S T R AT E G I E S F O R F U T U R E S U C C E S S
2022 Issue 2
Preparing for the Next Unexpected Event fRisk Management in Process Development fMerging Generations in Family-Owned Businesses fLearning with Multilingual Training Systems
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CONTENTS 2022 ISSUE 2
FEATURES 6
Safety Risk Management in Process Development
10
Outlook
16
Benchmarking
18
View From 30
22
Insurance
26
Strategies
30
Q&A
32
Talent
Stress Testing on a Loop: When the Hits Just Keep on Coming
6
Quality is Essential: Are You Doing Enough? From Hire to Retire with a Career Lattice
Health Benefits Costs: What is the Magic Number? Culture Crash: Merging Generations in Family-Owned Businesses Reducing Production Downtime with Auxiliary Equipment The Times, They Are A’Changed
10
26
Departments 4 From the Director 15 Member News 24 Technical Standards Update 25 Industry 34 Calendar 34 Ad Index
S T R AT E G I E S
E SUCCESS FOR FUTUR
2021 Issue 1
ts Autonomous Robo ty Increase Plant Safe of Waste Eliminating Sources g Closes Skills Gap Online Trainin m for Processors Cautious Optimis in 2021
www.InsideRubber.com The Official Publication
of the Association
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Cover photo courtesy of Sperry & Rice www.arpminc.com 3
FROM THE DIRECTOR Seeing… Hearing… Doing: All in the Name of Better Profits By Letha Keslar, ARPM
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physicist by the name of David Bohm once said, “to change your reality you have to change your inner thoughts.” My thought about rubber manufacturing executives is that “to radically change and improve your current state of business, executives must physically witness and experience the advances that others are making.” I will not discount the fact that executives can improve their businesses by implementing ideas and practices they have read about. However, the rubber manufacturing businesses that I’ve seen transformed are run by executives who actively measure their operations and compare their processes and methodologies to others. Recently, ARPM held a plant tour event at Bruckman Rubber in Hastings, Nebraska. When ARPM conducts these open house activities, both the participants and the hosting party receive value. From an attendee’s viewpoint, seeing another operation is a valuable learning tool, as one can quickly gain improvement ideas or compare methods to find more efficient ways of doing things. From the host’s viewpoint, value is received in a couple of ways. First, when other manufacturing professionals walk through your operations, they inherently find opportunities for improvement. Second, the pride employees feel in themselves and their place of work when they demonstrate to others “how good they are” often acts as a morale booster! Hidden in this concept is the fact that teaching others about your own operation may require stafflevel employees to invest time and effort into better understanding processes and procedures; after all, you don’t want to be stumped by a question from a guest when it comes your way!
7321 Shadeland Station Way, Suite 285 Indianapolis, IN 46256 Phone: 317.863.4072 | Fax: 317.913.2445 info@arpminc.org | www.arpminc.com © Copyright 2022 ARPM Officers and Board of Directors President Travis Turek, Bruckman Rubber Corporation Vice President James Wideman, MBL (USA) Corporation Treasurer Marel Riley-Ryman, Southern Michigan Rubber Secretary Joe Keglewitsch, Ice Miller LLP
4 Inside Rubber // 2022 Issue 2
ARPM Board of Directors
There is incredible value in learning from others, and ARPM is offering all rubber industry leaders a variety of opportunities to develop their knowledge bases and improve their own business operations. • Sales and Marketing Forum (June 15-16). Is your company prepared to meet its sales goals this year? Attendees will explore successful sales strategies and learn about best practices in sales and marketing. • HR Forum (July 20-21). The annual HR Forum is a unique virtual event designed by HR professionals in the manufacturing industry. Current benchmarks, best practices, challenges and more are covered to send attendees back to their organization with implementable ideas to improve dayto-day business operations. • Finance Forum (November 16). Discover the latest strategies and technologies being implemented by leading companies to deliver the crucial support and insights necessary for longterm economic success. And of course, the annual Benchmarking & Best Practices Conference (October 5-7) will be held in Indianapolis, Indiana, and has been designed as a practitioner’s event. It offers rubber manufacturing executives the opportunity to interact with other rubber manufacturing executives, with presentations on Continuous Improvement Initiatives, Today’s Tactics in Dealing with Customers, Program Launch Best Practices and more. I would like to personally invite you and your team to these very special events. I guarantee you will leave our venues with new ideas, new contacts and a renewed level of excitement about your own business and career! Register at www.arpminc.com/events.
Vice President, Editorial: Dianna Brodine Editor: Nicole Mitchell Vice President, Design: Becky Arensdorf Graphic Designer: Hailey Mann Published by:
Kirk Bowman, The Timken Company Charlie Braun, Custom Rubber Corp. Russ Burgert, Maplan Rubber Machinery Joe Colletti, Marsh Bellofram Randy Dobbs, Sperry & Rice Doug Gilg, Continental ContiTech Diya Garware Ibanez, Fulflex, Inc. Dave Jentzsch, Blair Rubber Seth Johnson, Zochem LLC Donovan Lonsway, BRP Jon Meigan, Lake Erie Rubber & Manufacturing Mike Rainey, HBD Industries Inc. Mike Recchio, Zeon Chemicals L.P. Brandon Robards, Ace Extrusion Mike Smith, Basic Rubber and Plastics Joe Walker, Freudenberg-NOK Sealing Technologies
2150 SW Westport Dr., Suite 101 Topeka, KS 66614 Phone: 785.271.5801 ARPM Team
Executive Director Troy Nix – tnix@arpminc.org Managing Director Letha Keslar – lkeslar@arpminc.org Marketing Director Marcella Kates – mkates@arpminc.org Analytics Tony Robinson – trobinson@arpminc.org Director of Publications Susan Denzio – sdenzio@arpminc.org Membership & Events Director Kaitlyn Krol – kkrol@arpminc.org
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Risk Management in Process Development By Perry Parendo, founder, Perry’s Solutions, LLC
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he product development process is challenging to execute. There are technical, manufacturing and business considerations to balance. Any issue can cause a significant delay in project completion and the ultimate product launch. Production issues can damage company image and negatively impact financial success. How can companies avoid these delays? How can they anticipate things that they are not expecting? Risk management provides an opportunity for launch predictability. How does this happen?
Development process
First, companies need to consider the development process. Organizations will emphasize different aspects of the process, but the core elements tend to be common for many. A general flow of these core development elements are as follows: y Project Planning y Requirements y Concept Design y Product Development y Manufacturing Development y Validation y Clinical Evaluations (in the medical device industry) y Product Launch Many organizations consider risk management as a deliverable at project completion, just before launch, vs. a tool to improve project execution. However, to truly help their project, risk management should be implemented early in the process. But how is that done? This article will give tips for each stage of the product development process. 6 Inside Rubber // 2022 Issue 2
During the Project Planning stage, one should consider areas of uncertainty. Are enough resources allocated? Resources can include people, prototypes and time for training. From a process point of view, companies need to consider things they need to be successful. Make sure to ask the right questions and get those questions resolved. Anything not provided is a level of uncertainty for project predictability. The next uncertainty to address is Requirements. This stage includes technical requirements but also can include business and operational requirements. Examples include product cost, production cycle time and expected yields. As the processing needs are identified, there is a need to assess capabilities. Which requirements are difficult to achieve? Challenging requirements provide uncertainty and risk and a need for a plan and resources to resolve them. At the Concept Design phase, a functional assessment of the product performance as well as the manufacturing process can be done. New designs can produce production challenges. This can influence fixturing, equipment or finding a process sweet spot. A high-level review of the project can really benefit the later stages of the development process. During the Product Development stage, the design team will create a detailed assessment of the product situation. The team also should dig deeper into the initial concept level testing and analysis. Design of Experiments (DOE) can be a big help by evaluating multiple input variables and finding optimum performance. Companies want to avoid focusing on the first solution that shows promise. Instead, they need
to understand all options and determine which one is most likely to be stable and repeatable for customers. Similarly, the Manufacturing Development phase needs to go to the next level of detail. Companies look at their processes in more depth in critical risk areas. Potential issues often are exposed during prototype builds. The more parts produced, the more issues that can be uncovered and resolved. However, budget and schedule constraints mean companies need to learn the most from the test units that are available. Training in new techniques also can happen at this stage to prepare for the expected future production volumes. After design is complete for the product and process, Validation needs to be done. Validation is a way to confirm all prior development work is accurate and agrees with the final design configuration and manufacturing process. Up to this time, much of the work has been characterized at a low level. These component level bench tests are informational, but it is important to confirm performance after things are integrated together. In the medical device world, Clinical Evaluations are an important time for feedback. One can learn about new issues
and the frequency of occurrence. In other industries, this may be through a beta test with select clients. This can influence the completion of the current project design or provide insights for a next generation of the product. Finally, during Product Launch, companies gain more information at a faster rate, and they obtain further feedback about production issues and field experiences. Because of this, making risk information into living documents provides a way of capturing this ongoing information. This can be used for continuous improvement, training or for future product enhancements. Many opportunities exist to influence project execution with risk management to deal with the uncertainties.
