|Ironwood Plastics Declares, “Challenge Us!”|
|by Dianna Brodine|
|Profile Summer 2008|
For many business owners, proximity of the facility to its customer base is an important component in the ability to land contracts and deliver jobs on time. However for Ironwood Plastics, a custom injection molder located in the Upper Peninsula of Michigan, the key is to operate like the U.S. Postal Service – neither rain, nor sleet, nor snow (more than 300 inches of snow per year on average) will keep this determined molder from meeting customer needs.
Tackling its projects with a strong dose of engineering know-how and a heavy investment in the latest equipment, Ironwood Plastics often surprises potential clients not expecting such a high level of technical expertise from a company located so far from an urban center. From its capabilities to its equipment to its web site, which invites visitors to “Challenge Us!”, Ironwood Plastics takes pride in accepting projects that its competitors deem unusual or too complicated.
“Dad really poured every asset we had into the business and put it on the line here…”
Gordon K. Stephens spent more than 30 years in the tooling and injection molding industries before starting his own com-pany in Ironwood, Mich. in 1979. Driven by a desire to own his own business and the assurance that his family was up to the challenge of a new location and a new venture, Stephens and his family left Detroit (metropolitan area population 5.5 million) and ultimately landed in Ironwood (population 6,000).
Scott Stephens, one of three Stephens sons who now own Ironwood Plastics, was 11 years old at the time. He explained that starting the business was truly a family affair. “My brother, Mark, had already graduated from the University of Michigan with an engineering degree and he had gone into a partnership agreement on a machine shop in Detroit. After a couple of years, my dad called Mark and asked if he wanted to start this business in Ironwood.” Another brother, Rob, had just graduated from high school and Gordon Stephens called upon his own knowledge and education at the Ford Trade School to train Rob as a moldmaker. Gordon’s wife, Joan, handled the accounting and the paperwork.
The transition from employee to business owner was not an easy one - a challenge for Gordon and the entire family. “We took a step back when the business started,” said Scott. “It was a pretty abrupt lifestyle change. Dad really poured every asset we had into the business and put it on the line here.”
However, the move – and the family involvement – paid off. Although the small company didn’t have any custo-mers to start with, it began to build its reputation in the electronics market, learning precision molding along the way. The earlier sales efforts were made using independent representatives, but now Ironwood Plastics is represented by five sales groups in 20 states. The operation that started with four machines in a 10,000 square foot building and a big bank loan now has $27 million in sales.
Not all of the company’s success can be attributed to its founder. When Gordon retired in 1999, three of his sons became co-owners and took over the daily operation of the company. “You hear all these stories about how the patriarch of the family who started the business just can’t let go,” Scott laughed. “Our dad is the antithesis of that. We had to beg him to stay a little longer!” Gordon was not only ready for retirement but moreover, had confidence in his sons’ ability to operate the business he had started. “He always let us implement our ideas. If we were passionate about something, he’d let us run with it… even if he knew it was dumb,” explained Scott. “I think it’s because he knew that day would come when he didn’t want to come to work anymore.” Gordon continues to hold a seat on the board of directors for Ironwood Plastics, but has no ownership interest. His sons still bounce ideas off of him, recognizing the value of having a resource with decades of experience in the business world.
The three brothers – Mark, Scott, and Rob - share the title of Co-President, meeting for one full day and evening each month to discuss business issues. While this management style might not work for a lot of family-owned businesses, it works well for Ironwood Plastics. The brothers attribute much of their success to two people. “Our uncle, Elvin Stephens, worked with us tirelessly to establish a management system that would work when Dad retired,” said Scott. “He helped us establish our ground rules which, in hindsight, I think he lifted from ‘All I Really Need to Know I Learned in Kindergarten’. He encouraged us to hire a professional manager and we brought in Rick Faustich several years ago.” The formal management skills, data-driven analytical approach, and organizational skills held by Faustich have provided a perfect compliment to technical and engineering expertise held by the brothers.
“We pride ourselves in taking on those tough challenges that our competitors shy away from...”
Today, Ironwood Plastics operates out of the Ironwood shop and a facility in Two Rivers, Wisconsin (opened in 1987). The Ironwood location is a 60,210 square foot facility with 165 employees, while the Two Rivers facility occupies another 25,200 square feet with 50 additional employees. Both facilities have full tooling and engineering capabilities to compliment the injection molding service that comprises the majority of the company’s work. Additionally, Ironwood Plastics is known for its expertise and superior quality in insert molding, continuous molding, and over molding.
The company has 43 injection molding presses, many of which are electric, ranging from 56 to 300 tons. Steps have been taken to automate production wherever possible, including an IQMS Real Time Monitoring ERP System, 18 Wittmann robots, and three Fanuc 6-axis robots. “It’s the precision that has led to our investment in automation,” explained Scott. “We find that when getting into smaller, more intricate parts, we need the preciseness, repetitiveness, and speed that robotics offer.” To add an extra ‘dimension’ to its quality assurance department, Ironwood Plastics added a LDI-3D laser scanning system, which scans a part and creates a color map of all the points. “We’re not seeing many competitors using this yet,” said Scott, “but it helps us quickly prove to the customer that we’re hitting all of their dimensions.”
More than 70 percent of the company’s business comes from the automotive industry, with the remaining 30 percent in the industrial, electrical, military, and medical markets. “Everything we do for the automotive industry is under the hood,” said Scott. “We do a lot with fuel-related parts and sensors. There are no cosmetic things – no doors, trims, or buttons. We focus on the technical components.”
