By: Rebecca Kanthor
PLASTICS NEWS CORRESPONDENT
May 22, 2014
SUZHOU, CHINA — In fast-moving China, a small American injection molding company is showing that it’s possible to succeed by following a slow and measured path to growth.
From its modest startup in 2006 with three employees, two machines and one key customer, Poly-Cast Plastics (Suzhou) Co. Ltd. has grown steadily, all the while resisting the temptation to expand too fast. General manager Jeff Leedom described the company’s growth strategy as a “crawl before you walk before you run” approach.
And it looks like it’s been paying off. Today the company runs an 11 to 13 machine operation from a 21,500 square feet facility with 40-plus employees. What began as an offshoot from Poly-Cast’s Portland, Ore., operations has since morphed into a jointly owned operation by Poly-Cast and two other American family-run injection molding businesses, Viking Plastics Inc. and Falcon Plastics, who each own a third of the shares. The company records under $10 million in sales annually.
Last year the company enjoyed record sales and is expecting a repeat this year. And the industry stateside is beginning to take notice. Just last month the company was honored for Enterprise Technology Leadership by Frost & Sullivan’s Manufacturing Leadership Council. The award honors “manufacturing teams and individual manufacturing leaders that are shaping the future of global manufacturing,” said Jeff Moad, Frost & Sullivan’s research director. He wrote in an email that “The ML Awards judges were very impressed that Poly-Cast was able to take control of its financial and manufacturing execution systems, allowing it to establish an advanced, real-time business review process and quickly identify risks and opportunities. This contributed to rising profits and market share gains in 2013.” The company also is a contender for a Manufacturer of the Year award, which will be decided at the annual Manufacturing Leadership Summit and Gala June 4-5 in Palm Beach, Fla.
Early on, the company took a risk that has shaped its trajectory over the 8 years it has been operating in Suzhou. While many companies looking to enter the China market choose to partner with a local company in a joint venture, the Leedom family instead sent its oldest son Jeff to set up and manage the facility. It proved to be an enormous challenge and a steep learning curve for him, as well as an unique opportunity to prove himself. He says that there are no regrets about those early choices.
“I think it has worked out very well for us,” Leedom said in an interview with Plastics News at his Suzhou facility. “There are so many unknowns going into something with an unknown partner,” he said. “You take the burden, you take the risk on your own as a fully-owned, but it was something we were willing to do on our own.”
Choosing to go it alone meant Leedom had to learn everything about business in China. “My biggest learning curve was my first four years on the ground,” he said. From setting up the business, to importing equipment to hiring people, he found that just about everything was different than what he was used to in the United States. Two years in came the financial crisis of 2008, which added another challenge for Leedom.
But 2008 also brought the beginning of the partnership with Viking Plastics. Leedom said the cooperation among Poly-Cast, Viking and Falcon has gone amazingly well.
“The companies couldn’t complement each other better,” he said, adding that the relationship has been strengthened by the common family business background of all of the companies and their common objective. “Regardless of what’s going on stateside, we’re going to continue to grow the China business and their minds and their plans have been pretty well linked from day one,” he said.
Looking ahead, Leedom says that focusing and managing growth is a constant priority for him, especially in China.
“It’s really easy to look at 40-50 percent growth and say I want it,” he admits. “But we’re really looking for that sustainable long-term growth plan that sets us up to be here for the 25 years to come. [So we’re] looking at all the opportunities in China and asking how do we really focus and what’s the best fit for us.”
Still, even as it manages growth, the company will soon grow too large for its existing facility. The next question, says Leedom, is whether to move the entire operation to a larger facility or split up the operations between two or more sites. The company aims to be a 25-machine operation by 2020, with presses ranging from 55-500 tons of clamping force.
Leedom says the company will grow along with its customers. But the company strategy also includes diversification. When it started in 2006, the operation was heavily automotive, producing accelerator pedals and fuel cap assemblies. Today the company has added medical, healthcare and consumer electronics, which Leedom says is the fastest growing segment. He showed off one of the products, a portable cylindrical Bluetooth speaker, sold in stores around the world.
One thing that the company hasn’t and won’t do, he said, is compete with the company’s owner companies in the United States. Poly-Cast’s client base does not overlap with the U.S. partners, he said. The company came over to support the China market and less than 20 percent of its output is exported.
The plant mostly molds parts for international partners in China or that sell to Chinese OEMs who export to the United States and Europe.
The leadership award came as a surprise to the team, although they knew that IQMS, which developed the financial accounting system in the facility, shared their story of success with the judging organization.
“We had some true cost savings that came out of that,” Leedom said. “We were paying our outside CPA ‘x’ amount a month to drive financials that I couldn’t use. Our team couldn’t use [them] to drill down and make changes and improvements.” But within three months of implementing the new system, he said, the team was completely independent. “We’ve stayed compliant from day one with a U.S. system for manufacturing,” he said proudly.
Cathy Pitts, financial controller for Corry, Pa.-based Viking Plastics, visiting the Poly-Cast plant on a business trip, called the recognition “the pat on the back you didn’t know you were going to get, that you didn’t know you needed.” Just getting the system running properly in China gave the team a real sense of achievement, she said, and being acknowledged with an award reminded her just how hard it was to accomplish.
The recognition has been a motivating force for the team, Leedom added. The feeling is “we’re a small company but we’ve put ourselves on the map.” Then he reflected further. “Where I was excited then [in 2006] I’m probably more excited today,” he said. “Just never would have imagined that a little company from the U.S. would be doing what we’re doing here today.”