The economic seas may be rough, but Precise Technology Inc. is leveraging a novel approach to keep the contract injection molder and mold maker sailing ahead as smoothly as possible.
The North Versailles, Pa., firm, which primarily serves the consumer packaging and health-care markets, dedicates some of its 14 molding plants to sole customers and specific products. That ``customer-aligned production'' has driven growth: Precise has added 11 new presses, mostly Huskys, since late last year, and now boasts 202 presses in North America and 41 in the Netherlands.
The approach - driven by President and Chief Executive Officer John R. Weeks - is a key to the business philosophy that has shaped Precise since it more than doubled its size by acquiring Tredegar Molded Products from Tredegar Industries Inc. in 1996.
Precise constantly looks to boost efficiency by investing in highly automated equipment. The acquired Tredegar plants' direct labor cost as a percentage of sales was 17 percent. Today the average across all Precise plants is 10-12 percent, with Precise IML, its highly automated, single-product plant in Swedesboro, N.J., clocking in at closer to 3 percent.
At the time of the acquisition Precise had 260 employees, five plants and annual sales of $49 million. Tredegar Molded Products had 1,140 employees, eight plants and sales of $85 million.
After consolidating and modernizing operations, Precise now employs about 920 and operates 11 molding plants and three mold-making facilities in the United States. In spring 2000 the firm acquired an injection molding plant in the Netherlands, now called Precise Phaff. Precise reported 2001 total sales of about $148 million, and Weeks said revenues this year - not counting its planned purchase of Courtesy Corp. of Buffalo Grove, Ill. - will top $150 million.
The company dedicates three of its plants to single customers:
* Its Holden, Mass., facility makes the popular Mach 3 razor organizer and the new Venus razor compact for Gillette Co.
* Its Streetsboro, Ohio, site makes the Diaper Genie for Playtex Products Inc.
* Precise IML produces baby-care products for Procter & Gamble Co.
In the summer of 2000, just two months after expanding into Europe, Precise Technology itself changed hands. Code Hennessy & Simmons LLC, a private equity investment firm in Chicago, bought the firm from longtime owner Mentmore Holdings Co. of New York.
The move was designed to provide the molder with a greater opportunity to invest and expand. Weeks said the arrangement, which includes a minority ownership stake for senior Precise management, has worked out as planned.
The other two finalists bidding for Precise in mid-2000 were Dallas investment house Hicks, Muse, Tate & Furst Inc. - which the year before had paid $353 million for the now-bankrupt Courtesy Corp. - and United Plastics Group Inc., which had formed in 1999 as a roll-up acquisition vehicle that since has had to slim down and restructure.
``We rode the right horse,'' Weeks said in an interview conducted during a late-June visit to two Precise molding facilities - in Newark, Del., and across the Jersey border in Swedesboro, near Bridgeport.
He claims Precise was the top performer last year in Code Hennessy's portfolio of more than two dozen firms.
Beyond upgrading equipment, assimilating the much larger Tredegar operations into its core required other significant changes, some of which are embodied by Precise's current emphasis on employee training, as well as its staff incentive and bonus system.
Weeks points to Precise IML plant manager Bill Finkley as a shining example of a manager who rose through the ranks and who instills those aspects of the Precise vision.
Finkley joined the company as a warehouse scheduler at its Delaware plant in January 1995 from Terumo Medical Corp. He became Newark plant manager in 1997 and assumed the same post at the P&G-focused New Jersey facility to oversee its launch in 1999.
Finkley explained his specific approach to training at the Swedesboro plant which, due to its dedicated, specialized nature, does not have to worry about changing molds. Except for the very experienced technical staffers, ``Most of the people we've hired have never seen an injection press. We do extensive training,'' he said.
``We pick the weakest person [in a given discipline], train them and then have that person train the others,'' he said.
That applies to everything from mastering the company phone system to maintaining electric motors. Finkley said it usually takes three to four weeks of training for a person to become prepared enough to teach his or her own class.
There also is a corporatewide emphasis on cross-training staffers to handle multiple tasks. ``There's not one person here who can't answer an alarm on a press,'' he said.
The New Jersey IML plant - which employs 15 salaried staffers, plus 25-35 temporary workers - operates its nine Krauss-Maffei injection presses around the clock, typically running at about 95 percent capacity utilization.
But twice a week, on off-shift days, staffers receive various types of in-house training.
``Miss three classes,'' Finkley said, ``and you're out,'' meaning you cannot attend any more of that particular class. That approach is challenging, Finkley acknowledged, but most rise to the occasion. ``Give someone the chance, and 90 percent will grab it,'' he said.
Weeks said Precise also applies an open-book policy with employees about corporate finances and the performance of every plant. Precise bases its performance-driven bonus system on the measure of ``cost of goods sold'' at each plant, derived by monitoring such factors as material, labor, scrap and overhead costs.
Weeks sets the goals. Meeting them yields an average pay bonus of 18 hours per employee per quarter, based on each employee's own salary. But some plants get zero, while others sometimes earn as much as 32 hours per quarter in bonus pay. And everybody in the company knows what the workers at the other plants are receiving. All workers eagerly await the quarterly reports, Finkley said.
That awareness and in-house competition ``is one of the real drivers,'' said Weeks, who acknowledges that he adopted the fundamentals of the program from his former boss, Nypro Inc. chief Gordon Lankton. Precise's corporate executives have their own bonus rating system, based on overall profit and loss performance.
Meantime, changes proceed at other Precise plants, including at the Newark facility managed by Rusty Brooks, who oversaw its launch as a cap-molding facility in early 1994. That plant installed two new, 440-ton Husky G-Series injection presses in April, and then took delivery of two more 440-ton Husky machines in July. The four new lines, including auxiliary equipment, represent about a $2 million investment, according to Brooks.
The Newark plant now runs 13 hot-runner-equipped presses serving customers such as Playtex, P&G and Unilever. Three high-speed, 350-ton Netstal presses run 128-cavity, Swiss-made Schottli stack molds that churn out millions of small products daily.
A conveyor system transports the molded parts through the wall to the adjoining handling/storage area, where robots load them into tote boxes before they get sealed and stacked prior to shipping. Fine tuning of the blown-on labeling materials and automated vision-inspection process has trimmed the reject rate on those lines to less than 1 percent, he said.
Other factors can affect reject rates at the Precise IML plant. Finkley noted that, because of the sensitive labels, the plant must maintain a controlled climate of 45 percent relative humidity to keep its scrap rate below 2 percent.
``Running bad for one day would destroy one month's profitability,'' he said. ``That's the scary part. ``If something goes amiss, you need to fix it quickly, on the fly.''