Some plastics processors are using the economic downturn as a time for self-reflection and improvement, are taking steps to increase profitability, and are positioned to come out of the recession stronger than ever, according to a recent industry survey of 77 plastics executives.
About 64 percent of respondents said they have significantly intensified the way they are managing their business operations, according to the Manufacturers Association for Plastics Processors 2009 Contingency Planning Survey.
MAPP members are using the survey and networking opportunities through the organization as a method of benchmarking during these trying times, and sharing best-practices ideas to get through it.
“When things get bad, what do you do? This isn't something that's written down in a [standard operating procedure] book. It's not out there,” said Troy Nix, executive director of Indianapolis-based MAPP, in a telephone interview. “If you've never led in an economic downturn before, how do you know what you're supposed to be doing?”
Many of the companies are mining the survey results for ideas. Some companies are doing the opposite of what one might expect. For example, because of the high number of unemployed, some firms are going into a hiring mode to take advantage of the unusually deep talent pool available.
“Think about it,” Nix said. “Some of these guys are willing to work on terms they never would have before. If you're wanting to grow your management team right now, or bring in a new function, the pickings are good out there.”
Kelly Goodsel, president and CEO of Corry, Pa.-based Viking Plastics Inc., talked about the benefit of talking through problems and concerns with other company executives.
“As owners and CEOs, in times like now, it can be very lonely,” Goodsel said in an April 9 telephone interview. “You don't have a lot of people you can sit down with and discuss options, and discuss the difficult decisions you have to make. You get a tremendous amount of value out of being able to pick up the phone and talk to three or four people having the same issues.”
Mike Walter, general manager of Elk Grove Village, Ill.-based MET Plastics Inc., said his company has been focused on scrap and cycle-time reduction, as have most companies involved in the MAPP survey.
“We've been making changes to the molds to improve efficiency, whether it be improving water in the molds or modifying the gates. Things like that,” Walter said.
The company has also invested in automation during the recession, namely robots, to help reduce hourly costs, he said.
“We typically play in the low-volume molding arena,” he said. “Automation for us is not as much of a no-brainer decision. It was much more difficult to justify the cost of it. We've recently been doing more cost analysis. We determined that we can improve our rates, our cycles and also our part quality.”
While the survey results are promising in that so many companies appear to be doing all the right things, Walter said survey data often comprises “higher-end companies that are dedicated to improving themselves.
“They see the importance of filling out the survey and benchmarking. I imagine there are a lot of other companies that aren't doing much and are more worried about the economy than doing something to address how the economy is affecting their company,” Walter said.
Viking Plastics has gone from a five-day work week to four days to minimize labor costs while retaining its workforce, Goodsel said.
“When we come out of this, our people are going to come out trained and we're going to have the people we need on staff,” he said.
The company was able to completely shut down and reduce overhead during the three-day weekends. Then, about three weeks ago, Viking orders jumped 10-15 percent, and the company has been adding hours accordingly, Goodsel said.
“The focus people are putting on their business is going to benefit them when things turn,” Nix said. “They're better, they've increased training, more people know how to do it, they've been through the drill.
“The good companies are going to be able to maintain this focus.”