During project execution
Typically, project plans include adequate resources for highrisk items. What do companies do with the moderate risk items? Companies cannot afford to provide resources for all of these uncertainties. Many moderate risks will go away with an existing, limited characterization plan. But what about the ones that do not go away? Often, a few high risks will page 8 u
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improve faster than expected. When this happens, resources can be transferred to these new areas. As an example, a parallel path technology development can be cancelled, freeing up resources for other purposes. This implies the need to begin a risk management process early, which would need to be reviewed periodically. This can capture new learning and ensure prior items reflect the current maturity level. This does not need to take a lot of time, and it is a good sanity check as the project moves forward. Failure Mode and Effects Analysis (FMEA) often is performed at the component level for a Design. How can one do this if a company does not know its components yet? There is an option to perform a concept level FMEA using functions instead of components. They can take a similar approach with the processes. For example, maybe it is a joining function, but it has not yet been determined if it is screwed or glued. The joining options create different risks to help decide on the eventual solution.
Failure Modes and Effects Analysis (FMEA)
A common method to conduct risk analysis in several industries is FMEA. While risk management can and should go beyond this single tool, but discussions in this article are limited to FMEA. For design risks, one might perform a Design FMEA. This assumes the components are “perfect” and that the process is fully capable. The focus is on the ability to design a product (mechanical, electrical and software) and to meet the requirements. The other areas assumed to be free of errors are evaluated in other documents or methods. It is common for people to find risks in other areas of the project outside of themselves, thus the important value of cross functional teams when populating these risk tools. For the manufacturing risks, a Process FMEA is performed. While the format appears similar, this process version makes different assumptions. First, the design is appropriate and complete with respect to the requirements. Second, companies only look at the specific process being studied. It’s assumed that upstream processes are successful, which includes incoming components. Again, the other error-free areas are evaluated in other documents or methods. Focus is on taking credit for work done to improve the work done and to look for potential areas of improvement. Companies can drill down as far as needed to become comfortable with the uncertainty. But how do they know where to drill down? And how far do they drill down? Teams should do this in the areas of highest risk. They should explore issues deeper in high-risk areas. This implies that they should schedule with more detail for high-risk items as well. Low-risk areas do not require the same amount of attention.
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Business risks/ business impacts
If companies evaluate all business risks, they improve the opportunity for profitability. For example, they can look at their development process, development system and management methods. These impact the ability to execute the project but often are not considered with project risks. Eliminating blind spots can allow people to perform better and avoid big surprises. Further, companies need to recognize that the technical risks for the product design impact its development cost, product cost and project schedule. These are additional business considerations. While the work required to translate technical risks to detailed business risks is not always done, the thinking process can help to make solid decisions throughout the project. Done early, a company can increase its chances for meeting its cost and schedule performance expectations.
Process validation strategy
Determining an appropriate validation strategy is an important step for predictable project completion. Organizations tend to have a validation approach that is applied to all areas. Should companies apply a similar framework to all areas? Based on the previous discussion, the answer should be no. The level of testing should vary depending on the level of risk involved. Knowing the risk level from early on in the project allows companies to evolve the validation strategy as they go through the development process. Allowing flexibility in the validation approach can speed the end of a project, and increase confidence for product launch. For example, at what level should testing be performed? Do extreme settings need to be included, or is a nominal value adequate? Do companies need a large quantity of tests, or do they have relevant prior testing that helps increase our performance confidence? These are all questions to properly address project uncertainty.
Conclusion
When risk management is used for competitive advantage, it can impact many areas of an organization. Companies can create better plans and improve how they execute them. They can be more predictable. They can have a confident and firm validation strategy. By helping in each key phase of the development process, companies can smooth their project performance. Team motivation will be higher, and financial success will be stronger. Start now and gain the most benefit for the company and for the product development team. u Perry Parendo is the founder and president of Perry’s Solutions, LLC, a consultancy focused on speed and predictability in new product development, specializing in Design of Experiments methods. Parendo can be reached by calling 651.230.3861 or via www.perryssolutions.com.
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Stress Testing on a Loop: When the Hits Just Keep on Coming By Liz Stevens, writer, Inside Rubber
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very manufacturer does disaster planning, which, by definition, is designed to address the unusual, the unexpected and the unpredictable. When circumstances cause a manufacturer to roll out the disaster plan, both the plan and the company undergo a stress test. Did the plan hold up under pressure? What aspects should be rewritten for a better response next time? Did the company’s collective action support the operation through the crisis? What could management and staff have done differently, to greater effect? Each company faces an occasional calamity and learns lessons from the experience. But what happens when companies must implement disaster plan after disaster plan because before one disastrous episode ends, a new and different one rolls in to swamp the operation? That predicament – a series of episodic complications, setbacks and reversals – is what industry has faced for the last couple of years. Take an industry sector and hit it with a global pandemic, then either shut down production entirely or turn it up to full blast for old or brand new “essential” items, and then complicate it all with an employee exodus. Just as the industry settles slightly toward normalcy, throw in an avalanche of new
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orders for commodity goods, toss in a new virus variant outbreak, and then factor in a global supply chain meltdown and record inflation. When things are nominally back under control, it’s time for a double whammy – a humanitarian catastrophe caused by a war and another wallop to the global supply chain. For the rubber industry, there was more. Polymers and other ingredients fell into short supply but at premium prices, and domestic and international deliveries were drastically delayed while shipping costs skyrocketed. Semiconductor chip shortages delayed the production of new manufacturing equipment as well as auto industry production, and the labor shortage/drain hit rubber manufacturing hard. This has been a series of stressors to test even the most resilient company. So, how have some rubber manufacturers passed the test and come away with lessons learned that will make whatever stressor hits next more manageable? Inside Rubber spoke with two rubber manufacturers to hear how they met the challenges of the ongoing multi-episode stress test, and how their experiences have prepared them for future stressors. Randy Dobbs is president and CEO of Sperry & Rice, LLC, a Brookville, Indiana, maker of custom extruded
rubber products for the appliance, automotive, HVAC and truck and bus industries. Rob Pruyn is president of the transfer, compression and injection molding company The Rubber Group, Rochester, New Hampshire, which serves the industrial, transportation, medical and consumer products markets.
