A train wreck usually marks the end of the line. Listen to any of the billion old country and western tearjerkers about them, for example, and you won’t hear many lyrics about the cars getting refurbished and put back on the tracks.
But that’s exactly what happened at Rotovac Group Inc. The Milton, Ont.-based rotational molder and thermoformer has revived formerly bankrupt Ontario plastics businesses with a new management team at the controls and a new direction in sight.
And this train has definitely left the station.
SURVEYING THE DAMAGE
Sold out of bankruptcy to Rotovac in March 2013, the businesses were part of Milton-based NS Technologies Group Inc., which had gone under a year earlier. If the name sounds familiar, it’s because NS Technologies had been on a $200 million expansion spree from 2008 to 2011, snapping up rotomolding, thermoforming, injection molding, and extrusion businesses around Southern Ontario like so many properties on a Monopoly board. The company’s last acquisition was Shirlon Plastics Company, a Cambridge, Ont.-based rotational molder, in spring 2011. The party came to an end shortly after, when majority shareholder New Solutions Financial Corp., of Mississauga, Ont., sought bankruptcy protection in early 2012.
Which is where Alan Crossley came in. Crossley had an extensive management background in distribution, light manufacturing, and processing, and among other achievements had been responsible for setting up an Ontario-wide distribution network for lubricants made by Imperial Oil Ltd., a Canadian subsidiary of ExxonMobil Corp. As the other NS Technologies processing operations were wound down and the assets sold, Crossley and two other investors bought the company’s rotomolding and thermoforming assets. “NS Technologies had tried to be all things to all people, and wound up without a business focus,” Crossley said. “My partners and I took the parts that worked — rotomolding and thermoforming — and passed on the rest.”
But even the parts that worked didn’t work very well. “Frankly, NS Technologies was a train wreck when we bought it,” Crossley said. “The shop floor staff had worked for the company for years and was technically proficient, but demoralized. And the overall culture was indifferent, with some customers at times being treated almost as afterthoughts.”
RISE UP, RISE UP
Several steps were taken simultaneously to turn the company — now operating under the new name Rotovac — around. One involved trimming enough fat to feed Ford Nation. “The incumbent management at NS Technologies was not the right group of people to move the company forward, so we replaced them with our own hand-picked team,” Crossley said. Crossley himself became Rotovac’s president in early 2014. “We also consolidated all of our purchase assets — which had been located at plants in Milton, Lindsay, and Whitby, Ont. — into the 40,000-square-foot Milton site, which made the best logistical sense: located about 50 kilometers west of Toronto, it puts us in the middle of Canada’s largest market and provides good access to U.S.-based customers,” he added.
The next move involved doing partial penance. “I met with both current and former customers — some of whom had had bad experiences with NS Technologies — to help learn what that company’s strengths and weakness had been,” Crossley said. “A few of them welcomed the chance to vent at me, but once they got that off their chests, they were very helpful.” The verdict? “The customers had all been satisfied with part quality and pricing; the main complaints related to consistently missing agreed delivery deadlines and general poor customer service.” The solution? “We put a series of measurements in place to improve our product delivery, including reinstating a quality management program that had been abandoned, and hiring a production specialist to redesign and reconfigure the work flow of the plant,” Crossley said. “As a result, our monthly on-time delivery rate hit 90 per cent in April 2014, and has been in the high 90 percentiles — sometimes hitting 97 per cent — ever since.”
Driving down the scrap rate was crucial to bumping up product delivery times. “Through the quality management program, we’ve succeeded in recycling approximately 500,000 lbs of plastic as of September 2014,” Crossley said. “What would have been scrap parts previously are now reworked and reused, often in the original application. Finally, we collect every piece of processed plastic not shipped out and send it to a domestic recycling processor who returns it to Rotovac, for use in manufactured products alongside, and in place of, virgin materials.”
A final step involved what Crossley and the other managers didn’t do. “We didn’t let any of the staff on the shop floor go,” Crossley said. “They were demoralized when we took the company over, from having worked in a bankrupt firm and seeing a procession of molds being removed as customers cancelled their contracts. But their technical expertise and loyalty to the company were never in question, and their belief in the new direction of Rotovac has been key to our business turnaround.”
THE SHAPE OF THINGS TO COME
And what a turnaround it’s been. “Our customers took a leap of faith by staying with the company during the restructuring, and they’re all surprised at how quickly Rotovac has become a reliable partner to them,” Crossley said. “The word-of-mouth has been positive enough that some former customers have actually contacted us, asking to place orders.”
Rotovac currently has 25 employees, four vacuum thermoformers — the largest capable of processing sheet 6 feet by 11 feet — and four Ferry rotational molders. “Our revenue is split equally between the rotational molding and thermoforming businesses, which together make up about 80 per cent of our revenue,” Crossley said.
The business plan going forward couldn’t be more different from the scattershot approach of NS Technologies. “We look at ourselves as producers of high-quality, short run custom products, and this will remain our focus. Our two processes enable us to manufacture a wide variety of plastic components for a diverse group of industries and applications, including the core areas of landscaping/site products, recreational equipment, transportation, agriculture, and electronics,” Crossley said. “Our goal is to pursue aggressive growth by emphasizing quality, with a five-year target of tripling the size of the company’s sales earnings.”
It’s not a bad destination for a once-wrecked train.