Roger Vang, CFO of Diversified Plastics Inc., is a versatile guy.
He fills a lot of roles: bean counter, board member, human resources adviser, health care insurance negotiator, trustee, gear head, husband, father and grandpa.
Vang is one of three runners-up for Plastics News' 2015 CFO of the Year Award. The award honors financial leaders at North American plastics processors who have helped their companies achieve strong growth and profitability.
Since joining the company 10 years ago, Vang has tripled profit as a percentage of sales, improved health insurance coverage while cutting premiums and successfully guided the injection molder through the Great Recession with no layoffs. He has increased the firm's use of marketing and helped Diversified expand into the medical market by adding a white room and a clean room.
On top of those feats, one of Vang's greatest business accomplishments was helping the custom injection molder implement an employee stock ownership plan five years ago.
Vang performed a financial analysis and did some creative financing — by finding and negotiating with banks that were experts in ESOPs — that saved “a few hundred thousand dollars in debt service and interest expense,” he said.
His plan was so innovative, according to Vice President Annette Lund, he reduced the potential cost of the transition by 40 percent.
“We leveraged the ESOP and upgraded our machinery so we're much faster than before. And we're paying down debt faster,” he said.
Diversified was named Company of the Year for 2015 by the Minnesota/Dakotas Chapter of the ESOP Association.
Also, since forming the ESOP, Vang said he's noticed employees have a greater level of interest in the company's workings, and ask more questions at monthly staff meetings.
“They like their annual statements, too,” he said, chuckling.
Productivity has continued to improve significantly in recent years, he said, crediting in part the company's 5S program (sort, set in order, shine, standardize and sustain), a lean manufacturing method focused on increasing efficiency and reducing waste. The program also is designed to empower employees by encouraging them to make suggestions.
“It's really starting to add a lot of value,” Vang said in a recent phone interview.
By improving efficiency and productivity while cutting costs, Vang saved the company enough money to buy an Objet260 3-D printer from Stratasys Ltd. about 1½ years ago.
Diversified's stock value has soared since then, he said.
“Instead of just making prototypes, we also make molds out of plastics for our machines,” he said. Diversified is one of only perhaps a dozen companies in the world making plastic molds, according to Vang.
While the process has limitations, on short runs it allows for quick, cheaper changes and faster turnarounds.
The company continues to grow and currently operates 18 presses total, with clamping forces of 50-610 tons.
A good fit from the beginning
When Vang first interviewed with Diversified President James Dow for the CFO position, they toured the shop. Vang's instincts told him the corporate culture would be a good fit for him.
“People had big smiles. They started conversations with [Dow], felt comfortable around him. Jim has always cared a lot about employees, and a lot of them have been here since — well, since the beginning of time.
“If people stay here a year, they basically never leave.”
That's how the ESOP came about. When Dow began thinking about retirement, he wanted to be assured that “the people who helped us get where we are were taken care of,” Vang said.
Employees of the Brooklyn Park, Minn., company, near Minneapolis, trust management, he said, which helped make the transition successful.
“It made my job a lot easier, too.”
Workers also believed management would do right by them during health care changes. Through an innovative, custom program, Vang was able to improve coverage and cut costs.
“We have a lot of older workers, in our mid-50s — right when things are starting to fall off,” he said. “We're a higher-cost group, but we have a self-insured program that gives me a great deal of satisfaction.”
Vang kept health insurance costs flat for five years, saving Diversified 20 percent on health care expenses. His negotiating skills saved the company almost 50 percent in premium costs, Lund said in nominating him for the CFO award.
Lund said Vang also instituted a health program to encourage fitness after three employees died of heart attacks within one year. The program has been recognized by public officials for its ingenuity.
During the Great Recession years of 2007-09, when many companies hunkered down with significantly smaller staffs and still lost money, Vang took advantage of a state program in which employees received unemployment benefits one day a week so “we could hang on to them them the other four days.”
The result was very little difference in their take-home pay,” and they kept their jobs, he said.
Also during that time, Vang created a cost-reduction plan that reduced miscellaneous expenses by 2 percent.
This year, the $11 million company is seeing a 6 percent growth in sales over the year before, and a 57 percent increase in profit. It employs about 48 workers on staff and 10-20 contract temps depending on need.
Going beyond finance