That technical expertise has been Ironwood Plastics’ primary marketing point for years. “Usually, when you decide to start a business, you’re grasping for what your niche is,” said Scott. From the beginning, Gordon Stephens gravitated towards smaller products and built the business on his tooling knowledge, which was passed down to his son, Rob. When Mark’s engineering education was added into the mix, the company discovered its point of difference with the competition. Scott explained, “Anything that required a lot of engineering - that was something that we tended to do better than our competitors. Now we pride ourselves in taking on those tough challenges that our competitors shy away from.” Thus, the “Challenge Us!” mantra evolved.
One example of taking on a challenge to meet customer needs entails a process called “foam in place”. With foam in place, a robot is used to inject a foam-like substance onto the part to form a custom gasket. An Ironwood Plastics customer had been doing foam in place as an in-house project, but the transportation logistics didn’t make sense. The customer was shipping parts through a supplier in Oklahoma, doing the foam in place process at its plant, and then assembling the part at another plant. “The company realized the logistics were crazy, so it went to the supply base and said, ‘We need someone to take this off our hands, do it in one spot, and send us the part’,” explained Scott. “A lot of its suppliers said no, but we looked at it and told the customer we would take it on.”
The willingness to take on challenges doesn’t mean that every process is done entirely in-house at Ironwood Plastics. Ten years ago, the company built 80 percent of the tools it used; now, Ironwood Plastics produces less than 25 percent of its tooling. “We looked at what we have to do internally to maintain a successful business and what we could outsource to capable people,” stated Scott. “Repair is very difficult, so repair capabilities have to be kept inside. It’s nice to keep engineering changes in-house to ensure quick turnaround. Conditioning of new tools is the same way - when you shoot a mold for the first time, you’re going to have to do some tool work to it. If your process requires you to send that to an outside vendor, you’ve added a lot of time. So that left the main part of the tool build as something we should outsource.” Ironwood Plastics uses both U.S. and Chinese toolmakers, depending on tool complexity, necessary turnaround time, and client preferences.
“We spend a great deal of time with one another in and out of work…”
A location in a remote section of the state makes for a very different work environment than what might be found in an urban setting. Many of Ironwood Plastics’ employees are related and everyone in the facility – employees and management alike - tends to spend a great deal of time together in and out of work. “In Ironwood, you literally are in this small corridor and there’s not a lot of transient activity,” explained Scott. “We all have our little groups – there’s the hockey group and the hunting guys and the biking group. The people with kids see each other at sporting events. The circles all intersect and you get to know everybody on a whole different level beyond employer/employee.”
Also taking things beyond the traditional employer/employee relationship is Ironwood Plastics’ open book management system, which has been in place since 1997. Each month, the owners meet with all the employees and an accountant explains the most recent income statement. “We started an education cycle to try to explain that we invest in our business to give the employees additional opportunities – that growing our business benefits them, as well as us,” explained Scott. To increase the employees’ sense of ownership, the three brothers implemented a profit sharing plan. The company’s profit is placed in a “bucket” and when that bucket reaches a pre-determined amount, 13 percent of the profit is distributed equally to qualifying employees (six months of service and 90 percent attendance for their scheduled time in that period).
In the end, it comes down to proximity. “We’re all spending the same part of our lives at work,” said Scott. “It came down to figuring out how we can make sure this company survives not only the short term, but also the long term.” Ironwood is a depressed community in economic terms and that assists in bringing employer and employee together to seek success. “Let’s face it,” Scott added with a laugh, “you don’t work for a unprofitable company for very long!”
“The discipline that the environment demands and the consciousness of the people working there brings you to a whole different level…”
Ironwood Plastics will begin a contract in 2009 that will add 19 percent to the company’s sales volume and that will require much larger presses. In fact, Ironwood Plastics recently added a new Mitsubishi 720 ton machine to help meet the needs of the new contract. In addition, a “white room” has been built that can easily convert to a full-fledged clean room.
The white room will serve a dual purpose. First, from a marketing standpoint, Ironwood Plastics realized that it would not be able to expand its medical work without a clean room, even if the actual product being quoted didn’t require it - the perception is that a clean room is a necessity in medical injection molding. Ironwood Plastics settled on a solution that satisfies its prospective customers. “It isn’t a clean room but it tests consistently below Class 100,000,” explained Scott. “If we had an application that required it, we could quickly convert it to a true clean room.” The company has already had some success in selling more medical work.
The other objective Ironwood Plastics is hoping to accomplish with the addition of the white room is less straightforward. It’s about attitude rather than abilities. “Automotive, electronics, whatever – for every industry, customers are requiring the level of exactness that is often found in a clean room production environment,” stated Scott. “The discipline that the environment demands and the consciousness of the people working there bring you to a whole different level, and we want to see that roll out to the rest of the facility.”
To ensure future success, Ironwood Plastics will focus on training its people to meet the challenges that new technology will bring. Scott acknowledges that taking the workforce to an ever-higher level of ability and ensuring the company’s strength on the bench will be big priorities. “The demographics warn of an impending shortage of skilled workers. We can fight that by teaching the skills, which is a win for us and a win for our employees,” Scott stated. The company currently requires 40 hours of classroom training for its entry level positions, followed by annual testing to ensure skill and knowledge retention. “Twenty years ago, what did your entry level people do?” asked Scott. “What our employees are asked to do now is completely different because of the advancements in technology and it’s our responsibility to bring them along.”
With an eye to trends in automation, new technologies, and continual employee involvement, coupled with the strong commitment of three brothers to the ongoing success of a company their father began almost 30 years prior, it’s clear that “Challenge Us!” is one declaration this Michigan molder has taken to heart.