Manage the finances
Dobbs told Inside Rubber that the pandemic and the subsequent business disruptions did not cause significant financial problems for Sperry & Rice. The company did not have to make changes to its existing loan agreements, but it did participate in the federal Paycheck Protection Program, designed to keep workers on the payroll. “This program was vital to allow our business to remain open,” said Dobbs, “and keep as many employees as possible in place.” Pruyn and The Rubber Group were fortunate to have a limited amount of debt and be in a good financial position with cash reserves at the start of 2020, although the company did participate in the Paycheck Protection Program. “These programs were instrumental on being able to retain team members,” said Pruyn. His company also made changes to its planned capital expenditures. “We had a number of things planned for 2020,” Pruyn said. “One of the things on the table was an expansion to our building. We stopped almost all capital investments unless they were essential, starting in April of 2020, and we didn’t resume the other investments until early 2021.” At Sperry & Rice, said Dobbs, “Most non-essential capital spending has been reduced until business can return to more normal levels. One area of investigation that we have started, though, is around automation. We would like to add some automation and reduce the need for labor since it is very difficult to find the number of employees we need to satisfy our customers’ demands.” Dobbs’ company remained open throughout the entire pandemic, with no layoffs. “In the early part of the pandemic, we allowed our workforce to contract through normal attrition,” Dobbs said. “Then, within a few months, when business rebounded to close to normal levels, we attempted to hire replacement employees. It has been impossible to find enough people.” During the worst of the crunch, he said, Sperry & Rice made numerous changes to employee management. “We changed pay rates twice and added a new employee referral program,” said Dobbs. “We changed our attendance policy to be more accommodating and modified our vacation policy to allow new employees to earn vacation time more quickly.” The company added part-time positions to allow more flexibility among the available workers and brought in meals on various occasions to show employee appreciation. Dobbs said that it took over a year to re-staff and that the company is still about 10% short of the employee level needed, hence his current exploration of automation to supplement the workforce.
For The Rubber Group, the summer of 2020 saw a significant reduction in revenue across a large swath of its diverse marketplace. “It was a pretty tough year overall,” said Pruyn. The company had been proactive about keeping its workforce healthy during the pandemic – and avoided closures or interruptions due to illness – but it had to make layoffs in response to the revenue dip. “Then,” said Pruyn, “our business levels bounced back in early 2021.” The company now is a little bit over its pre-pandemic head count and is aggressively trying to hire to meet significantly increased business. “We have been having a difficult time scaling up to meet those production requirements,” Pruyn said, “because we are having a hard time getting the right number of folks in the factory.” As companies that need to manage inventories wisely, these rubber manufacturers faced whiplash in their inventory handling as demand for products cratered and then abruptly skyrocketed. “In 2020, when things looked pretty bleak,” said Pruyn, “we were conscious of overall inventory value. We worked to drive those values down because it seemed like demand was going to be low for a while.” The Rubber Group now is in the opposite inventory position. “We have become much more willing to increase our inventory value and have built more inventory as a way to mitigate supply chain risks,” he said. “Right now, we are probably at our highest raw material inventory levels. Part of that is to support increased business, but it is outpacing even that because we are building larger safety stocks as a hedge against the ongoing uncertainty.” At Sperry & Rice, inventory posed different problems. “A combination of returned customer orders and limited labor caused an explosion of our order backlog,” said Dobbs. “The backlog increased to more than twice the normal level. Dealing with this required excessive overtime for workers and extended our lead times for new orders. We are still working to get the backlog and lead times back to normal levels.”
Keep the lines of communication open
Dobbs hit the nail on the head when he said, “Communication has always been vital to running a successful business.” And he was just as on point when he said that the pandemic magnified the need to communicate well in all avenues – with employees, with customers and with suppliers. Being open and honest with employees – about pandemic issues, supply chain snags or production peaks and valleys – served the manufacturers well. “It was vital to keep employees abreast of the business outlook, so they felt secure and valued,” said Dobbs. In addition to talking to workers, Dobbs’ company listened to its employees about
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their needs and concerns, and responded with pay increases, a more accommodating attendance policy and new part-time positions to offer flexibility to workers. Pruyn reported a similar atmosphere of open communication with his company’s workforce. “We try to do regular ‘State of The Rubber Group’ updates,” said Pruyn, “so that our team knows how things are going.” Pruyn also emphasized to workers that their behaviors can impact the company’s relationships with customers. “We probably reinforced that more than ever,” he said, “to make them understand that if, for whatever reason, we had a significant COVID outbreak in the facility and had to close down, that would seriously impact the customers. It was a reminder that customers are really the folks that support all of us financially.” “Overall, though,” said Pruyn, “there was not a big shift in our messaging. We may have communicated more frequently. We may have used vehicles like email and communication boards when it became difficult to do company-wide meetings amid the social distancing requirements that we implemented.” The company got creative to fashion a good spot for everyone to gather for meetings by setting up sticker dots in the parking lot at six-foot intervals so meetings could take place outdoors. Pruyn’s communication with customers and suppliers was similarly beefed up. “We worked with our main suppliers,” he said, “to develop more regular and more structured communication surrounding risk associated with all of the supply chain craziness.” Pruyn called this increase in communication just a natural expansion of the company’s normal operating procedure. “We always are striving with both customers and suppliers to create life-long relationships,” he said, “A key to maintaining those relationships is solid, regular communication. Our culture and our desire to treat others the way we would like to be treated helped us a lot through the last couple years.” The sentiment at Sperry & Rice is similar. “Customers are the lifeline of any business,” said Dobbs, “With our unusually high backlogs and long lead times, we were not always able to make and ship the orders our customers needed. Keeping them informed about delays was very important so they could adjust their processes or inform their own customers.”
Deal with the rising cost of … everything
As the cost of materials and parts has spiked, so has the cost of labor and shipping. Rising costs, along with frequent shipping delays and scarcity of items, make it more important than ever to have clear agreements with customers and suppliers, as well as backup plans for sourcing materials and transporting goods.
Dobbs noted that his company does not hold long-term contracts with its suppliers, but it does have backup plans. “In our business, we have qualified second and sometimes third suppliers for most of the important materials that we use,” said Dobbs. “There have been lots of delays in deliveries and, in a few cases, a material was not available and so adjustments had to be made. We have a chemist on staff, and this allows us to offer alternative materials to our customers and to adjust critical components.” Pricing volatility and material availability also tested The Rubber Group. “We didn’t have a lot of formal long-term agreements with either customers or suppliers,” said Pruyn. “There have been regular price increases from suppliers and to customers, much more so than we typically see.” Pruyn’s company had worked to keep its pricing stable over the years, but during the pandemic supply chain chaos it had to deal with big price increases for customers twice in a matter of months. “We do our best to announce predictable price changes as far in advance as possible but if the price increases are abrupt and significant, we have to pass those along immediately.” Pruyn noted that it takes a lot of resources to requote pricing frequently to keep up with cost changes. “We do not like to do this to our customer base,” he said, “but we were forced to react immediately because the increases were so impactful to our cost structure.”
The big takeaways
As the manufacturers looked to the future, they reflected on the last two-plus years and cited the most valuable lessons learned. A commitment to honest, frequent communication was a biggie, as was the realization that healthy cash reserves really can solve many a problem. Keeping the employee head count at its optimal level was another important consideration, even if it means taking a leap of faith and/or stretching the budget. Keeping employees happy and keeping the pipeline of new candidates flowing by being an attractive employer was another lesson learned. Having flexibility with one’s workforce, to match the ever-changing operational demands, was another important lesson. Tips from The Rubber Group Pruyn summed up the key lessons learned at The Rubber Group. “We were in a really decent financial position to weather the initial storm,” he said. “Our experience illustrates that having significant cash reserves is a good way to be prepared for this kind of uncertainty. We are consciously preparing for the next possible situation by ensuring that we have a solid, significant cash reserve in place.” Pruyn learned a lesson from his company’s difficulty in staffing back up after the layoff that was required during those bleak early months of the pandemic. “In terms of page 14 u
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downsizing and upsizing,” said Pruyn, “if I were to face that situation again, I would try to maintain employment levels for a longer period than we did in 2020, because having to cut the workforce drastically and then scale back up was very difficult.” Pruyn said that ramping back up in nearly a “from scratch” hiring process – bringing in a lot of people to interview, to hire and to train – was a tough experience. “In hindsight, we would not do that again.” “And finally,” said Pruyn, “I would reinforce that communication with customers and suppliers and team members is probably the most important thing. Even when things were difficult for us, maintaining those relationships was really key to remaining successful.”
