In the mid-1990s, Libralter Plastics Inc. was rising with the auto industry, at one point filling four facilities, including its base in Walled Lake, with 800 employees and more than $100 million in sales.
But the numbers were deceiving, built up during a period of rapid growth when automakers were increasing sales, but also demanding that their suppliers take on more responsibility while simultaneously cutting costs.
The first problems surfaced during Libralter's biggest plant expansion, in Howell, Mich., and cascaded from there.
``We had problems with a program there that we didn't do well at launch. We had to fix that, and then there was the [1998 General Motors Corp.] strike, at a time when GM was our biggest customer, with 70-80 percent of our business,'' said Libralter President Alan Barr. ``Then we had to get rid of the plant in Westland [Mich.]. That took our attention, and then all the while you're taking your eye off this plant. The problems just snowballed.
``That all led to the point two years ago where we were struggling financially. We were hanging on by our fingernails.''
After an intense, 18-month turnaround that saw the company huddle up to improve the basics, Libralter is smaller and leaner, but financially stable and looking to expand once again.
``In most of these situations, people look for the magic solution and the magic is, there is no magic,'' Thomas Whapham, executive vice president and chief operating officer, said during an Aug. 11 interview in Walled Lake. ``You have to go back to basics; you put together a business plan and you do it. That's what we did.''
The company expects to end its fiscal year in October with about $30 million in sales and 240 employees at its one plant. Libralter is smaller, but the privately held company also expects to post an aftertax profit, which is becoming less common in the auto industry, even among larger suppliers.
Libralter has planned profit sharing with employees and is beginning to look at what it needs to do to double sales - without losing the operating principles it has regained. The company may eye a small acquisition or expand its existing plant.
``Back then, we really didn't have the infrastructure to know what was happening, so we were always who-knows-how-far-away from losing millions of dollars,'' Barr said. ``There's no question that this now is a better place to be.''
Terry Barr, an eight-year member of the Detroit Lions football team in the 1950s and 1960s, founded Libralter in 1977, beginning with a handful of injection molding presses, a rented building and a few automotive contacts he had developed through sports and other businesses in the Detroit area.
The molder of a variety of interior and exterior components grew steadily with the auto industry, expanding to meet customer demands while also balancing continuous pressure to cut prices.
The tough times began in the late 1990s, though. The company sold assets to stay above water until, by 2001, it was being pressured by customers, lenders and vendors alike.
At the same time, Whapham was preparing to retire from sunroof maker Inalfa Roof Systems Inc., where he had led that company through a turnaround. Terry Barr knew Whapham through other business contacts and asked him to talk to his son, Alan Barr, who was seeking help with Libralter.
``It wasn't that difficult to decide to stay with it,'' Alan Barr said. ``It takes commitment and sometimes you do ask yourself why, but it's the company my father started. It's something I think we're good at. It's something we think we can all be proud of.''
Once convinced that the family, the company and its management all were ready for the ``tough love'' of a turnaround, Whapham signed on.
``Alan was always pulling rabbits out of a hat to get us through whatever we faced. He just wouldn't give up,'' said Richard Felstow, vice president, human resources and legal.
From the start, Whapham and Barr told everyone involved that the process would be difficult and would require hard work. Managers would be putting in 12-hour work days or longer. Every salaried worker would have a job on the shop floor to help oversee the firm's transformation. Office staff might end up cleaning up around work areas or painting floors.
Receptionists were tasked with collecting and posting hourly production numbers. Engineers helped solve on-the-floor quality problems.
``We told them what was going to happen and we told them there was going to be a head-count reduction,'' Whapham said. ``We said, `Do you want to stay here and help? Because if you stay, this is what's going to happen.' ''
Some people left voluntarily as the company slashed 20 percent of its salaried workforce. Others stepped up to respond to the call for improvements.
``Even on the clerical level, there were people who had been here quite a while,'' Felstow said. ``They didn't want to see it fail and were willing to do what they needed to keep it alive.''
``People look for leaders,'' added Mark Hokanson, manager of organization development and communications. ``Some of the people who really responded well were the ones who were able to say, `Boy, I've really been waiting for this.' ''
Management set up a command center on the shop floor and launched hourly tracking of specific production numbers - scrap, completed parts, shipping and any problems that would arise. Someone from upper management would be on site at least 20 hours each day.
When the turnaround began, Libralter was racking up an unacceptable defect rate of 1,000 parts per million.
``People would have made scrap all day long, under the thought that they've got to get a shipment out. Now we'd say, `No. Shut it down. Get out there, find out what's wrong and fix it,' '' Whapham said.
``If they'd say there was no money to fix the machine, we'd say then let's stop running the scrap and use the money we'd waste there to fix the machine.''
Molding process guidelines were to be followed to the letter. Operators were told to run the machines by the book, not by some belief that they knew better.
``We had all kinds of knob tweakers in here,'' Whapham said. ``It's that `black magic' syndrome. It's not magic, it's a process.''
``We needed more scientists and fewer artists,'' Barr added.
The firm installed red, yellow and green lights at each press, giving immediate feedback about its operation. Workstations were equipped with specific instructions for each job.
And while communicating with management and workers, the company also was in close contact with its vendors, bankers and customers - and most responded strongly to Libralter's plans to improve.
In any turnaround, companies must be prepared to negotiate with all of their constituents and lay down the realities of what must happen and what will happen, said Jonathan Ball, an analyst with Birmingham, Mich.-based turnaround experts Conway MacKenzie & Dunleavy.
Interior supplier Lear Corp. loaned Libralter experts who helped the firm lay out a better manufacturing footprint, and improve material flow, engineering and lean manufacturing.
Southfield, Mich.-based Lear cannot help all of its more than 2,000 suppliers, spokeswoman Andrea Puchalsky said, but it was convinced Libralter had the leadership to survive.
``A company that is key to our campaign, and that we think is salvageable, we will go in and do what we think is appropriate,'' she said.
Some businesses supported the turnaround by simple moves like showing patience with deliveries or payments.
And the numbers improved.
Libralter now has a defect rate of 10 parts per million. Whapham estimates the firm is at 80 percent of its goal of at least 90 percent efficiency.
The company has even made a few key hiring moves to bring the engineering expertise it needed in-house to keep up with the continued demands of its customers. Some of those people have come from the ranks of other businesses familiar with the old Libralter, and they were eager to find out what was happening there.
Hourly production counts and daily statistics go into a rolling forecast used to track the company's long-term profit and cost numbers, allowing the company to know precisely how it is doing - even when customers seek price reductions.
Whapham said Libralter is nearing its goal of being a true world-class manufacturing facility. It has the footing needed now to ensure its continued survival.
``When I met Alan, I became convinced that here was a family that understood that there were a couple of hundred jobs here, and they were going to fight their way back,'' he said.
``It's good to put that effort into an American company that can go out and say that we can be as good as anybody.''