A recession success story
Intertech Plastics, Inc. is an example of how a mid-sized manufacturing firm proactively managed their business through the recession to exit an even stronger company. They made some gutsy decisions to invest in their business through regular strategy sessions, investment in technology, and careful management of expenses.
Intertech Plastics is a mid-sized local manufacturer of custom injection and blow molded plastic products. Their facility is highly automated with state of the art technology and led by excellent management. They run 225 injection molding machines and one large-part blow molding machine. They also have expertise in custom design and product development which they make available to for their customers.
Their products are sold under private labels for many of the leading companies in the consumer products, medical equipment, industrial equipment, food services, telecom, and packaging industries. Intertech Plastics does not market or sell products under their name, all products are private labeled and assembled in their Denver plant.
The owner and President, Noel Ginsburg, leads an annual strategic planning program process each year, which allowed them to be ready for the downturn in business that took place. In 2009 and 2010 sales to the construction industry dropped by 50% and sales to automotive went to zero as customer facilities were shut down and moved out of the U.S. This was a time of uncertainty and angst about the projected bottom, and the company was forced to lay off some of their workforce to preserve cash. General ongoing marketing efforts in 2008 and 2009 landed new customers that replaced the lost revenues, and then exceeded them, most notably from consumer products manufacturers. Revenues in 2011 through July are up 100% from 2010, which included a record setting month in July. Employees are now at about 100100, down from over 150 in pre-recession years reflecting how automation, technical and systems improvements increased efficiencies. Some other areas that Noel and his team experienced include:
A recurring theme that we are seeing is the banking environment became less personal and more about the ratios. Noel moved his banking relationship from a large national organization to a local business bank. The new relationship resulted in an SBA loan to purchase equipment and further strengthen cash flow.
Noel’s team developed a roadmap that focused on improving their operations during their annual planning sessions. The roadmap included upgrading equipment and continually adding machine automation for state of the art time studies and movement tools, along with efficient line layouts. A gutsy move in a tough economy, but it allowed them to provide customers with cost competitive assembly pricing.
Noel and his team have a great emphasis on leveraging IT to gain a competitive advantage. In a process that took 12 months to complete, the company upgraded to a fully integrated accounting and MRP system. throughout the company. The system provides machine monitoring controls to keep processes in check during all phases of production and uses the data for process optimization and efficiencies. The goal is to reduce costs without sacrificing quality or reputation. Noel Management can monitor all operations and each machine from his their offices or remote as long as he hasthey have an internet connection. This is critical for a manufacturing plant that operates 24/7. The system also allows Intertech’s customers to access information to review inventory, order and shipping status.
Noel is very active with his marketing efforts and includes speaking at trade conventions, submitting articles to trade publications in his target markets, and limited trade advertising. In addition to these efforts, the company has significant efforts in SEO (Search Engine Optimization) and SEM (Search Engine Marketing), which has resulted in page one listing on Google.
Their customers are 95% national and 5% international. With the rapid growth from 2010 to 2011, the focus is on customer concentration and best fit for Intertech. In this analysis, the company let go of some customers, helping them find other more suitable manufacturers. The goal for 2012 and early 2013 is to maintain sales growth of 5-10% and use efficiencies to continue increasing profits to reduce the debt.
Strategic planning is the key
The objectives of each year’s strategic plan during the recession were consistently met. Noel and his team were able to anticipate some of the downturn and develop a plan to emerge from the recession a much stronger company. The strength of Intertech Plastics is in the dedicated employees, state of the art technology and integrated automation systems, the longevity and the reputation of the company.
Consistent with Intertech’s core values, its emplyees have a deep commitment to the community in which they live and do business. Noel has served as Chair of Mile High United Way’s Board of Directors and annual campaign, Chair of the Allied Jewish Federation of Colorado, as well as a number of other local non-profits. In addition, company employee’s volunteer weekly at Montbello High School, teaching a business management and marketing class as well as volunteering with Habitat for Humanity on an annual basis. This year will mark the 10th anniversary of the company’s annual United Way Charity golf tournament raising over $100,000 over the years.
Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of two books “Owner Exit Planning: Leave On Your Own Terms” and “Mapping Your Recovery: Grow sales in difficult times”, www.roundhouseadvisors.com/growsalesbook . For additional information visit www.RoundhouseAdvisors.com