Hans Luetkemeier’s previous company had a facility in Waterloo, IA which was supported by a sole customer. Certain assets were deteriorating and required a capital investment to ensure long term sustainability of the asset. Past management was unable to get the customer to commit to a long-term agreement which was required for his company to secure internal approval for capital improvements. They had been content to allow the contract with the customer on an annual basis without addressing asset integrity.
Hans Luetkemeier, Growth Strategy Development & Execution Executive
Hans did not feel as though band-aiding the situation further was the best option. “After having done some research about product movement in the area and realizing that our location was one which was very centrally and strategically located, I sent notice to the customer in accordance with our contract to cancel the agreement for renegotiation, prompting them to come to the table, said Luetkemeier.” Hans’ approach was to be fully transparent with the customer regarding his company’s need to invest capital. He also devised a strategy to help the client understand the importance of this location to them.
“We ended up securing an agreement with a $17M revenue guarantee from that customer over a 7-year period. This commitment allowed my company to invest approximately $6M in capital improvements; but more importantly, it enabled us to have a long-term sustainable asset, while giving our customer certainty that they would have the same captive presence in the market for the same duration. Our customer had never entered into this type of agreement and had to get approval from their board, but in the end, it was a win-win scenario for both parties.”
Watch full video interview below.
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