There are many attributes that drive value in a plastics manufacturing company. It may be surprising, but among the most important is curb appeal. Simply put: appearance matters. Facilities that are clean and organized leave a favorable first impression on a visitor and, whether it is perception or reality, appearance is often indicative of the rest of the business. In a competitive market – all things being equal – a customer would rather have his/her products molded in a great looking plant as opposed to a cluttered, dark factory. If you are considering the sale of your business, potential buyers will view curb appeal in the same manner.
At MBS, we are constantly visiting plastics companies and see a cross-section of the industry. We tour through factories that are seemingly frozen in time, circa 1975. We see plants full of brand new equipment that is poorly maintained and appears to have been placed haphazardly throughout the plant without forethought. In contrast, we also see factories with older machines that are so well maintained that, to the untrained eye, all look as if they were all purchased new in the past few years. And of course, there are those “eat off the floor” plants that many of us have seen or heard about, that were designed and built for purpose, with no expense spared. Unfortunately, not every business model supports such a luxury.
I hear various reasons why plants don’t look their best. “I don’t want to [or can’t] invest any money into that part of the business,” is a common response. “Our customers don’t require it and they wouldn’t pay for it even if it were a clean looking plant,” is another. Also, “we want to clean things up, but we are busy and just can’t find the time.”
Additionally, the appearance of a factory is relative and can be a matter of opinion. I personally remember hosting two customers in the same week at one of my former molding plants. One customer offered glowing praise for how well maintained the factory was. The other customer found the housekeeping to be unacceptable. I learned a simple and valuable lesson here. No supplier, customer, or even potential buyer is ever going to complain that your factory is too clean and organized. Therefore, why not maintain an appearance that satisfies your most demanding client?
It isn’t too crazy that a customer would associate quality, scrap, material loss, safety, or even employee turnover with the visual appearance of the factory. But what if you don’t have a budget to create a “Taj Mahal” injection molding plant? Here are several ideas to improve the appearance of your factory with only modest investments of time and money.
- Learn about and implement 5S. Almost everyone in the industry has heard about Lean Manufacturing or read about the Toyota Production System. The benefits of embracing these continuous improvement practices are vast. Embarking on a lean journey for your company requires serious top-down commitment over a period years and dramatic cultural changes don’t come easy. However, one small element that is comparatively easy to implement is “5S” (Sort, Set in order, Shine, Standardize, Sustain). There are several names and variations of the theme out there, but the basic action is to clean and organize an area in a way that is sustainable and improves efficiency. Every world-class factory I visit has some form of 5S in place. The 5S process for plastics manufacturing is very well documented and available. Why not leverage those lessons learned by others? The investment for a plastics company may include hiring a consultant or purchasing training for employees (at all levels), as well as paying some extra hours or overtime to implement changes. The benefits of this investment for the operation and employees can be quickly realized and visibly apparent.
- Paint. Lighter and brighter factories tend to appear cleaner and more modern. If it has been decades since anything was painted or updated in the factory, consider a painting project using lighter colors (I prefer some kind of white). And don’t forget about ceilings. It is amazing the difference a white colored ceiling can have versus a darker color. You might be able to find some handy employees that want extra weekend hours prepping and painting. Even if it is done one section at a time, making progress over several months will change the whole image of the factory. Note that floors can be a special challenge, since unlike walls and ceilings, they experience wear and tear on a daily basis. Floors can be polished concrete, epoxy, painted or several other options, but all types will show wear if not cared for and maintained properly. Maintaining great looking floors may involve cultural and logistical changes to minimize the use of pallets, forklifts, and other items that are not “floor-friendly.” Investing a small amount in painting supplies and some labor can make a big difference in what visitors see and what employees experience every day.
- Lighting. The perception of quality and a bright working environment go hand in hand. Lighting technology has changed dramatically over the past decade. The evolution from incandescent to fluorescent, to LED lights has continued to reduce cost and prolong the life of light bulbs. In many areas of the U.S. there are programs, rebates, and subsidies available to companies who switch to modern LED lighting. With a modest (or potentially no) investment you may be able to convert to LED light and create a brighter factory with lower ongoing electric costs.
- Plant layout. Most thriving businesses, despite the best laid plans, experience some unexpected growth. In the big picture, bringing in new large projects is usually a very exciting and favorable event for a company. However, a plastics manufacturer may sometimes need to quickly install machinery to meet customer demand and may not have the time necessary to optimize certain conditions such as layout and location. Over time this can result in a plant with a random layout, poor material flow, and cluttered appearance. Although moving molding machines is not as easy as moving the furniture around in your living room, it can be done. Periodically re-assess the plant layout and seek ways to standardize machines into rows, while considering material movement and overall appearance. In some instances – particularly with larger machines – moving machines around is a costly exercise. In many cases, however, the rigging cost can be reasonable; some companies know how to move machines themselves (safely) and do it regularly.
- Building Exterior. A visitor’s first impression of a molding plant is the outside of the building, from the street entrance to the parking lot, from the walkways to the front door. Some aspects of real estate can be expensive to change – re-siding the building for example. Other aspects can be much less costly. If weeds are growing through cracks in the walkway to the main entrance of the building, that could lead a visitor to wonder how the rest of the operation is maintained or even question the financial viability of the business. Landscape maintenance, periodic resurfacing and line painting of the parking lot can make a difference. Signage also presents an image of the company. A modern sign is a relatively small one-time expense that will impact the perception of the company each and every day.
- Website and marketing image. These days, the first place most people actually see your business is on your website. In reality, this is a key part of the curb appeal. The internet has become an ingrained part of our society and matured rapidly over the past decades. It is fairly easy to spot a website that was developed in the early 2000’s and has not been updated since. An “old” looking website jumps out and portrays an unsophisticated, small-company image. Website development has come a long way and costs have continued to decrease. If you haven’t updated your website in a while, you might consider a refresh. You will likely be surprised at how economical it will be.
- Culture change. Expectations for how the factory is organized and what level of cleanliness is required starts at the top. If the leadership is committed to taking the factory to another level and is willing to spend time sharing this passion with the workforce, then positive change can happen. This can be comprised of simple adjustments in mindset such as: 1) the idea that all staged materials and auxiliary equipment have a specific location in a standardized position, 2) use of professional-looking communication tools rather than handwritten instructions taped on the door of the molding machine, or 3) the simple requirement that all spilled resin pellets on the floor need to immediately be cleaned up. There are many more examples. I could claim these cultural changes are “free,” however, we all know that a company’s established behaviors are only modified with real diligent efforts, over time, and change must stem from leaders committed to the long-term.
As the leading mergers and acquisitions advisory firm in the plastics industry, MBS Advisors can attest with certainty that the value of your business in a sale process will be driven up or down by the curb appeal of your operation. If you are considering a sale of your business in the next few years, now is the time to consider how your company visually presents itself to the marketplace. Maintaining a highly organized and clean working environment is just good business and will only bolster long-term profitability through increased sales and productivity.
MBS has advised on nearly 100 successful M&A transactions. We also provide exit planning consultations, sale preparation assessments, and generally help owners and shareholders maximize value. We can help you benchmark your company against the industry in a variety of areas and help you determine which investments will provide the best return.
by Jonathan Soucy
Very meaningful article Jonathon. Thank you for the summary.