2020 has been unprecedented. The global outbreak of the Coronavirus has affected us all. Where service-based businesses have switched to remote working, for manufacturing industries like AR Metallizing, this hasn't been a possibility. Retaining staff on-site to run machinery has been crucial, especially so for those of us who have a part to play in manufacturing and delivering essential and consumable goods.
There was no way to plan for a pandemic or the subsequent turmoil from the Coronavirus. That said, some companies have led the charge with how to deal with a new reality. Quick decision making, socially remote working, adaptation of working practices, dealing with a turbulent economy, and, perhaps surprisingly, unexpected opportunities have defined the winners of the past few months.
In a series of interviews with leaders in the industry, our CEO Bart Devos explores best practices, lessons learned and the innovative ways CEO's in the packaging, paper, converting, and the printing industry has tackled the crisis.
Introduction
Mactac is headquartered in Stow, Ohio. The company was founded in 1959 by Burton Morgan as what was originally the Morgan Adhesives Co. Mactac manufactures and distributes pressure-sensitive adhesive materials that are used in a number of industries, which include label printing, graphic design, packaging, retail display, fleet graphics, automotive assembly, and medical device assembly.
Ed LaForge is Mactac’s CEO and President. He has been with the company for nearly 30 years and has served in a variety of senior functions in the firm before his appointment as CEO.
Today, Mactac employs more than 550 people and has operations in the United States, Canada, and Mexico.
Reinvention in the face of a crisis
Mr. LaForge explains that Mactac looked to 'lean into’ the crisis, actively pursuing unexpected opportunities and reinventing the business, rather than handling the situation passively. Mactac's approach included being transparent with staff about risks from the get-go and fighting to stay operational, rather than pause manufacturing. The rationale was clear: if the company couldn't continue to manufacture at a high rate, jobs would be at risk. LaForge also challenged staff to adapt an 'optimization mindset' and focus on positively reinventing the business during the crisis.
‘When the pandemic first began, we explained to the staff that we – along with everyone else doing business in the US – were in a tough situation. The flip side of that was that there was a serious opportunity if we could tap into it. But we needed buy-in from every member of the team. We asked employees to reinvent themselves: challenging the status quo at a greater level had to be the new norm. We asked everyone to think about how they approach their job, how we sell and market ourselves, how we utilize our equipment, how to speed up that equipment, how we could do preventive maintenance better. We also got creative with product development. We re-marketed our tamper-evident food and beverage security labels for unique food packaging applications and our protective and diagnostic equipment tapes for face masks, protective shields, and sanitization dispensers. We also launched new hotel security closure labels, pivoted our interior floor graphic products for the Roll Label market, and further developed our anti-microbial adhesive products, which add protection to high-touch areas.
It's a strategy that continues to pay off. Mactac succeeded in setting sales and production records amid a pandemic, without impacting employee compensation, furloughing, or dismissing staff. LaForge believes the company is on track to achieve an aggressive 2020 pre-pandemic business plan. Mactac’s 2020 growth is even more astonishing considering we can expect a sharp contraction in the economy over the course of the year.
"In many ways we are undergoing a complete reinvention of how we do business."
Ed LaForge - CEO and President Mactac
A personal commitment to keeping goods on the shelf
Mactac produces adhesives for pressure-sensitive labels, which are a critical component of the labeling supply chain. Without the right adhesive, products can’t be labeled, and the whole supply chain falters. Mactac’s products are essential for applications in a variety of industries, including food and beverage, household cleaning, and personal hygiene.
The Coronavirus effectively created a whole new market for consumer health and safety, and the US saw an unprecedented uptake in certain food products, personal hygiene products, and household and industrial cleaning/disinfectant products as consumers spent more time at home, filled their pantries, and increased sanitization to help minimize possible exposure to COVID-19.
‘In a 2-month period, we saw a 140% to 180% increase in demand. From a leadership perspective, our top goals were servicing the demand increases while ensuring the safety and security of our staff. In mid-March, around the time many States were issuing work-from-home orders, we made the decision to move every Mactac position or function that could be completed outside of traditional work locations to remote functions and our manufacturing facilities started to operate 24/7 to meet surging demand. We implemented extensive safety and security measures, invested in equipment and technology updates, and more. Our leadership team communicated openly and honestly with employees, outlining our purpose and determination to keep the supply chain going and get products back on the shelf. We promised staff members that if we could all come together and commit to working through the surge in demand and operate 24/7 as needed, we would make sure everyone kept their jobs – no layoffs, no furloughs. The reality was if we stopped producing, high demand goods weren’t going to make it to stores and the Mactac team felt it was our responsibility to everyday consumers to step up and get them the goods they needed in what were extraordinary times,’ LaForge says.