Photo courtesy of Sperry & Rice Lessons from Sperry & Rice Dobbs echoed some of Pruyn’s takeaways regarding communicating and dealing with customers. “We always thought of ourselves as a supplier who stayed connected to our customers,” he said, “but these last two years put that even more into focus.” Getting and staying close to the customer is critical for showing that a manufacturer cares and is interested in a customer’s business and issues. When the relationship is mutual, customers learn about the manufacturer and develop a vested interest. This kind of familiarity allows a manufacturer like Sperry & Rice to anticipate the customer’s most crucial needs and go the extra mile to supply product to keep the customer’s own production line running smoothly. “Many times, we broke in to get them something even if not the entire order,” Dobbs explained. “In most cases, that was enough to get them over their immediate hump, and we could go back in later to get them the rest of that order.” That approach, said Dobbs, is a big factor in why incoming orders have remained very strong even when his company was not always delivering in as timely a manner as he and the customers would have wanted. Dobbs’ experience with his workforce yielded another important lesson. “Prior to the pandemic,” he said, “we had a pretty steady work force. There were occasionally 14 Inside Rubber // 2022 Issue 2
some retirees that we would need to replace but the pool of candidates was relatively large and finding people was not too difficult. That all changed coming out of this challenging time.” Like so many employers, Dobbs found that new employees are different now. “They are choosier about where and how they want to work,” he said. To remain competitive in the market, Sperry & Rice had to make several pay increases. With some new employees, extra time was required to help newbies become familiar with rubber manufacturing. Dobbs found that flexibility – about positions and about work hours – was even more important than pre-pandemic, as were updates to the company’s attendance, vacation and employee referral policies. “Our new employee referral program was very successful,” said Dobbs, “and we also found success in reengaging with a select group of ex-employees.” Overall, he said, “the work/life balance is something many employees think much more about than in the past. There is a greater level of turnover as new employees come and go based on what is driving them personally, so keeping a steady flow of new applicants is critical for now and for whatever comes next.” Flexibility, said Dobbs, has always been one of his company’s strong suits. “But the last two years,” he said, “has put that into overdrive.” With labor issues and strong customer demand, Dobbs and company had to shift the workforce it had to where it was most needed. “This need for flexibility went well beyond the normal cross training that everyone has done for years,” he said. “It often meant shutting down entire departments so those workers could be redeployed to other areas so that customer orders could be completed and shipped. Each day, it required an assessment of the most critical customer needs compared to the work force at hand for that day.” This level of flexibility had pros and cons. It was not easy, especially for many long-time employees. Even some managers and supervisors struggled with an approach that often seemed chaotic. “It did provide the avenue,” said Dobbs, “for some employees to step up and really show what they are capable of delivering. As I like to say, the work has changed, and we must change with it. There is no longer a need for a ‘left, rear, wheel, lug nut, tightened’ position. For today and the unknowable tomorrow, we need utility players who can perform well in all kinds of positions and environments.” COVID-19, the supply chain quagmire, extreme weather, wild swings in product demand and the Great Retirement really put manufacturers to the test in 2020, 2021 and 2022. What’s next? Will inflation abate? Will another virus variant shut down production of key items in China? Will another container ship run aground on the way to the US? Those questions cannot be answered, nor even guesstimated. So, learn from the last two years and stay prepared for whatever might be around the next corner. u
Congratulations to the 2022 Safety Award Winners
Each year, ARPM invites members and non-members to participate in the Safety Achievement Awards and the Safety Best Practices Awards. The Safety Achievement Awards are a way to recognize safety in the industry and facilities that have achieved a level of safety performance above the industry average. These awards are based on data reported on a company’s annual OSHA 300 Log of Work-Related Injuries and Illnesses. This year’s winners are: Gold Achievement – Hamilton Kent, LLC (Winchester, Tennessee); Zeon Chemicals LP (Riverport Warehouse); Zochem LLC (Dickson, Tennessee); and Zochem ULC (Brampton, Ontario) Silver Achievement – BRC Rubber and Plastics, Inc (Wayne, Indiana) Honorable Mention – Bridgestone APM (Upper Sandusky, Ohio) and Custom Rubber Corp. (Cleveland, Ohio) Commitment to Excellence – Eagle Elastomer (Cuyahoga Falls, Ohio) The Safety Best Practices Awards are a way to recognize the best practices that organizations have implemented to increase overall safety. Members submitted the best practices that they have implemented into their facility and what the results of their new program were. After all completed submissions were received, the best practices were sent out to the membership to vote. This year, Zeon Chemicals L.P. was awarded a 2022 Safety Best Practice Award for its innovative approach to improving safety in their facility. Additionally, Blachford RP Corporation was awarded a Commitment to Continuous Improvement Award for its submission about its no-lost time incidents and its 10-year safety record. All award winners were recognized at the 2022 EHS Summit on April 27 and 28.
2022 Benchmarking and Best Practices Conference Keynote Speakers
The 2022 Benchmarking and Best Practices Conference will be October 5-7, 2022, in-person, at the Indianapolis Downtown Marriott. This event will bring together over 500 manufacturers from around the United States for two and a half jam-packed days of programs and activities. The goal of the Benchmarking and Best Practices Conference is to help plastics companies improve their operations and tactics in order to impact bottom-line profits. This year’s Benchmarking and Best Practices conference will address leadership, operational best practices, the latest financial benchmarks, sales and
marketing, the impact of employees on the bottom-line and much more. ARPM is excited to announce two keynote speakers for this year’s event! Jason Hewlett is the youngest member of the prestigious Speaker Hall of Fame, whose talks inspire leadership from the perspective of a Promise. Having delivered thousands of presentations, Hewlett is the only speaker in the world teaching leadership skills, tools and mindsets in such a powerfully unconventional way. You will leave his presentation with proven processes and immediately implementable takeaways to transform your business and leadership skills. Paul Krismer teaches the practical application of positive emotions to achieve corporate and personal excellence. Krismer has a proven track record as an inspirational leader. For 20 years, he has served in senior management roles – overseeing hundreds of employees, multi-milliondollar projects, and cheerfully growing future leaders. Helping people to reach greater happiness and success is his trademark promise. Look for more speaker and agenda updates on the ARPM website as the event gets closer.
Welcome New Members
Please join ARPM welcoming the following new members! Home Rubber Company ShockTech Mechanical Rubber Products Corp. Carolina Recycle Partners Delta Flexible Products, Inc
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Quality is Essential: Are You Doing Enough? By Tony Robinson, analytics director, ARPM
M
ost, if not all, manufacturers advertise quality as a top priority. This characteristic is shown on company websites, pamphlets, social media and other forms of marketing. Customers demand a certain level of quality in their parts, or they will take their business elsewhere. However, meeting customer standards and striving for the highest quality possible are two very different things. This begs the question: how do companies that successfully prioritize quality compare to companies that meet the bare minimum? In other words, do companies that work to improve quality internally perform better than those who do not? The answer may seem obvious, but to provide better insight, the Association for Rubber Products Manufacturers (ARPM) conducted an industry analysis and published its 2022 Production & Quality Report in March. This report dives into a variety of key performance indicators (KPIs) to benchmark production and quality performance in both the rubber and plastics industries. It is important to note that KPIs analyzed in the report are not necessarily measured by all manufacturers, and it is the Chart 1. decision of the manufacturer to determine how performance is measured. One straightforward metric for examining a facility’s quality standards is to view its acceptable quality level (AQL), or the percentage of defects considered acceptable in a sample batch of a manufactured product. The average AQL reported was 2%, which provides for a better statistical understanding of performance of manufacturers in the rubber 16 Inside Rubber // 2022 Issue 2
Chart 2.
and plastics processing industries. When examining this metric segmented by market served, companies serving the automotive sector had the lowest average AQL (Chart 1). Even if a facility meets its own internal standards, customers may still find issues. Eighty-four percent of survey respondents track customer complaints, and on average, processors received 23 customer complaints in 2021. Despite having the lowest average AQL, processors serving the automotive sector also received more customer complaints on average (about 35), much higher than the industry average. This is a testament to the rigorous standards of major automotive companies. Overall, a manufacturer can consider itself best-in-class if it receives fewer than 10 complaints a year (Chart 2).
Unsurprisingly, the correlated data indicated that as facility personnel increased the number of audits, the number of customer complaints decreased. As can be seen, those facilities that completed 16 or more audits in 2021 received nearly 50% fewer customer complaints (Chart 3).
