A global business like Viking Plastics had more warning than most in the U.S. about the economic impact of the pandemic. CEO and President Kelly Goodsel said that insight was helpful but couldn't halt the disruption to its automotive business.
However, that business is slowly coming back on line. Goodsel shares his thoughts on culture, private equity ownership and rate of change in his recent talk with Plastics News Publisher Brennan Lafferty.
What follows is an edited transcript of their conversation. The full interview is available online at www.plasticsnews.com/audio as part of the new "What Keeps You Up at Night?" podcast.
Q: Let's talk autos. We all expected a slowdown in 2020, but certainly not a complete halt to production for several weeks. Viking Plastics is a global supplier to the automotive industry. Can you tell us how you've dealt with this disruption to your business?
Goodsel: We actually saw this coming with our facility in China back in February with their facility being shut down for six to seven weeks. When things started to show up here in late March, we knew we had to take action.
Ultimately, we are here to serve our customers, and even though our automotive customers shut down our Pennsylvania facility, our Louisville, Ky., facility still had nonautomotive customers that were essential. For example, Trane, Carrier, Lennox air conditioning systems that are required in grocery stores, Walmart, medical facilities. They need to be up and running. So, we had some business, but our Indiana facility, which is 100 percent on automotive, was essentially shut down for six to seven weeks.
Q: Given the size and scope of Viking, let's talk about the new United States-Mexico-Canada Agreement. Do you expect USMCA to help plastic suppliers like Viking?
Goodsel: I think it's going to shift a little bit of the balance. But I don't think it's going to be a monumental change.
For people that have invested in facilities in the United States and not made an effort to go to Mexico, there's a chance for them to pick up some more share, not only from Mexico but I think also reshoring, in general, from the long supply chains in China, India, Eastern Europe to the United States.
I think there's going be a lot of people in Detroit and elsewhere asking why are we spending all this time there? Why don't we make it here and buy it here? So, I think there'll be a shift. I don't think it's a game-changer for anyone.
Q: You're also owned by private equity. Is the ability to grow and expand quickly one of the benefits of being owned by private equity?
Goodsel: I went from 100 percent ownership to a majority ownership to a minority ownership back in late 2016. Probably the best way to describe our relationship — Spell Capital out of Minneapolis bought us — is I get to run the company just like I used to. I just have a lower risk because I don't own all of it.
I own a smaller portion of it. That's point one. And point two, our goal has been to grow the business, both organically and through acquisitions.
We've been able to do that with acquisition in both 2017 and 2018 and then our partnership in Mexico in 2019. So, we've been very active.
But I have to tell you, I've got a lot of friends that have gone down the private equity path. And there are some good news stories. I would put myself in one of those good news stories, good partnership, good relationship with the private equity team.
And then there's the not good news stories. Or people maybe don't go into the arrangement with an alignment around growth, strategy, growth rates, profitability. It's kind of like buying Walmart stock at $50 a share and your expectations is it's going be $70 a share in two weeks. You're probably disappointed unless you're really lucky. I think that's where the private equity guys get their bad rap is when they're not in alignment around those activities.
Q: Is there anything that has surprised you about your team during the pandemic?
Goodsel: One of the cornerstones of the Viking business is our culture. About 10 years ago, we adopted the Paul Akers 2-Second Lean book. Not necessarily for the "lean" portion of it, but more for the culture aspect of it, and it just has highlighted over the last few months how resilient our team members are, how focused they are on running the business, as if they owned it.
It's one of the things that we talk about is run the business as if you own it. It's not owners and employees. It's not a situation where people need to be fighting against each other. It's how do we all do our jobs, albeit different jobs. How do we do our jobs the most efficiently so that we can deliver value to all our customers, employees, suppliers, community and, obviously, our shareholders?
Our team has been resilient. They've come through with a ton of improvements and great ideas during the downtime when we had some availability of resources.
The other thing is the willingness to change. We were not Zoom meeting. We weren't Teams meeting. We weren't videoing. It was no big deal to get in the car and drive from one plant to the other for a six- or seven-hour trip. Within weeks, we've transitioned our business from very much a face-to-face business to an interactive video business.
And then we're actually lucky enough because of our engineering resources to land a Ford ventilator program, a couple of different parts. We worked with the engineering team at Ford to literally [start the process] from a napkin to molding parts in nine days. That was featured on 60 Minutes. It's been a roller coaster. Mentally, you're exhausted from the economy doing what it's doing but resilient and doing a great job of fighting through that stuff and making it work to your benefit.
Q: So, what keeps you up at night?
Goodsel: Probably the topic that has challenged me for the last 10 years is what is correct rate of improvement or pace of change for our business.
One of the things we talked about from a strategic plan standpoint with all our employees is we want to improve. Is 0.1 percent improvement over the next 10 years an acceptable rate? Most everybody says no. That means we're only going to be 1 percent better 10 years from now.
The flip side is, do we want to grow or change or accelerate at 25, 30 or 40 percent a year? We've all seen companies that have grown too fast or tried to change their culture too fast.
So, the real challenge for me, the thing that keeps me up at night, is what is that rate of change for our business that is an acceptable rate, but also a manageable rate. It's something we talk a lot about and work on every day.