‘While the work was hard, our employees – and suppliers – were thankful. In the coming weeks, our facilities ran 24/7 with new safety measures in place and without incident of COVID-19. We transitioned to remote work environments for most employees, got orders in quickly and accurately, worked closely with our supplier partners to meet demand increases, shipped products on a weekly basis and on normal shipping schedules, avoided unemployment, and hit record sales and production metrics. We were even able to pay out production bonuses and our parent company, LINTEC, was incredibly supportive and also paid all employees an added bonus. I can’t say enough about the incredible work of our employees and supplier partners. From beginning to end, it was a true testament to what a company is capable of when you have an engaged and positive culture and long-standing partnerships with best-in-class suppliers. Together with the AR Metallizing team, for example, I am proud to say that even at the peak of the pandemic, we have not missed on our ability to deliver our goods timely,’ says LaForge.
The long-term view
At the outset of the COVID-19 crisis, LaForge and Mactac were already thinking long-term. While they identified short-term opportunities in areas where there was a high demand for production, longer-term, a global recession looms as the international pandemic continues to affect the economy.
'At Mactac, our culture is one where employees are committed to supporting our business and each other. Part of the reason why our team worked so hard was that we also knew we had to prepare now for whatever was next in terms of economic headwinds or a recession. Streamlining operations and making the business more efficient will help us with the economic situation as it unfolds over the weeks and months ahead. The Mactac team is very motivated by this,' says LaForge.
How will the 'new normal' affect the manufacturing industry?
The pandemic has undoubtedly changed the way the world does business. While the corporate world and service-based businesses are looking at ways to benefit from remote workforces, LaForge encourages restraint for manufacturing businesses like Mactac.
Mactac shifted to remote working wherever they could very early on. Employees who could work from home were asked to do so while staff members who operated machinery continued to work on-site. While working from home continues to be the norm currently for back-office employees, Mactac’s leadership team has also been honest: the company can't – and doesn't want – to adopt a fully remote working model in the long-term.
'We're 100% supportive of allowing our employees who can work from home to do so during these challenging times so they can look after and take care of their families as needed. Long-term, however, we have to be realistic: we're a manufacturing company, and we need our people on-site. That's the truth of the way we do business. For companies like us where innovation and progression give a competitive advantage, the importance of connectivity, in-person brainstorming, and coffee pot chat can't be overlooked,' says LaForge.
While permanent home working policies aren't on the cards, Mactac does see the benefits in some flexibility, with LaForge encouraging employees to talk to their managers about how to be more effective in return for more work-life balance, although being fair and offering everyone the same opportunities remains a priority.
Communication
To keep staff safe, Mactac’s leadership team sent their workforce home ahead of mandatory work from home orders in the state of Ohio. Making quick decisions like this also became a trademark of the team.
Even under the new circumstances, LaForge wanted to maintain contact with his team: connectivity and communication were paramount. The leadership team had a rolling one-hour appointment at 11 am every day to discuss updates, review the situation, have difficult conversations, and determine what was best for the business. It's something the leadership team benefited from, and the meetings remain in place today, although less regularly.
‘Currently, we're meeting twice a week rather than every day, but meeting daily at the peak of the crisis was crucial for us. It brought the leadership team and the company a sense of purpose during a challenging time. The meetings were the basis of our response to 'lean in' to the opportunities presented to us. We reaped the reward of that as a business,' says LaForge.
Across the company Mactac’s teams were meeting in a similar fashion, working cross-functionally and diving in to solve problems and challenges, while quickly adapting to the changing environment. LaForge says it has been a very cooperative approach to problem-solving.
Investing to become a better business
Despite the economic impact of the coronavirus pandemic and the potential for a global recession, Mactac is choosing to follow through with strategic investments that will support the future of the company and its customers. It is moving forward with implementing an ERP system and investing back in the business, funding employee training and equipment. Again, the company's strategy has been to ‘lean in’ to the pandemic, rather than trying to outrun it.
Mactac reassessed costs carefully, cutting any excess expenses. Instead of focusing on cost-cutting for short-term gain by laying off employees, and Mactac is investing in the company and the staff with an outlook to set the company up for even greater success in the long run. 'Instead of furloughing staff, we are spending money to train employees, and we're giving bonuses to those working on-site. In return for job security, we've asked the team to commit to an adventure to reinvent the business. People do want to reinvent themselves, and, of course, there's also understanding that the economy isn't in great shape, and innovation and reinforcing the business is the best way to protect their job. As a result of our commitment to keeping the team employed, we see a lot of goodwill from employees, and simultaneously the business is benefiting from renewed productivity, focus, and drive. The “Mactac first” culture is shining.
"It has been amazing how employees are looking out for each other in hopes of keeping everyone in our community safe, healthy and employed."
Ed LaForge - CEO and President Mactac
While Mactac may have robust cash management plans in place, the company isn’t looking to halt spending. LaForge notes that Mactac’s leaders are pouring more capital back into the company in 2020 than they have in the last 15 years.
Innovation
LaForge and his team are also looking closely at consumer trends to understand and anticipate evolving needs and desires. 'One of the things I encourage is throwing ideas around and brainstorming, so we're currently looking at where there are new gaps in the market, and we're asking what we could do in the space. One example is the anti-microbial work we’ve been doing. There aren't necessarily easy answers or simple solutions, but we push the boundaries to see what we can do next. This adaptability has served us well and will continue to do so for whatever's next,' says LaForge, in conclusion.