Intertech Plastics Inc., a small custom blow and injection molder in Denver, survived a Chapter 11 bankruptcy with its core values intact, said President Noel Ginsburg.
At the Plastics News Executive Forum, Ginsburg recalled Intertech's fight to emerge from bankruptcy and thrive again - a fight he said small companies nearly always lose.
``The chances of survival are very thin,'' he said. ``It's like walking a tightrope in a high wind.''
In his March 6 presentation called ``Back from the Brink,'' Ginsburg listed five keys to making it out of Chapter 11: company values, employee loyalty, customer loyalty, the firm's reputation and a sheer determination to survive.
``It's certainly an experience I won't ever forget,'' he said.
Ginsburg told of the roller-coaster ride of his company, which has $15 million in sales and runs 24 injection molding machines and two large-part blow molding machines. In 1980, he and two partners founded the company as Container Industries Inc. Ginsburg developed the molding company from a college project to create a business plan.
One key product: a proprietary Traypak, used in the fast-food industry for sauces and mayonnaise.
In 1995, the company changed its name to Intertech Plastics, to reflect its position as a custom molder. Business was good, and the company was a major custom molder for Denver-based Gerry Baby Products.
Evenflo Co. bought Gerry Baby Products in 1997 and soon announced it was moving Gerry out of Colorado - a major blow to Intertech Plastics.
Ginsburg bought two Denver-area custom molders to consolidate the local industry. About that time, he signed a five-year manufacturing agreement with another company, which supplied Fisher-Price Inc. The company - which Ginsburg cannot name because of a legal settlement agreement - became Intertech's biggest customer, accounting for about $18 million in sales, he said.
But the unnamed customer ended up violating its agreement with Fisher-Price, and Fisher-Price fired the firm.
Ginsburg said Fisher-Price officials wanted Intertech to continue molding for the juvenile-products company. But Intertech suffered a cash-flow crisis when it stopped getting paid by the customer covered by the five-year agreement.
``Throughout this whole process, our losses mounted and our cash flow became terminal. I'd gone too far down the road to continue operating as a business, so I had some very difficult choices to make,'' he said.
Meanwhile, the manufacturing economy was difficult in Colorado. Several major companies left the state.
One option was liquidation, but Ginsburg and other top management decided to file Chapter 11 in 2000 and fight to keep the company alive.
Intertech Plastics emerged from bankruptcy in 2003. The company also settled out of court with the customer that burned it. Last year, Intertech recorded the second-most profitable year in its history.
Struggle for survival
Ginsburg called the experience painful and stressful, ``a living hell.'' The survival strategy was to retain all customers, acquire new business while in bankruptcy, retain key employees, cut costs and resize the company, remain committed to continuous improvement, sell nonessential assets and get the court reorganization approved.
Failure in any one area could have killed the company.
``If I would've lost my key employees, that would've been it. ... They clearly were the key part of our success,'' Ginsburg said. As to continuous improvement, Intertech got ISO certification while in bankruptcy.
Early on, Ginsburg also cut his own salary 30 percent. He sold his sports car. ``As the president of the company, you've got to lead in both good and bad times,'' he said.
In the court appearances and business dealings, there were plenty of opportunities to bend the truth or just plain lie. But Ginsburg said he refused, falling back on the company's core values of high ethics.
``It's almost like a security blanket for me. The one thing I wasn't going to lose, in this whole process, was my integrity, even if it meant the company,'' he said.
He outlined some lessons learned in the ordeal:
* ``Contracts are important, but they're not as important as shared value between partners.'' Intertech had an ``ironclad'' five-year contract. ``It did me absolutely no good when push comes to shove,'' he said.
Ginsburg advised to thoroughly check out a long-term partner. ``Once you're in bed with them, it's really hard to get out of bed.''
* Don't put all your eggs in one basket. Everyone knows this, but in plastics molding, it's easy to do, Ginsburg said. ``It's a risk, and there's no way to get around it. It may never come home to roost. But if it does, it can kill you.''
* Learn to act fast. Any missteps can threaten the business. Ginsburg said he wants Intertech Plastics to keep that sense of urgency.
* You're not alone, he said, displaying slides of his family, and his and his wife's sponsorship of the ``I Have a Dream'' Foundation, which mentors low-income children and helps pay for their higher education.
``You're what you do in this world. You're what you contribute to the world. And it's not the money that you make; it's rather what you give.''