Thin-gauge thermoformer Flexpak Corp. of Phoenix is hitting the next stage of its metamorphosis with changes in management and an eye on becoming 100 percent employee-owned by 2015.
Ed Bond, who has been president, CEO and chairman since the company's founding in 1974, is gearing up for retirement. Bond has appointed Steve Murray as president and Jim Boley as vice president of sales development.
It's been an interesting evolution for a company that started as a contract packager.
That was our main business until the late 1970s, Bond said in a Feb. 2 telephone interview. We got into thermoforming in a small way because of the contract packaging business.
Now, thermoforming is the core of Flexpak's business. Two years ago, officials invested in a clean room for the medical market.
Our medical-market business is now more than 50 percent of our business, Murray said. Prior to fleshing out the medical market, the business was nearly 100 percent consumer. Roughly 5 percent of its business is in food trays.
We're much stronger in two segments as opposed to being too heavily concentrated in one, he said. We've seen nice growth over the last year.
Sales growth in 2010 was a welcome change from the rough ride of 2008 and 2009. Flexpak's sales were up 30 percent last year.
We hit the abyss like everyone else in 2008 and 2009 but gained that all back in 2010, Bond said. I'm pleased with where it's at. We're being very careful. We feel very good with business we've got.
In Bond's view, ensuring a company's longevity is about relationships with employees and culture. He has sold the company twice once in 1976, only to regain it three months later, and again in 1982, buying it back in 1985.
In both those situations they lost a lot of the business we had, he said. I just always felt like it was a very viable company and I didn't want to see its demise. We committed ourselves to make it last.
Now, he's committing himself to prepare employees for 100 percent ownership. The company first began implementing its employee stock ownership plan (ESOP) in 1988. As of 2010, employees owned just a little over 50 percent of the company.
By 2015, my goal is to get 100 percent employee ownership, he said. ESOP is a great way to maintain ownership longevity of the company.
Employee ownership has its benefits, Murray said.
Motivation, [the] pure fact of being an owner, your decisions and approach to the business are that of an owner. It gets you more engaged in the business, he said.
Flexpack now has 60 employees, up from 50 one year ago. At one time, the company employed more than 300 and had expanded contract packaging with plants in Illinois and Virginia.
Bond sold all of the packaging business in 2002 and concentrated on the thermoforming operations in Phoenix.
Starting this year, he has committed himself to the ESOP.
We're being very open-book with [workers] on our company and what we're trying to do, he said. We're trying to help employees think like owners. Seventy-five percent of employees have been with the company five years or more. We're trying to reward longevity. We look at the long term, not short term.
We're not like publicly traded companies that have to show results this quarter. Sadly, so many of our business images are the stories of the high-powered, high-paid, high-bonused executives that have to show quick-term results. Then they collect their bonus and they're off to another job. In my business, you can't do that. If your goal is to build something to last, you have to look at what it takes to make it last, he said.
I think that's the reason we've lasted long-term, he said. I'm proud of our ability to stay in business 36 years when there is such a high mortality rate upon companies like ours.
Flexpak's goal is to grow at a rate that allows it to maintain financial health while maintaining results, Murray said.
I am reminded of a customer of 10 years and their recommendation letter we received during our ISO registration process boasting about our ability to deliver over 30 million parts annually, without a single missed delivery or quality issue, he said. Foremost, we need to maintain that reputation and, given the current economic conditions, we think a good supporting growth rate is about 8-10 percent.
For Bond, it isn't about being the biggest. He has read and has had his management read Small Giants, a business book about being the best.
In 1974, he started the business with a $5,000 loan. To see it evolve into what it is today has been amazing.
The steps that it has grown in, it just amazes me, he said. To have a controlled environment and to have achieved ISO, it's been a real blessing to see it happen.