Diversified Plastics wins PN Excellence Award for employee relations

Brooklyn Park, Minn. — When the employees are the owners, they pull together as a tight-knit team to run as efficiently as possible and grow the company.

That's what happens at Diversified Plastics Inc., a custom injection molder based in the Minneapolis suburb of Brooklyn Park — winner of the Plastics News Excellence Award for Employee Relations.

James Dow, who found himself out of work when his employer went bankrupt after what he said was mismanagement, decided to start his career over and bought a small, financially troubled company in 1977 with 13 employees. He was new to plastics, so he relied on the hardworking men and women to build up Diversified Plastics. Today the company has 100 employees in Brooklyn Park and a company the firm bought two years ago, Pacific Plastics Injection Molding in Vista, Calif.

"Through a lot of hard work and dedication and getting good people, we just kept growing and growing," Dow said. He promoted a family environment and a culture of collaboration.

So, as Dow got to an age when he was looking to retire, around 2005, offers came in from potential buyers. "People were approaching me all the time wanting to buy the company. They would always assure me that they were going keep all my employees, not to worry. Everybody'll have a job. Well, I wasn't born yesterday. I know better than that. I had 13 people who put their lives into this company, and I wasn't going to have them out in the street," he said.

Dow turned them all down. Then Chief Financial Officer Roger Vang told him about employee stock ownership plans as a way for Dow to retire and turn Diversified Plastics over to his staff. But the company was too small and it took several years for it to make economic sense, Vang said.

Finally, in 2011, Dow created the ESOP.

Workers owning a company can be a powerful motivator. After a computer crash in 2015, employees toiled over several weekends to fix it. Diversified lost no customers.

Amazingly, the average employee tenure is 12 years. And four of the original employees are still at Diversified Plastics.

Sales totaled $21 million in fiscal year 2019, ended Oct. 31. Markets include water filtration and medical devices, among other end uses.

Each year, accountants figure the value of the company. All the ESOP members in the Brooklyn Park factory have a monthly meeting to review the financials and get a company update. They like what they hear: The stock price has gone up 72 percent in last three years.

Now Vang is working to get Pacific Plastics employees into the ESOP.

In 2015, Diversified Plastics won the Company of the Year Award for the Minnesota/Dakota Chapter of the ESOP Association.

Kevin Hogan joined as CEO in 2017 and started a strategic growth initiative for faster, profitable growth. Hogan himself came from an ESOP, so he's well-versed on employees owning the company.

One major growth initiative is additive manufacturing for direct part production. Diversified Plastics acquired three Carbon additive manufacturing machines and formed a new unit, called the Acceleration Station, to focus on the technology. The molder is no newcomer to 3D printing: Diversified bought a Stratasys printer in 2013 to make prototype injection molds.

Hogan thinks additive manufacturing could account for one-third of business in five years.