Chart 3. To increase quality and improve customer satisfaction, manufacturers have a variety of continuous improvement tools, but internal audits are used in some form by most manufacturers (79%). An internal quality audit is basically a verification activity aimed at evaluating the degree of conformance to a standard specification or procedure of the design, product, process or system. Of those companies that reported performing internal audits in 2021, 12 audits were conducted on average at respondent facilities.
Returning to the original question, do companies that work to improve quality internally perform better than those who do not? Although this article examined one primary improvement tool, the implementation of internal audits, the data demonstrated a direct correlation to improving overall product quality when viewed by the number of customer complaints received. u To discover more about quality metric performance in the rubber products industry, obtain ARPM’s full 2022 Production & Quality Report at www.arpminc.com.
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From Hire to Retire with a Career Lattice By Nicole Mitchell, editor, Inside Rubber
I
t’s no secret that companies across the world are struggling to hire and retain employees. At the same time, workers are looking to grow – in knowledge, benefits and, of course, pay – and they’re willing to do that with or without the company they currently work for. Because of this, it’s beneficial for employers to work alongside their employees to help them get to where they want to be, while keeping them at the company. While this can take a little extra work, it’s almost always worth it in the end, as both employees and employers benefit from a team of qualified professionals. How do businesses give their employees room for growth? R.E. Darling, a specialty rubber manufacturer in the aerospace market based in Tucson, Arizona, advocates for a “hire to retire” philosophy. Keeping employees from first hire to retirement is no easy task, but by developing a career lattice approach, R.E. Darling hopes to give employees opportunities to grow and develop across different departments. Lynn Cosgrove, human resources manager for R.E. Darling, said, “It’s how someone grows in the company and can stay here long term.”
The beginning steps
R.E. Darling still is in the beginning process of switching its jobs development program to a career lattice approach, yet the company has learned a lot since the inception of the idea. A career lattice differs from a career ladder. In a traditional career ladder, employees only can grow in the department they started in – for example, an employee who is hired on the production line may eventually move up in responsibilities and salary levels, but only in production line roles. In a career lattice training model, an employee could start out as a production worker, but eventually move out of production and into a maintenance position as their interests changed. “We are in the beginning stages of defining the skills needed at each level and the training needed to move to the next,” Cosgrove said. “We actually had it slated to start in the fall, but with COVID-19, it’s kind of been a start and stop.” 18 Inside Rubber // 2022 Issue 2
said, “and that means we have to give them opportunities to grow and develop.”
Source: Deloitte Insights, Issue 8, “The Corporate Lattice: A strategic response to the changing world of work,” www.deloitte.com
The engagement process
Cosgrove leads a workforce performance excellence team that discusses issues related to R.E. Darling employees, which includes production personnel and program management. R.E. Darling also regularly hosts town hall discussions, where employees are offered a space to share their goals, ideas and issues with the rest of the company. In recent years, R.E. Darling employees were sharing their wishes for movement within the company as well as other overall employment goals. After hearing what the team wanted out of their workplace, Cosgrove sat down in 2017 with Jen Johnson, HR specialist, and the R.E. Darling executive team to develop a plan. “I had a long-term strategy mapped out,” Cosgrove said. “But because we couldn’t just jump into this, we had to kind of put all the pieces in place.” The outcome was clear – the team wanted to create a career lattice, but the steps needed to be written and discussed before continuing. Changing processes for every employee is a difficult task, so R.E. Darling took it slow and started with the engagement process first. “We needed to know what our employees wanted,” Cosgrove explained. “Then we moved into thinking about how we assess performance, and so performance management was the next big piece that needed to be discussed. We did restructure the entire compensation system as well.”
Communicating a change
After discovering what employees wanted and changing some systems around, such as compensation, R.E. Darling switched gears to creating plans for employees. “We want people to be able to be here a long time,” Cosgrove
At this point, employees and management both were aware that the human resources team was working on creating a way to develop long-term career plans. Cosgrove and Johnson kept in touch with management to be sure that they were on the right track to developing the new approach, but it also was important to communicate with employees.
R.E. Darling typically uses a town hall strategy when announcing new ideas and plans to its employees. “Recently, we had a town hall related to compensation because that’s another important item with our employees,” Cosgrove said. “Through this town hall, it has been delivered to our employees that the career lattice plan is coming.” page 21 u
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Hosting town halls provides R.E. Darling the opportunity to receive feedback from employees on how they feel about the company, the direction of the policies being implemented and other issues of importance to overall workplace culture. “If employees disengage or don’t like what they asked for, we will chat,” Cosgrove explained. However, so far employees have been hopeful for the change in job advancement structure. As R.E. Darling is continuing toward the implementation of career lattices, the company is using a soft approach to the subject. “Right now, we’re using 180 Skills as a skills training program and building the system from that perspective,” Cosgrove said. 180 Skills, Indianapolis, Indiana, is a training system that combines online skills training, a learning management system, instructor training plans and certification testing. “We know that it has the classes that we need for the structure,” Cosgrove continued. Using a soft approach also allows R.E. Darling to solve issues as they come, since this transition is new to the company and its employees. “There are a lot of things that we’re trying to make sure are aligned,” Cosgrove said. “We want this to align with our compensation system. We have to be able to budget for it.”
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Defining the processes, such as how people move through grades of skill sets and associated compensation, is an important step of the process. As of right now, the company is working on defining the skills levels, required curriculum, the desired outcomes for the curriculum and how the employers will know that employees will have the right education and skills to move on to more advanced jobs at R.E. Darling.
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As of right now, R.E. Darling hoping to fully implement its career lattice training program at the end of June 2022. Johnson and Cosgrove hope that employees see their opportunities for growth and cross training as a high returnon-investment (ROI). Once the new approach is fully available, the team plans on clearly defining the options to employees, so they can see the exactly what work must be put in to receive a reward. “So, for example, in order to move from a base level operator to the next level, there is 19 and a half hours-worth of training required,” Cosgrove explained.
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It’s a completely hands-on approach that put the control in the hands of the employees – when they’re ready to move up in the company – especially to a different department or to a role that might come with additional benefits or higher pay – the path is defined. All the employee has to do is take that first step. u www.arpminc.com 21
INSURANCE
Health Benefits Costs: What is the Magic Number?
Image 1.
By Will Hinshaw, partner/founder, Captive Solutions & Options
I
nsurance reporting is wrought with charts and graphs that document figures, percentages and acronyms that are difficult to understand in terms of cause and effect. Rarely do they drive clarity and action. However, those disparate reporting sources can be simplified to a single metric that links to what business leaders care about – cost! This metric can help leaders evaluate options, monitor progress through the process and assess the impact to the health benefit plan accordingly for the next year. This “magic number” is Total Cost Per Employee Per Month (PEPM).
Total Cost Per Employee Per Month
Healthcare spend is based on the sum of a multitude of unit costs. These unit costs then are consolidated and summed based on an enrolled employee – hence the term Per Employee Per Month. This methodology is necessary because employee enrollment varies from month to month. These unit costs are grouped into three “buckets” of spend: administrative costs, insurance costs and claims costs. Image 1 depicts a total cost PEPM, while the buckets categorize the metrics and the unit costs that commonly are included.
Using PEPM to evaluate options
At the onset of an annual insurance contract, PEPM can serve as the basis for calculating projected total cost, as well as comparing each bucket of spend. The insurer – for either a fully insured or partially self-funded plan – and the advisor or broker will be able to consolidate total cost into a single PEPM. While this is an excellent point of comparison that levels the playing field between demographics, plan designs, service delivery and cost containment programs, the components of the PEPM illuminate valid points of comparison. The mix of spend articulated via the percentage for each bucket further highlights the points of comparison. Some will espouse minimal fixed costs, so claims coverage 22 Inside Rubber // 2022 Issue 2
is maximized. Others will counter that greater fixed costs reduce the volatility during the policy year. The goal is to simplify the process to allow for a targeted assessment, which leads to action. Total cost PEPM and the percentages associated with each bucket, in conjunction with the rates and factors that make up those percentages, are excellent tools to create a measurable comparison. While the comparison is not “apples to apples,” it will provide insight that can lead to better outcomes. As with any business decision, the choice is the risk vs. the reward criteria, which is specific to each company.
