Tonya Mallory is back in startup mode.
After abruptly stepping down as CEO of Richmond-based Health Diagnostic Laboratory in September, Mallory has quickly transitioned into a new role at a small company in a small town.
Mallory left behind a once rapidly growing medical firm with some 800 employees and new $100 million headquarters downtown.
Now she’s commuting an hour each way a few days a week to Crewe, Va., – population 2,200 – where she’s a shareholder and advisor at ITS Manufacturing, a six-person startup launched recently by her brother.
“It’s like an old boyfriend,” Mallory said of going back to a startup. “You start to remember the fun things and deal with the painful things. Every day is different and very challenging. It’s crazy that everyone is cheering for the small things again.”
ITS manufactures computer numeric control devices, which Mallory described as hunks of metal containing blueprints that are turned into critical components for heavy metal machines, like warheads or automobiles.
The company uses a CNC lathe or milling machine to custom manufacture metals into working parts, a departure for Mallory from her comfort zone of blood tests and lab coats.
“It is something I’m going to have to get used to, and I have a lot to learn in this area,” Mallory said. “But it’s engineering and high-precision, so it’s very similar in some ways.”
The company is small, but Mallory has her eye on growing ITS just as she did at HDL.
She and her brother, Trace Shook, bought a 50,000-square-foot building for $220,000 in February, and the business occupies about half of that space. ITS started ordering equipment in April and then brought in clientele around June.
ITS’ revenue comes from contracts with the federal government, engineering companies and tobacco manufacturing suppliers. The firm is in the process of bringing in more clients, reaching out to shipyards and entities like Rolls-Royce that may be interested in their product.
Mallory said ITS is expected to generate $500,000 in revenue this year, and she expects it will have to expand next year into the full 50,000 square feet of the building.
“The market for this type of manufacturing is unique in the mid-Atlantic region,” Mallory said.
ITS’ local competitors are companies like Kosmo Machine Inc. in Sandston, Va., and Jewett Machine Manufacturing Co. in Richmond. But most of the others are in Pennsylvania, Maryland and North Carolina.
Though she left behind somewhat of a business celebrity status in the much larger Richmond market, Mallory said ITS is happy for now in its small-town setting.
“Other than the equipment, everything that we could possibly source locally, we have,” she said. “It goes back to the small community.”
ITS made a capital investment of over $2 million in the Crewe area, Mallory said. It plans to work with students in the local high school or community college who are interested in becoming machinists.
Shook and his family are also part of the reason the company is staying in Crewe for the time being, Mallory said. Shook’s wife died in 2012, and Mallory said the family is trying to stay near the small town for his two young children.
Mallory said that Shook expected his business to be slow at first.
“It’s taken off a lot faster than he expected, which demonstrates that there is a huge need for this kind of quality,” she said. “It’s very exciting.”
Mallory still has plenty of ties to Richmond. She lives in town, is on the board of directors at HDL and is still an advisor to the company.
HDL was co-founded by Mallory 2008. This week the company laid off 15 percent of its employees, or about 132 people. Those cuts come in the midst of a federal investigation into HDL and several other medical lab firms nationwide.
Mallory left HDL shortly after the companies’ practice of paying fees to doctors to use its lab tests was called into question in a Wall Street Journal report. The company is now run by co-founder Joe McConnell.
When asked about HDL’s current situation, Mallory said she could not comment but said she feels positively about the direction the company is going.