Making the most of complexity

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Don Loepp Bob Macintosh is president and CEO of Nicolet Plastics Inc. located in Mountain, Wis.

MOUNTAIN, WIS. — In the global market for injection molded parts, custom molders have tried a million different ways to differentiate themselves from the pack.

Make that a million and one.

Nicolet Plastics Inc. is tucked in an out-of-the-way location in Wisconsin’s Chequamegon-Nicolet National Forest, nearly 200 miles north of Milwaukee. But the small molder has won national attention for its innovative manufacturing strategy.

Nicolet is all about making the most of complexity.

In a way, the company fell into the strategy. Or more accurately, it discovered the theory and found out that it fit the little molder like a glove.

Humble beginnings

Bob Macintosh and three partners started the company in 1985 and incorporated in 1986. Macintosh, the president and CEO, had a customer service background, including a stint in the telecommunications business.

Nicolet started in a small garage about a mile from its current location, with a leased Newbury press.

“It was a pretty humble beginning. We started with a $1,200 investment, $300 from each of us. That sounds kind of crazy today, I don’t know if it could be reproduced in today’s environment. But that’s what we did,” Macintosh said, in an interview at the company headquarters.

They didn’t even have enough startup capital to have the press delivered, so they picked it up themselves.

“We were able to make some parts and make some money,” he said. “And it was difficult beginnings, but we managed through it. We found a banker who actually believed in what we were doing and gave us some additional funds that allowed us to buy a new press. Once we started down that road we learned more about what molding was all about and we started the process that allowed Nicolet to grow and prosper.”

From the beginning, complexity has been part of the corporate culture. The custom molder serves a wide variety of end markets, molding many different resins — including many engineering grades. It specialized in low- to moderate-volume projects, and highly complex custom parts.

Mold changes were commonplace too, and Nicolet used quite a variety of molds. Today it makes about one-third of the tools it runs, it gets about one-third from offshore, and the rest come from other domestic mold makers.

But, at least in those early years, Nicolet was like a lot of other molders: chasing after bigger molding jobs.

Reacting to the recession

Don Loepp A Nicolet Plastics employee does pad printing on plastic parts. Nicolet has 17 presses and 80 employees.

Over time, Macintosh bought out the other three partners, the last one in 2008. Then, in 2009, came the Great Recession. The company lost a lot of its high-volume, less complex work; much of that went offshore. Nicolet had to cut about 22 percent of the work force. Macintosh says it was a very emotional time in the small community.

“We also had to figure out how we were going to grow the business,” he said.

That’s when they learned about Quick Response Manufacturing.

The philosophy, preached by Rajan Suri at the University of Wisconsin, is all about managing complexity and cutting lead times. Instead of trying to emulate the Toyota manufacturing model — striving for long-run production, and making it as lean as possible — QRM teaches manufacturers to make complexity a competitive advantage.

The real key is cutting out time.

“It permeates throughout the organization, from the time we take the order to the time we ship. We look at taking time out of everything we do,” Macintosh said.

So the company, which has just 17 presses and 80 employees, averages 120 to 130 mold changes a week, and runs more than 1,000 tools, according to Chief Financial Officer Joyce Warnacut. She’s a big proponent of the high-mix, low-volume production. Everything the company does is focused on minimizing the order-to-cash cycle, and reducing the wait time in queues. That starts with quoting jobs and entering orders, and continues throughout the process.

On the molding floor, that means not starting a job until you know that you can finish it, so that semi-finished parts aren’t sitting around waiting on someone to assemble them — or worse, sitting in a warehouse.

“We don’t load the [resin] dryers until we know we’re going to run, and we know we can finish the order,” Warnacut said.

The result is that Nicolet invests in capacity. The idea is to always have excess capacity to handle a rush job. The company doesn’t spend resources on building up inventory.

Customers can benefit from the strategy. They can order in smaller lot sizes, reduce their own inventories, and be more efficient, Macintosh said.

Emphasis on people

Nicolet also invests in worker training. The company has what it calls a skills matrix, which allows workers to seek their own level of plastics industry knowledge.

Basically, workers determine their own pay, because their hourly wage is based on how much training they successfully complete. The team manages the process by encouraging workers to pursue training in areas where it’s needed the most.

Scott Walton, chief operating officer at Harbour Results Inc., said the skills matrix is what really makes Nicolet stand out from its competition.

“The team at Nicolet also prides itself on treating the people with a great deal of respect. I like that,” Walton said. “That really helps them to overcome barriers, and do a nice job of reacting to economic challenges in a remote location.”

Don Loepp A Nicolet Plastics employee assembles a part. Nicolet workers determine their own pay based on how much training they successfully complete.

New workers are indoctrinated into the corporate culture right away — one of their first tasks is to read Suri’s book “It’s About Time,” and to write a report on it.

“For some of them, it was a challenge. But they all enjoyed it in the end, and now they have a better idea of what we’re all about,” Macintosh said.

Walton said the changing manufacturing sector is putting a lot of emphasis on low-volume, mass-customization-type work. Consumers want products that look different and have unique features; whether that’s in the automotive market or cell phones.

“The days of molding millions of types of the same part is disappearing,” he said.

A lot of custom molders — like Nicolet — are reacting to the trend. Walton thinks QRM, like lean manufacturing, Six Sigma or anything else, can be an effective way to deal with the changing environment.

“QRM is a tool in the toolkit,” Walton said. “We’re big proponents of an organization finding a strategy, putting it into place and sticking to it. Nicolet has done a nice job of latching on to QRM.”

Harbour Results does assessments of injection molders, benchmarking them against their peers in a wide variety of areas. When Walton did an assessment of Nicolet, he was impressed with the organization.

“They’re in such a remote location. What we found interesting is they know what they want to do. They’re strong culturally,” Walton said.

Recognition in a remote location

The Indianapolis-based Manufacturers Association for Plastics Processors recently organized a plant tour, and a sellout crowd of 60 trekked to Mountain to see the plant and learn about QRM and the skills matrix. Macintosh said Nicolet is an enthusiastic MAPP member.

Don Loepp Nicolet Plastics

Last year, Nicolet was a top winner in the annual Manufacturing Leadership 100 awards, presented by Frost & Sullivan’s Manufacturing Leadership Community. The other winners were General Motors and Ford Motor Co.

That’s obviously prestigious company. Nicolet was honored in the category of companies with sales of less than $1 billion — and the firm is quite a bit smaller than that. Macintosh said Nicolet is on pace to post $11 million in sales in 2014.

Nicolet was recognized for having carried out one of the “most transformative projects” reviewed by the industry judges, according to Frost & Sullivan.

Macintosh knows that others are starting to take notice of his small molding company in the remote North Woods.

Regarding the location, by the way, Macintosh points out that there are advantages to being in an area that’s known more for camping, hunting, vacationing and recreational sports.

“One of the things we like to talk about, we’re in God’s country. OK, I guess we all live in God’s country. But we’re in the middle of Nicolet National Forest.

“When we talk to our new employees, one of the things we try to leave them with is one of the benefits of working here is that no matter which shift you end up working on, when you’re done with work and you head out the door and you’re heading home, you’re on vacation.

“Everyone else has to drive here.”