The Clearwater, Minn., firm has been investing in thermoforming and sheet extrusion capacity and has set up a new management team to lead the growth, said T.O. Plastics President Mike Vallafsky in a phone interview.
“We haven't butted heads with the [food packaging] majors,” Vallafsky said. “We will be selective in niche markets.”
The firm sees significant opportunities in applications where a million or fewer thermoformed parts are called for.
T.O. Plastics plans to develop proprietary lines of specialty food packaging and has hired a seasoned thermoforming executive to lead the way.
Jim Weaver has been T.O. Plastics' regional sales manager for food since he was hired in mid-2014. He joined T.O. Plastics from D&W Fine Pack LLC, where he last was national and multi-unit foodservice sales manager. D&W is a major thermoformer in Fountain Inn, S.C., which also does injection molding.
“He was hired to champion our entry into food packaging,” Vallafsky explained. “He brings expertise to the job.
“Growth in food packaging is still about 5 to 6 percent a year,” Vallafsky estimated.
The company has spent about $2 million annually in the past three years to expand and upgrade. Last year it boosted its capacity to make sheet from ABS and high-impact polystyrene. It also extended its 3-D printing and scanning capabilities to speed up turnaround for customers and its own proprietary product development.
Supporting growth plans are a new management team. In the past year and a half it hired Tony Reinhardt as vice president of finance, Shawna Pearson as director of engineering, Charlie Mockenhaupt as vice president of sales and Arne King as vice president of operations.
Vallafsky is counting on the executive team to lead efforts in lean processes and “best-in-class” manufacturing practices.
“It is vital to have individuals of this caliber on board to not only recruit, train and manage our top talent, but also to foster a sense of community and a must-win attitude in our growing company,” Vallafsky stated.
In addition to a thrust in food packaging, T.O. Plastics is adding plastic sheet sales to its business.
“It's not our No. 1 priority, but in mid-2014 we began selling rollstock,” Vallafsky noted.
It uses most of its sheet in house but it now can take its excess production capacity to the merchant market. Conversely, T.O. Plastics buys some of its sheet needs, especially food- and medical-grade sheet. Over the medium term the company will add sheet extrusion and coextrusion capacity.
“We are vertically integrated, which gives us a distinct advantage,” Vallafsky opined. Its ability to do sheet-fed and in-line thermoforming, producing heavy-gauge to thin-gauge products, also gives it flexibility to act on business opportunities.
T.O. Plastics' diverse customer base includes OEMs and other manufacturers in horticulture, medical device packaging, consumer goods, electronics and industrial products.
Vallafsky did not disclose the number of sheet extrusion and thermoforming lines his firm runs. He also declined to provide precise sales figures but said annual turnover has been about $40 million. Sales growth last year was constrained by the company withdrawing from a low-margin business with an undisclosed OEM.
T.O. Plastics operates a satellite plant in Otsego, Minn., which is ISO compliant and equipped with Class 7 and 8 clean rooms for medical and food packaging. To reinforce its new drive in food packaging the Otsego facility got compliance with the American Institute of Baking in late 2013.
In total, T.O. Plastics has about 275,000 square feet of space, which should suffice for a few years while it expands capacity. It employs about 150.
The company was founded in 1948 originally to thermoform refrigerator parts for the business now known as Frigidaire. T.O. Plastics has been owned by Otter Tail Corp. of Fergus Falls, Minn., since 2001. T.O. Plastics supplies some components to other Otter Tail subsidiaries but for the most part it operates as an independent company, according to Vallafsky.
T.O. Plastics is part of Otter Tail's manufacturing division, which includes metalworker BTD Manufacturing Inc. Otter Tail's plastics division includes PVC pipe producers Northern Pipe Products Inc. and Vinyltech Corp. The conglomerate also has a big stake in electric power supply.
