 2012, Crystal completed its to-date facility acquisitions with the purchase of a Memphis, TN, steel fabrication facility, adding 30 employees to its growing roster.
Forging Future Success
From their earliest “father-son” days in the steel fabrication industry, the Los understood that steel fabricators rise and fall on their reputation. So, from those earliest days, the Los set about to secure Crystal Steel’s rise by mastering on-time, quality delivery in each of the three steel fabrication categories. Traditionally, steel fabricators focus on one of the three areas of structural, miscellaneous, and ornamental steel fabrication. But Crystal Steel wins long-term customers by filling all of those needs. With its broad expertise, Crystal Steel takes customers’ steel fabrication projects from the drawing board, to in-house estimation, to on-time, project-wide completion, including detailing at its Manila detailing center overseen by a gold-standard quality control team of 5 U.S. ex-pat managers.
Crystal Steel has built an impressive catalogue of work on that formula for success. Today, Crystal Steel has completed projects across the eastern United States. Among its body of work are: New Jersey’s award-winning, all-steel “Empty Sky” 9/11 memorial; Liberty National Golf Club building in New York City, NY; a host of Salisbury University campus buildings in Salisbury, MD; the Washington, D.C. area’s 5 new Dulles Metrorail stations; and the U.S. Diplomacy Center in Washington, D.C., which is slated, upon completion, to house the U.S. State Department.
Today, Crystal Steel reports annual revenues of $60 million and employs 350, with short-term expansion plans including the addition of more than 50 positions. William Lo’s father, John, has now turned Crystal Steel’s operational reins over to William, who is more than bullish on the firm’s future. Based on past performance and plans to increase capacity and purchase additional fabrication facilities, Lo projects that, within 10 years, Crystal will be reporting $200-300 million in annual revenue.
This article does not constitute or imply an endorsement by SBA of any opinions, products or services of any private individual or entity.
The SBA is an independent federal agency, created in 1953, to assist small businesses to start, grow, and prosper. The SBA provides financial assistance by: (1) making loans to help families and businesses recover from national disasters and (2) providing loan guarantees to commercial financial institutions for working capital (7(a) loans), buildings/land/equipment (504 loans through the Certified Development Corporations), and for exports. Through our resource partners, the SBA also offers a variety of business development programs and services such as training, government contracting and export assistance. SBA resource partners include Small Businesses Development Centers, Women’s Business Centers, and SCORE (Counselors to America’s Small Businesses). For information on all of SBA’s programs and services call (302)573-6294.