Miel, R.. (August 21, 2006). A Prime Turnaround. Plastics News

When Noel Cuellar and Ethan Barde began Primera Plastics Inc. in 1994, it was just the two of them, splitting time between running presses and making deliveries. The injection molder grew, adding people and presses and in 2003 moved into a new building in Zeeland. Then they hit the wall. ``We crossed the $15 million mark in sales, but we were still struggling to pay the bills,'' Cuellar said. ``We'd look around and see that sales were good, but had to ask why we weren't making any money.'' With much of its business tied to a struggling auto supply industry, Primera's founders knew times were tough for everyone, and didn't want to join the ranks of suppliers that fell by the wayside. So Cuellar and Barde put out a call for help - and with that set Primera apart from most other firms facing problems while also helping to secure the future for their business and their 140 employees.

``Typically it's a bank that calls us in because they're worried about their investment,'' said Doug Wilterdink, managing director of restructure and turnaround for consulting group BlueWater Partners LLC, which worked with Primera. ``Noel called us, which is a bit unusual. ``We usually get involved when there's a crisis, and we're constantly telling people that that's the worst time to try and do a turnaround because your options are limited. Our conclusion with Primera was that it was fixable. Even six months later, that might not necessarily have been the case.'' After bringing in a professional manager to run the shop floor and changing its business outlook to track its finances based on cash flow rather than sales, Primera is back on solid ground.

The company bought two new injection presses in the first half of 2006 - and paid cash for them - and expects to add a third later this year. It is dropping its shoot-and-ship contracts and adding value-added business that brings in more cash. Customers are coming in earlier to collaborate on future products, Cuellar said. Primera is looking at alliances to expand into Mexico, and its sales are on track to hit $21 million this year. ``This has been our crossover year,'' Cuellar said. It has not been an easy journey, though. Calling in BlueWater - and San Carlos, Calif.-based supply chain specialists DemandTec Inc. to troubleshoot inventory issues - meant listening to harsh advice. ``It wasn't pretty to have people come in and tell you everything you do wrong,'' Cuellar said.

Barde and Cuellar also bought out a third partner who did not agree with Grand Rapids, Mich.-based BlueWater's suggestions. Business 101 Primera had to relearn how to do business, Wilterdink said. By switching to a cash-flow business model, the company had to learn how to work within strict 13-week budgets showing every dollar coming and going as well as a long-term system taking in the cost of debt and capital improvements. ``More often than not, companies don't have the financial tools to make an informed decision,'' Wilterdink said. ``They acknowledged that they had an approach where they would take on a project or buy equipment and rely on the money coming in later.''

Cuellar and Barde came from a molding background, but had to back away and admit that someone else could run the shop floor better than they could. The company hired Bob Buresh, a former executive with Prince Corp. and Clarion Technologies Inc., to oversee operations. Buresh brought a new outlook. Cuellar said he thought the company needed a new press, but Buresh found that the company was not using its existing presses to their full capacity and through cycle time improvements actually freed up more press hours than the company needed. Consultants from DemandTec, which supplies DBM (demand-based management) software, helped streamline Primera's inventory process and reduced its warehouse holdings by $300,000. And as Primera improved, its customers took note. ``You want a proactive supplier like Primera,'' said Michael Ramirez, director of inclusiveness and corporate diversity for office furniture maker Herman Miller Inc.

Zeeland-based Herman Miller wants to support a diverse supplier base, Ramirez said, but minority status is not enough to guarantee future contracts. Cuellar was born in Mexico and Primera is a member of the Michigan Minority Business Development Council. ``Having a strong base of strong suppliers is critical,'' he said. ``If you're not pushing your suppliers to strive to be a better business, how are you helping them?'' Both Wilterdink and Ramirez maintain that Barde and Cuellar's attitude was a key in Primera's turnaround. They swallowed their pride, Wilterdink said, and admitted that they might not be the right people to make every decision. ``They treated themselves just as if they were any other employee,'' he said. ``They changed their roles.''

Barde and Cuellar went through the same certification process on the presses that their operators had to pass. The company also worked with its bank to provide free personal financial planning classes to its employees, reasoning that if the hourly workers understand more about their own checkbooks, they can better understand the changes going on throughout the firm to improve the bottom line. ``[Barde and Cuellar] are probably some of the least ego-driven suppliers I've ever met,'' Ramirez added. ``For them, it's all about their people. It's about making something that will last because they've got 140 people who depend on them.''

Primera had to learn how to turn down contracts that would eat up press time without returning a profit, Cuellar said, but it also has been winning new business that will bring long-term benefits. It supplies injection molded housings for Gentex Corp., a desired supplier of self-dimming automotive mirrors. Primera just launched a series of parts for a new General Motors Corp. vehicle, and companies like Herman Miller are turning more toward the firm as a first-line supplier, rather than a backup player. ``There's that crossover idea right there,'' Cuellar said.

The turnaround effort will not end just because things have gotten more comfortable at Primera, he said. The company now knows it must make continuous adjustments if it wants to survive in a manufacturing climate that itself is always changing. ``We're constantly changing and setting the egos aside,'' Cuellar said. ``Things are still tough. You have to keep your eye on the ball.''