Using PEPM to monitor performance
Where the total cost PEPM really shines is in a monthly snapshot vs. the contract, budgeting and/or additional benchmarks. Given that the rates associated with service delivery and insurance premium are fixed at the contract onset,
the monthly review should focus on the claims PEPM, as it calculates into the total cost PEPM. During policy updates, the claims PEPM should be broken down into medical and pharmaceutical claims, which easily can be measured and compared year-over-year, month-to-month, vs. projections to determine if further research is warranted. For example, given an increase in the monthly total cost PEPM vs. the projected monthly average, leadership easily can assess if the driver is increasing medical or pharmaceutical claims based on their PEPM values. If the increase is in medical claims, a quick analysis should identify the top three costs based on PEPM. Depending up on the outcome of this quick analysis, a company can determine the course of action to address the rising costs. One area of increasing cost, but easily monitored via the PEPM, is pharmaceutical claims. In addition to understanding the year-over-year costs, there are many national benchmarks for pharmaceutical PEPMs, which brokers or advisors can provide. A number of innovative and well-established cost containment programs exist to effect change, and the vast majority of today’s programs focus on how and where to source the prescription.
These international sourcing and/or patient assistance programs can drive savings from a moderate 10% to an astounding 100% subsidy. The awareness generated by PEPM monitoring can lead to specific tactics to lower costs. The complex nature of the healthcare delivery system quickly can lead to dizzying levels of detail that are difficult to assimilate into a traditional business decision-making process, which is why understanding total cost PEPM is necessary and beneficial to navigating through today’s healthcare challenges. u Will Hinshaw has dedicated over 25 years to leading organizations to profitable growth and superior service delivery in numerous industries over the years, including healthcare delivery, pharmaceutical, and mergers and acquisitions. For more information on the “Magic Number” or healthcare spend in general, please contact Susan Denzio, sdenzio@firstresourceinc.com.
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TECHNICAL STANDARDS UPDATE
Standards Committees Have Been Busy
I
t has been a while since I’ve updated the activities of the ARPM standards committees. In this column I’ll look at the Belt Committee, active in ISO TC41 and with an extensive ARPM standard portfolio. The ARPM/ISO rubber belt Greg Vassmer community works in two broad areas ARPM of application: power transmission Technical Coordinator belts and conveyor belts. Its ARPM work is published in a series of specification standards numbered IP-20 to IP-27 and set of technical bulletins IP-1-1, IP-1-2, and IP-3 to IP-3-18. It also maintains IP-1, the Conveyor and Elevator Belt Handbook. Since the last update, four IP standards, the Conveyor Handbook and several ISO standards have been reviewed, some revised and one has been edited to include a major addition. Since the ISO standard activity is primarily confirmation of existing standards, focus on the IP standards and bulletins. IP-20 and IP-22, covering classic and narrow V-belts, have both been updated with new standard belt lengths added since the last revision in 2015. In addition, in IP20 the metric tolerances were updated and belt designations were added for imperial unit-sized belts. IP-27, covering toothed synchronous belts, has eased requirements on the belt tension used to measure belt length and now allow it to be treated as a reference rather than an absolute value. This tension is used by the belt manufacturer when measuring the belt length to ensure the belt meets required standard length and tolerance. Converting this to a reference value allows manufacturers to adjust the belt measuring tension to accommodate differences in belt construction and tooling. IP-3-18 for Curvilinear Synchronous Belt Drive Systems now adds misalignments due to shaft runout in the estimate of tension excursions caused by belt component tolerance. A tension excursion occurs when there is variation from nominal dimension, location or load in parts of a belt drive system. This causes variation in belt tension that needs to be minimized because it causes vibration, chatter and load spikes or, in particularly bad cases, excessive bearing wear.
24 Inside Rubber // 2022 Issue 2
How much of an excursion is okay? Less is better. The bulletin gives rough guidelines for the maximum excursion load allowed for the belt. But keep in mind, other parts of the belt drive system might be adversely affected at loads lower than the maximum belt load, and care in this area belongs to the system designer. The last update I’ll mention is the major addition to the popular IP-1, the Conveyor and Elevator Belt Handbook. A new chapter will be added outlining a method for manufacturers to measure – and for users to compare – the energy efficiency of different conveyor belts. Lower energy use means less operating cost and less environmental impact, especially in long, heavily loaded belts such as those used in mining operations. In long conveyor belt runs it has been found that the energy consumption is driven by the indentation rolling resistance (IRR). To understand IRR, picture the conveyor belt running over the top of each conveyor roller like an inverted tire (the roller), on pavement (the belt). Each roller is connected frictionally to the belt (otherwise the belt would slide over the rollers – a bad idea), each roller drains some energy from the forward motion. The rubber formulation of the rollertouching part of the belt is unique to each manufacturer and can reduce the energy loss from IRR up to 30%. To evaluate belts for a rating system the new IP-1 chapter recommends either of two types of tests. A type A test allows a direct comparison between suppliers since it requires a standard belt construction. A type B test doesn’t control the test conditions but is best for determining the impact on energy use of changing other variables in the conveyor – like increasing the roller diameter or changing the belt speed. Once a test type is selected and run per the new standard, a rating chart modelled after the energy efficiency charts used, for example, in appliances, is created displaying the test parameters and ranking achieved by the belt. This is an exciting addition to the handbook and helps the industry understand the energy impact of the equipment it uses. 2022 will be a busy year for the belters. Sixteen technical bulletins and five standards need to be reviewed. To get through the workload, and for the first time in a couple years, they plan to meet face-to-face to work through as many of these as possible.u
INDUSTRY Goodyear to Develop Domestic Source of Natural Rubber
The Goodyear Tire & Rubber Company, Akron, Ohio, announced a multi-year, multi-million-dollar program supported by the US Department of Defense (DoD), the Air Force Research Lab (AFRL) and BioMADE to work with Ohio-based Farmed Materials to develop a domestic source of natural rubber from a specific species of dandelion. The program will build on research that analyzed more than 2,500 species of plants but found only a few with properties for use in tires. For more information, visit www.goodyear.com or www.biomade.org.
ASTM International Proposes New Standard
ASTM International’s recovered carbon black (rCB) committee, located in West Conshohocken, Pennsylvania, is developing a proposed standard that will be used to differentiate between rCB projects and provide quality control tool for producers and users. According to ASTM International member Pieter ter Haar, the proposed standard (WK81244) will explain how thermogravimetry (TGA), a type of thermal analysis, can be used to measure rCB bulk composition parameters. TGA also can measure organic residuals, ash content and overall carbon content. All interested parties are invited to join the standards developing activities of the rCB committee. For more information, visit www.astm.org.
Trelleborg Improves Elastomer Bonding
Trelleborg Sealing Solutions, Fort Wayne, Indiana, invested in a Multicomponent Development Center to solve the issue of bonding thermoplastic to thermosetting elastomer bonded multicomponent solutions. Trelleborg enables customers to use multicomponent technology in more applications, due to its ability to provide fully tested and validated options. The process allows for a lower total cost of ownership for customers, while giving them the design latitude to create higher-quality products. For more information, visit www.trelleborg.com.
Ceresana Releases Global Market Study on Carbon Black
Ceresana, Konstanz, Germany, released its global market study on carbon black, featuring information on demand, production, revenues and more. The global and regional demands for carbon black were analyzed according to its application areas: tires, rubber products for cars, industry construction and other applications, and pigments for plastics, printing inks and paints and coatings. The study also shares information about carbon black separated by country. For more information, visit www.ceresana.com.
Orion Engineered Appoints Director of Sales, Marketing and Chief Financial Officer
Orion Engineered Carbons S.S., Houston, Texas, has promoted Jennifer S. Stroh, Ph.D., to director of sales and marketing – specialties Americas at Orion Engineered Carbons. In her new role, she leads all marketing and sales activities for specialty carbon black throughout the Americas. The company also announced that Jeffery Glajch has accepted the role of chief financial officer for Orion. Glajch will succeed Bob Hrivnak, who currently serves in the dual role of interim CFO and chief accounting officer. Hrivnak will continue as chief accounting officer. For more information, visit www.orioncarbons.com.
