The purchase of Sussex IM Inc. at the end of 2009 will keep the company and its 110,000-square-foot plastic injection molding plant in Wisconsin despite overseas competition. “We closed the deal at the end of last year, and we are a new entity as of Jan. 1st,” President Keith Everson announces. A management team consisting of Everson, CFO Dave Guagliardo and Phil Salzman, vice president of manufacturing, purchased the company from Rexam, which bought it in 1999 when Everson was its president.
The previous owners – Lorand Spyers-Duran and Walter Nathan – sold to Rexam when businesses were going global. Among its other products, Rexam manufactures plastic packaging for cosmetics. When the economy slowed in 2009, Rexam – which is a $6 billion company – was examining its 72 plants worldwide for rationalization. Plastics are $2.2 billion of Rexam’s Sales.
“After a long analysis, it made most sense to sell this plant, and Rexam first offered it to the management team,” Everson remembers. “So that’s where we stepped in. We got financing because the banks were starting to loosen up.”
Sussex IM has a multiyear agreement to supply Rexam’s cosmetics packaging, which is approximately 30 percent of Sussex’ business. “Their best option to retain that market was to keep us as their supplier,” Everson points out.
“It’s a win-win-win,” he insists. “It’s market; it’s a win for the employees at Sussex, because they got to keep their jobs; and it’s a win for our customers, because there was no disruption in supply.”
During Rexam’s ownership, Everson held numerous positions within the company over the last 10 years.
“Big European companies typically don’t recognize presidents – that’s not a common term for them,” he notes.
“You’re either a director or a general manager or a plant manager, things like that. I held a number of director positions and multifacility jobs, and I decided to get back into the small business arena.”
Everson was one of the first engineers Sussex IM hired 31 years ago and ran engineering and sales before becoming president. He started at the company in 1979, two years after it was founded.
“I worked out on the shop floor and learned how to hang molds and shoot plastics from some of the best guys in the business,” Everson remembers. He lists former owner Lrand Spyers-Duran and his father among his mentors.
Everson has degrees in engineering and management, and his family owned a tool-and-die business, which is how he first decided he wanted to get into the plastics industry. “In order to make a good injection molded part, you have to start with a good mold,” he says
“I learned about plastics through the tool-and-die business. It’s kind of like my grandmother said – never let school interfere in your education.
Back from Overseas
Sussex IM is seeing a return of manufacturing business from off-shore competitors. “We have seen a number of our customers and potential new customers that have done a total cost analysis on products from Asia, and they’re realizing if you really add everything up and put time and value on people, they probably with they would have done it here in the US, “ Everson relates. “So on redesigning new products or next generation products, we’re seeing people coming to us and wanting us to do more and more of their business.”
“You’re not just an injection molder making widgets and putting them into boxes,” he asserts. “What you need to do is be more of a full-service supplier and automate and take as much labor out of the product as you possibly can. That’s something we do very well here. We get involved with the very up front design of our customer’s product, and by the time we’re done, we’re basically delivering product to their distribution centers.”
This design-to-distribution-centers approach uses value-stream mapping (VSM) to take waste and non value added costs out of the process. “The end consumer does not want to pay for non valued added cost, and when a product is on a boat shipping for Asia, that is not adding any value to that product,” Everson emphasizes. “We’ve been aggressively reducing our costs, and in other parts of the world, they’ve been aggressively increasing their costs.”
“Labor is going up overseas,” he insists. “Raw materials are fairly standard around the globe, and it comes down to labor, execution and time. It takes longer to do it in Asia. There’s pockets where that doesn’t happen, but for the majority of it, your lead times are just longer.”
Sussex IM specializes in four market segments cosmetics packaging: home and garden, such as insect lanterns and lamps, and insect control packaging containers for termites, bees and ant traps; residential construction, such as grills for bathroom fans, duct work and sanitizer pump dispensers; and industrial such as pump components.
“Rexam was interested in cosmetics and not the other three markets,” Everson points out. “That’s why it became logical for them to sell this plant versus moving it or shutting it down. So now that we are not part of Rexam, it does give us more freedom to grow these other areas. We do have open marketing, and we’re investing in innovation in markets that Rexam did not traditionally serve.”
That variety of industries has helped Sussex IM weather economic storms.
“We’ve always had a diversified product market base and a diversified customer list, and it’s been very helpful when there’s ups and downs in certain segments of the economy,” Everson acknowledges.
“We have always been able to weather any downturn, and we’re going to continue to grow in all of our markets.”
Build Your Own
Sussex IM has extensive automation design capabilities, Everson stresses. “It’s quite unique for the size of the company we are to have a staff of automation engineers on hand.” he asserts. “We design and build our own automation so when people walk through our facility for a plant tour, there’s tow things they come back and say: “That’s the cleanest plant I’ve ever been in, ‘ and No. 2, “The automation is unbelievable.’ Those are the two things that come out of the mouths of 95 percent of them.”
The cleanliness is part of lean manufacturing, Everson maintains. “Everybody in the plant is engaged in that, and the plant is totally cleaned three times a day,” he emphasizes. “It’s an absolutely eat off the floor type of mentality in three shifts.”
Sussex tried outside automation companies for custom solutions to its manufacturing needs. “What we’ve learned over time is that doing that costs twice as much, works half as good and takes twice as long,” Everson stresses. “So we’ve invested in automation engineers.”
He points out that when customers have a new product launch date, it can’t be missed and control of the automation process is a strong advantage.
The company has one completely automated process making simple labeled plastic parts and placing them in a cardboard box, and the whole process requires no human intervention. “It’s a very simple package that you would think would be made in China or Asia,” Everson concedes. “We make 16 of these every 12 seconds. To make it even funnier, a small percentage of these we ship to China. Their heads spin when we bring people in, and they can’t believe that’s the kind of automation we do here.
It’s the Pita
A lean manufacturing concept the company often uses is called “The Pit.” The concept is to put key department supervisors in one open area called the pit so customer-related issues can be solved among departments immediately. “We have no silos and no boundaries in our operation,” Everson insists.
Representatives of manufacturing, shipping, customer service, purchasing, warehousing and production scheduling confer to coordinate meeting customer requests. An example is responding to a customer’s desire to move up manufacturing and shipping of a product.
The company’s department heads attend a 20-minute meeting a 2pm daily to review orders received in the past 24 hours, and other immediate operational issues. Every two weeks, a larger group of staff meet, and quarterly a team of 20 key employees from the plant and departments go-off-site for a day for what is called the quarterly planning team meeting. In the morning of the QPTM, the previous 90-day goals are reviewed and how they were met is discussed. Over lunch, the team proposes new challenges for the next quarter, and in the afternoon, each team member presents how he or she will address those challenges in the next 90 days.
“These activities are all tied to our one year goals that are tied to our three year goals and our company vision,” Everson explains. “We really try to create a culture where everybody feels engaged and everybody knows what other departments are doing.” He emphasizes the company’s long term commitment to its goals. “We’re not in this for the short haul – this is a long-term investment, and we want to stay privately held. This is not a flip where you buy it and try to sell it in three to five years. That’s not our vision. We’re going to innovate or die.”