As it marks its 10th year in its manufacturing complex in Piqua, Harmony Systems and Service Inc. has managed an unusual feat for a custom injection molder with a history largely of automotive clients — tripling its sales during the recent economic meltdown.
During a March 25 interview at the company's 100,000-square-foot facility, plant manager David Richard said diversifying into consumer goods has paid off in a big way. From $4 million in sales in 2007, Harmony is on track to achieve $15 million this year.
“We like to think we're smart, but sometimes it's better to be lucky,” he said.
Despite having a large contract with Playtex Products Inc. of Westport, Conn., to manufacture items such as baby-wipe containers and components for Playtex's Diaper Genie system, Richard said Harmony remains committed to its core business: supplying automotive parts including taillight assemblies, and trim and body side moldings, to the Big Three and Honda Motor Co.
“It seems like a good time to get back in automotive,” Richard said. “As companies go out of business [as a result of the recession], the Fords and General Motors have less of a supply base to bid from. We're starting to see pricing get to a place where you can bid on it. You can get some margins — you're not in double digits, but you're not trying to just survive and get business with no margin.”
Harmony in mid-2009 bought most of the extrusion assets of Plastic Trim LLC of Beavercreek, Ohio, from China's Minth Group Ltd., which had purchased the firm in 2007. Several lines were then moved into a purpose-built addition constructed behind Harmony's plant for its new extrusion subsidiary, Precision Plastic Technology LLC.
Mike Wilfong, PPT's engineering manager, has seen the best of both worlds. He worked for Plastic Trim from 1986-2000, left to work for Harmony, went back to Plastic Trim in 2003, then left after Minth bought the company from its American owner, Bill Mercurio.
On March 25 at PPT, Wilfong demonstrated one of the 1,000 parts per day he runs for General Motors Co.: a PVC body side molding for the Chevrolet Silverado SUV that has a Mylar laminate strip and protective plastic coating, as well as injection molded end caps.
Among the former Plastic Trim assets installed at PPT is a 6-inch profile extruder with 11/2-, 2- and 21/2-inch coextruders tied in to produce coextruded lips, skins and cores. PPT and Harmony recently inked a deal with GM to produce 117 different parts for various vehicles in GM's four marques.
“There's no barriers back here, we can be as creative as we want to be,” Wilfong said. “Fortunately, or unfortunately, we are doing a lot of service work. The tooling was in poor condition, so it's given me an opportunity to train some individuals. You literally have to run 400 or 500 pieces and then do a changeover.”
Richard came to Harmony in 2005 from GM's Inland division in nearby Dayton, Ohio, where he spent more than two decades in engineering and plant management. Ed and Nellie Adams, Harmony's co-owners, worked for GM before founding Harmony in 1994 in Piqua.
“I took a look at our portfolio and thought it would be good to get into other businesses — whether that be medical, consumer goods, etc. — that tend to have a little bit better margins than automotive,” Richard said.
Since the changeover began in 2006, Harmony has added a nearly 11,000-square-foot warehouse to its existing 80,000-square foot factory, plus the 10,000-square-foot PPT addition in 2009. The number of employees at Harmony has tripled from about 30 to nearly 90.
The firm in the last 18 months added 10 injection molding presses, including several from a consumer-products molder that closed in Streetsboro, Ohio, bringing the total number of injection machines to 27 — a stark contrast to the five machines and three operators Harmony had in 1994.
“The overriding philosophy we have here is to continue our path with lean manufacturing. Even though injection molding tends to be shoot-and-ship, we found that the success with some of our products is to do molding and assembly all in one shop,” Richard said.
Lean manufacturing and kaizen cells — small groups of employees that identify workplace problems and solutions — have been part of Harmony's success in the slow economy, as has support from customers to keep down manufacturing costs, he said.
“I think the attitude is permeating through the industry that if we're going to be competitive — not only in injection molding, but in the [U.S. manufacturing industry] — you've got to look at the whole supply chain and work together. Everybody's [suppliers have] to do it, from Tier 3 to Tier 2 to Tier 1,” Richard said.
Several challenges to growth remain, including banks that are reluctant to extend credit even to companies with good track records during the economic slowdown. There's also the recent passage of federal health-care reform legislation that has many companies wondering how the fine print will affect them, as a host of scheduled changes — including an increase in 2013 to the Medicare tax rate paid by employees, a 2014 employer mandate to provide medical coverage and a 2018 excise tax on benefit-rich plans — begin to take effect.
“Not knowing how it will affect us is difficult. We are a company that offers a very good health-care plan. Because we've had some growth, we've picked up more and more of the cost of [employee] health care. Over the next three to four years, it's going to be a dollars-and-cents thing,” Richard said.
He said Harmony is working with its insurer to ensure that all employees will get affordable health care under the new law.
In another pending change, co-owner Ed Adams and Harmony's management are working on a succession plan that would see the company sold to members of management, Richard said, although there is no definite time line for that to happen. Adams is in his late 60s.
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