GlobalTech Plastics Acquired by Molded Dimensions
Molded Dimensions, a manufacturer and supplier of custom rubber and urethane molded parts in original equipment manufacturers (OEM) and related businesses, announced the acquisition of GlobalTech Plastics, Fife, Washington. GlobalTech Plastics is a full-service plasticinjection molding company that specializes in the aerospace, medical and transportation industries. The addition of GlobalTech Plastics will help Molded Dimensions broaden its manufacturing capabilities to include plastic molded parts and components. For more information, visit www.moldeddimensions.com.u
www.arpminc.com 25
Culture Crash: Merging Generations in Family-Owned Businesses By Nicole Mitchell, editor, Inside Rubber
F
amily-owned businesses are extremely prevalent in the US; in fact, there are 5.5 million family businesses in the country, according to Grand Valley State University’s Family Owned Business Institute, located in Grand Rapids, Michigan. Family Enterprise USA, Washington, D.C., reported that over 90% of family businesses feel that what sets them apart from non-family firms is long-term investment philosophy, commitment to employees and suppliers, and contributions to their communities. The same could be said for two ARPM members: Verona Rubber works, Inc. and Custom Rubber Corp. Verona Rubber – previously H+M Rubber – was created in 1986 by Cathy and Mike Othon and their friend, Harvey Van Cleave. The business has gone through a variety of changes throughout the years, including Van Cleave leaving the company; Verona now is located in Blackstone, Illinois, and is run by Cathy and Mike Othon and their two children, Ben and Cindy. The company does work in agriculture, valve and water industries, construction, military and trucks. Custom Rubber serves a few different markets, including consumer products, oil, gas and wastewater treatment to name a few. The company was created in 1956 and has been owned by the Braun family since 1980. Now, Charlie Braun, the second generation, is the president and owner of the company.
family and work as much as possible – which can be difficult when working with parents or siblings on a daily basis. This can be as simple as paying attention to how one addresses their family members while at work. “When I worked here in 2000, I called my parents by their first names,” Braun said, whose parents have since retired. “It was important. It mattered a lot to me.” Braun worked at Custom Rubber while he was in high school, helping around the shop wherever he was needed. But after college, his parents requested that before coming back to the company, he first work somewhere else. After gaining more experience, Braun decided to rejoin the company. Othon, whose parents still are actively running the business, said he functions similarly. “When people ask me, ‘How is your dad doing?’, I answer, ‘Oh, Mike’s doing great.’” Each family member has their own role in the business – although sometimes those roles overlap or one person may take on more than his given title. However, it’s important to understand the roles that family members play in the company and appreciate the different skillsets and capabilities each
While family businesses are prevalent in the US, there still are questions that many ask themselves on what it’s like to transition ownership from one member to another.
Family dynamics matter
The dynamics at family-owned businesses are bound to vary from business to business; however, the number one suggestion from both Ben Othon and Charlie Braun are to separate 26 Inside Rubber // 2022 Issue 2
The Braun Family
Similarly to plans at Verona, Custom Rubber was slowly transitioned from one owner to another as it felt right. “When we were in college,” Braun said, “my parents started transferring shares into a trust that my siblings and I couldn’t touch.” As each sibling graduated and ultimately decided what they wanted to do with their lives – work at Custom Rubber or somewhere else – the children active in the business could buy the shares from the trusts of the inactive siblings. “I executed that option and bought the shares from my brother and sister,” Braun said. It wasn’t until 2021 that Braun bought all the existing shares from his parents, making him the sole owner of the company.
Working with family members
Like any business, there are pros and cons – and with familyowned businesses, there are some specifically when it comes to working with relatives. Some challenges faced might include family members struggling to keep business talk separated from home life, troubles when decision making and more. The Othon Family person brings to the table. “When my parents leave at the end of the day,” Othon said, “I step back and realize what they do every day. I appreciate their work.” Jealousy in the workplace is nearly inevitable, especially when a family member joins the company. There may be employees who feel that the younger family member may only be there since they’re family. Othon and Braun noted the importance of working for their position. “Make sure you do what’s possible of your skills and don’t just sit there because you’re related to the owner,” Othon shared. “Do the extra work to prove that you’re there because you’re valuable.”
Ownership transition plans
There are many considerations and much planning to be done before transitioning from one owner to another, particularly when family relationships are involved. If siblings are involved in the business, is it best to name co-owners? Should primary ownership remain with the parents, even after they leave the everyday demands of the job? What other factors should families think of before changing ownership? Othon and his sister have had minority ownership in the company for many years. “We’re already considered owners,” he said. “But my parents own the majority stock.” Starting small has helped Othon and his family slowly transition together. “It’s always been the plan that I will take majority ownership with my sister,” Othon said, with his parents working for as long as they please.
“My dad and I are competitive and stubborn people,” Othon said. “We butt heads with how we want to do things. And, the more I take over, my parents somewhat feel left out.” Both Othon and Braun agreed that it can be hard for the original owner of the company to find the right balance of letting their family member take the reign while also providing help when needed. Braun has experienced a different challenge of his own: Having patience. If the business transition had moved at his desired pace, “I would’ve bought the shares and assets 10 years ago that I got only a few years ago,” he said. Having patience serves as a reminder that things don’t have to be done right away. Since Braun’s family required him to work elsewhere before rejoining the company, he had to remind himself why he was there and what drove his desire to stay at the helm of his family business. Custom Rubber Corp. now has a board of advisors who help assist in decision-making processes; and this was another aspect of the company that Braun wishes he had implemented sooner. The board of advisors helps ensure that decisions being made benefit the company as well as reduce potential conflict within the company. There are plenty of positives when it comes to working with family. For starters, the experience has given both Braun and Othon a solid understanding of what it means to be a good employee. “It instilled a work ethic in me,” Braun said. “I didn’t want to be the son who just sat there.” Putting in the work allowed both men to find themselves and their own places in their companies. page 29 u
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LIKE ANY BUSINESS, THERE ARE PROS AND CONS – AND WITH FAMILY-OWNED BUSINESSES, THERE ARE SOME SPECIFICALLY WHEN IT COMES TO WORKING WITH RELATIVES.
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Importantly, working for a family-owned business where someone you trust is willing to take on ownership of the company gives a sense of comfort. “As a family business,” Othon said, “you know that they’re not going to leave you. They’ll do what’s best for the business, but also they are family. I can rely on them.”
“It’s not personal. It’s just business.”
When asked what advice they would give to those who are planning to transition into an ownership/leadership role in a family-owned business, Othon noted the famous The Godfather quote – “It’s not personal. It’s just business.” While the quote is originally referencing Michael Corleone’s declaration that he would kill the men who attempted to assassinate his family, Othon uses it as a reminder that company time and family time are separate. “If someone gets angry or feels like they have their toes stepped on, they can’t go to Christmas dinner and continue the argument,” he said. “They have to let go and just be their family member outside of the workplace.” Braun’s top recommendation for families in business together is to educate themselves on the best ways to collaborate and communicate successfully. “I took a great course at Case Western Reserve Business School taught by Ernesto Poza, family business expert, where he listed the five things to do successfully,” he said. Poza is an internationally recognized speaker and consultant for family-owned businesses. He’s also the author of Family Business – a book Braun highly recommends to those in the business. Braun also recommends that younger generations joining the business ask questions. “Before I came back to Custom Rubber, I interviewed my dad’s friends who work in family businesses to ask them what went well, what to do, what not to do,” he said. “So much of this transition relies on the older generation to let go.” u
How to Legally Protect Each Party Joe Keglesvitch, attorney for ARPM and partner at Ice Miller, recommends that family-owned companies be aware of the tax implications of a transfer of equity first and foremost. “There can be negative tax consequences to the transferee,” he said, “and also, opportunities to avoid those downsides with proper planning, particularly dovetailing and estate planning.” For those considering transferring ownership to multiple people – such as multiple siblings or cousins – note that there can be an impact on voting and governance, risking a once-fitting governance structure becoming ill-fitting in the future, Keglesvitch said. Lastly, businesses should keep all documents up-to-date to avoid further issues. “If there are shareholder, buy-sell or similar agreements,” he said, “it is critical that they be updated as necessary and that any new owners become party to them.” Missing out on these important steps could disrupt plans of transition or, worse, impact the next owner. Owners – current and future – also should take steps to protect themselves in case anything were to happen to the business during or after the transition. “Current owners should be sure that they have both offensive and defensive protections in place,” Keglesvitch explained. “As for defensive protections, you want to know your partners are bound by obligations as to when and how they can (or are required) to get rid of their equity.” Some examples of this are mandatory redemptions on events, drag-along rights and rights of first refusal. “On the offensive side,” he continued, “you need to know any buy-out provisions are adequately funded so as to ensure payment without rendering the business insolvent and that all the tax angles have been considered and covered.”
