INDIANAPOLIS (Nov. 18, 1:50 p.m. ET) — Mark Seeley and Craig Carrel probably never thought they'd be thankful for the recession of 2008-09.
But that's how both injection molding executives felt, after lessons learned during that time helped their firms deal with issues resulting from the earthquakes and tsunami that hit Japan on March 11.
Those events resulted in the deaths of almost 16,000 people, as well as extensive damage to buildings and infrastructure, including four nuclear reactors.
The disasters had a major impact on the companies that Seeley and Carrel work for, since both do a lot of business with Japanese automakers. Seeley is president and general manager of World Class Plastics Inc. in Russells Point, Ohio. Carrel is co-owner of Team 1 Plastics in Albion, Mich.
Seeley and Carrel described their firms' recovery efforts at a Benchmarking and Best Practices Conference hosted by the MAPP trade group, Oct. 27-28 in Indianapolis.
World Class generates about 85 percent of its business from Japanese automakers. At Team 1, that number is 60 percent, primarily business with Honda and Toyota.
Both firms had to scramble after the devastation hit Japan. “March had been a record month for us,” Carrel said of Team 1. “We had projected more growth, then March 11 hit and changed the whole year. At first, nobody knew how much we'd be impacted.
“Then April was down 40-50 percent vs. March,” he added.
“There were a lot of questions,” said Seeley of World Class “We have a Honda facility right across the street, so a lot of people came to us and asked what was going on. We didn't know, but by the end of March, there were indicators business was dropping. April ended up being off by 45 percent.”
There was an immediate impact on production schedules and manpower at both plants. World Class cut the hours of its hourly workers to conserve on capital and cash and match customer needs. At Team 1, Carrel said the disasters “hit so close to the recession that we had a plan in mind.” That plan called for shutting down the plan for periods of time and laying off some employees.
Seeley said the firm learned its lessons from the prior recession, when it didn't have the right staff or inventory levels it needed. “We learned not to repeat those mistakes,” he said. The firm drew up two or three plans to deal with possible scenarios after the earthquake.
Finances also had to be addressed.
“We had to work closely with our bank to keep cash flow,” Carrel said. “We had an active credit line and some cash. It was a struggle, but we were able to balance it.
“We also had to get a short-term loan for six weeks,” he added. “Without it, we would have been in trouble.”
World Class benefitted from using the same bank used by Honda. “The bank was hearing the same thing from Honda,” Seeley said.
Several months after the event, production at both World Class and Team 1 is closer to normal, but still not what it was before the recession. World Class has not returned to pre-earthquake employment levels — the firm “took a hard look at what we needed from a labor position,” Seeley said.
MAPP's executive director, Troy Nix, said when the disasters hit World Class and Team 1, “it was like going down a train track at 60 miles per hour and then the track disappears — it's gone.”
“But the companies were battle-hardened because they'd already been through it during the recession,” he added. “That helped them both dramatically. The takeaway is that even if you're doing well now, you have to be prepared for a catastrophic event.”
Carrel agreed that Team 1 used some of those recessionary lessons to handle its post-earthquake experience. “You have to react quickly and make decisions based on the information that you have,” he said.