U.S. manufacturers have had it hard enough fending off competition from foreign producers who promise to do cheaper, faster work. Then came the 2008 recession that dealt many a death blow. But some American factories have managed to survive these twin threats. Essential Sealing Products is one example. Thanks to continual innovation, a commitment to best practices and some hard choices, the specialized parts supplier rode out the 2008 recession and is thriving with locations in Chagrin Falls, Ohio and Burns Harbor, Ind. and a diverse list of clients that includes the steel, appliance, chemical, food packing, railroad and other industries.
"There is still a place for USA-made items, as long as we keep up with all the important issues of on-time, fair price, exceptional quality and unmatched service," says CEO Susan Pyle. Incidentally, Pyle began working in the company's office in 1974 and rotated through nearly every department before buying the company in 1993. "I am positive that having the opportunity to work in every aspect of this environment was the key for me to actually see what was needed to move forward" during the rough economic times, Pyle adds.
Recession Brings Opportunity
Before the recession, things were pretty easy for the company, Pyle recalls. "Most of the time, customers didn't shop. Most people stayed with you."
That changed with the downturn–and, while a lot of small shops closed, Pyle found opportunity. "It opened the door for someone like us to grab the business." Her sales people began to ask their customers whether they'd lost any vendors or had customers who were having trouble getting their needs met. They'd tell these prospects, "What did they do for you? Well, I can do that, too."
Pyle was able to snag those customers because Essential had always gotten top grades on key metrics, which eased prospects' concerns about switching vendors. An investment in high-speed automated equipment in 1993 allowed Essential to expand from providing parts for other manufacturers to making parts that go into finished consumer products like cars and appliances.
In addition, it had pared down its own vendor list, eliminating those that couldn't provide the same level of quality and service that Essential does. "It doesn't pay to have a lot of vendors that offer the same thing. There used to be the idea of pitting prices against each other, but that doesn't apply any more. We feel it's maybe worth a little more in dollars to get the quality and customer service," Pyle says.
She's even dumped customers, finding that the same clients that were always in a rush and highly price-sensitive were always dissatisfied anyway. She also turned down some new business. "If it's not our core business, I'll walk away from it. I don't want to do a bad job," Pyle says.
In 2009, Pyle wanted to refinance. She had plenty of equity in Essential's 11-year-old building, and interest rates were down. She planned to reduce her mortgage payment, pay down vendors and refurbish some equipment.
"Going to banks was a shocker," Pyle said. "They were not lending." Finally, she found a lending specialist who put her loan request on BoeFly, an online small business lending marketplace. "We had six responses–and they made proposals to me," Pyle says. "We wound up with a bank in Wisconsin that saw what we saw." The refinance saved her some $200,000 a year in interest.
Throughout 2008, Pyle tried hard to believe that the downturn would be short-term, but by the end of the year, the writing was on the wall. In stages, she laid off ten of her 30 employees. "We looked at our core people, who we needed to do day-to-day work without having any stress on our customers," Pyle says.
Instead of making the decision by tenure–or, conversely, by letting most expensive employees go–Pyle and her team looked at every employee's performance records and kept those who were cross-trained, self-starters and willing to go the extra mile.
Essential Sealing Products updated its computer systems so that it can offer new products and additional services, competing on value instead of price. For example, it can private-label items and drop-ship them directly to third parties on behalf of customers. It offers custom packaging and bar coding, so customer's products can go straight to retailers' shelves.
Essential offers technical support from product design through shipping. It will even private-label tech support and customer service. Essential engineers will do conference calls as though they're the customer's staffers at their locations. Says Pyle, "It makes our customers look great to their customers, and at no time are we undermining their relationship."
Pyle knows that her deep expertise in her company's operations is only half the equation for success. She reads a ton and is an active member of several trade organizations, where she networks and shares information. She's a believer in adapting practices of bigger companies by paring them down to fit her niche. Pyle has found that even her larger competitors are happy to share their insights. She says, "They started out small, too, and want to give you a leg up."
What did your business do to ride out the recession of '08?
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