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Q&A
Reducing Production Downtime with Auxiliary Equipment By Ian Turner, vice president of sales and service, Barwell
P
roduction efficiency always has been important to the manufacturing sector, but with rising energy and raw material costs, combined with worldwide inflation and the effects of the coronavirus pandemic, it probably is more important than it has ever been. As Barwell visits rubber factories all over the world, we are receiving increasing commonality in the issues that have a negative impact on production efficiency and downtime. Here are five of the most commonly raised issues.
We are looking to filter our compound, but this will mean increased downtime and inefficiency due to constant replacing of filters. What are the best options to reduce the downtime and costs of the filters?
A rear-loading preformer machine option is available, which means operators will not disturb the filtering setup or damage the filters when loading the machine. The filters do not need replacing, as they would with a front-loading machine (with a frontloading machine, the filters tear away from the filtering accessories on opening of the head and need replacing, adding significant time to the loading process).
We’d also suggest using a high-pressure machine to help push the compound through the mesh filters that filter the compound. This can provide an increase of up to five times the amount of rubber filtered per minute as the high pressure helps to push the compound through the tiny aperture on the gauze plate and mesh filters. 30 Inside Rubber // 2022 Issue 2
We are trying to streamline production efficiency throughout our business, but find it difficult to identify areas in which we can improve. How can we ensure our machine and operators are working to maximize efficiency? The best way to make key decisions is through data analysis; Automation, data collection and instant analysis ensure that the monitoring of machine performance improves production quality and efficiency, as well as enabling predictive maintenance and instant troubleshooting to take place.
Many companies are trying to establish smart factories, and systems are available to help transform rubber processors’ operations by using a safe Internet Gateway and advanced technology, allowing machines, devices, sensors and people to connect and communicate with each other. Process engineers are provided with vital information and data from all points in the manufacturing process to aid decisionmaking and identify key areas that require development. The systems also can provide operators with alarms, production history, error logging, live tracking, service reminders, daily checks and document storage to make daily tasks simple and trouble-free. Another major benefit to these systems is the ability to allow direct remote access to the machine’s control panel for solving urgent problems from anywhere in the world. Some systems also have the functionality to connect via an IP camera to view the machine remotely, providing instant support to help machine owners. This will help reduce downtime considerably and reduce the need for a service engineer visit.
We waste a lot of time changing the tools on our machine. How can we reduce changeover time?
A front die change solution is available, which is much quicker as the holder ring is unscrewed from the front. This means operators quickly can swap the die out for a different one without disturbing the accessories behind the head, and this has the added benefit of not having to remove any rubber compound, which can be a timely process.
I am concerned about the amount of waste compound during our rubber preform production. How can we reduce waste at the start of a production run?
Many of today’s preform machines are highly accurate machines, designed for minimal wastage and consistency during production runs. This firm’s preformers include a scales feedback system for automatic weight adjustment to ensure rubber blank control, which helps to maintain accuracy of up to +/- 1% by volume for many applications. It is possible to access a quick product setup using a product database to save time when programming the machine. For existing owners of this firm’s equipment, an extended funnel can be used when production solid sections of up to 90mm to further reduce compound wastage, which will reduce leftover compound found within the head accessories after each batch cycle, as the channel within the funnel has been narrowed.
We currently are hand-trimming rubber parts of flash and would like to move to cryogenic deflashing, but we know the costs are high with this process. Is it cost effective for us to switch?
To lower the costs associated with cryogenic rubber deflashing machines, it is important to reduce the level of liquid nitrogen consumption. This firm’s highly engineered chamber construction means that there is no wasted space, which reduces consumption. The inclusion of a 99.99% dryair system to transport the media prevents any unnecessary damage to the polycarbonate media and reduces any downtime, and removes any impurities found within the shop air, when compared to a screw augar. The main disadvantage with a screw augar is that it degrades the polycarbonate media quickly and is a labor-intensive process to clean. A dry-air system also means that gaseous nitrogen is not required, which is another cost savings. u Barwell’s aim always has been to improve production efficiency and reduce downtime to help maximize an organization’s profitability and production quality, as well as ensure effective and efficient supply and service through the supply chain. Barwell has new machine solutions for customers who do not currently own a Barwell, machine improvements for current Barwell owners or additional machines for Barwell owners to add to their rubber complete processing cycle. Barwell manufactures rubber-processing machines, including batch-fed ram preformers, continuous gear pump preformers, rubber deflashing machines, spacesaving spiral cooling conveyors, strip cutting machines, industrial drying microwave ovens and tire re-treading machines. For more information, visit www.barwellusa.com.
advantage Practice Advice for the Rubber Industry Ice Miller focuses on meeting the needs of our clients quickly, efficiently and cost-effectively. Ice Miller attorneys with rubber industry experience can assist with your greatest legal challenges. Contact Josef Keglewitsch at 614-462-2279 or josef.keglewitsch@icemiller.com for more information.
300+ lawyers in Columbus and other offices icemiller.com
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The Times, They Are A’Changed By Chris Clark, director of communications, 180 Skills
T
he Great Resignation. Everyone has heard it (ad nauseum) over the past 12 months. COVID-19 changed the business world in many ways, but in some ways it wasn’t the catalyst of change. It was more the expediter of change. Many organizational shifts were already in progress, but the pandemic threw jet fuel onto an already steadily burning flame. Take the recruitment and hiring process, for example. The days of the in-person job application-interview-onboardorientation process have been changed forever. Remember the days when one would go to the business, get a job application, complete it by hand and return it within a relatively short period of time? Seems archaic, right? With the creation of CareerBuilder, Monster, Craigslist, Indeed, GlassDoor, LinkedIn and other online job/career platforms the recruitment process has been streamlined. Organizations adopted these new Applicant Tracking Systems or ATS. But it didn’t stop there. Suddenly there were user-friendly Human Resource Information Systems or HRIS systems to help with Human Capital Management or HCM. Essentially the paper and pen were put down and adopted a world of acronyms. Once the interview is complete and the jobseeker becomes the new employee, it’s time to onboard. The dreaded onboarding. The endless forms and acknowledgements. The first day on the job felt more like closing on a first home. The paper trail looked like the Oregon Trail. Then technology stepped in. Now a new hire can onboard from the comfort of their home. Send over a link, wait for the completion notification, and BINGO, the newest team member is onboarded. Next up: Training. More specifically, new employee orientation. This is usually a classroom setting with an orientation facilitator. Human resource policies; safety practices, procedures and protocols; OSHA; Open Door; Anti-Harassment and Discrimination; Anti-Retaliation; Diversity and Inclusion; and maybe even a Collective Bargaining Agreement or CBA orientation. Then, if lucky, employers can begin showing them how to do the job they were hired to do by day three. That is, if everyone in the classroom speaks English. 32 Inside Rubber // 2022 Issue 2
This is the point where organizations miss the mark. They’ve cut the paper trails. They’re speaking a new language of acronyms. They can access employee information in seconds. Yet, when it comes to teaching employees to do the job they’re paying them to do, they rely on an archaic process. While the other processes are vitally important to the legal onboarding of new employees, why skimp when it comes to teaching them the job? People have different learning styles. They speak different languages. They comprehend information in a myriad of different ways and rates. Employers have brought these people into their work environment to do a job. So why aren’t they giving them the proper tools and skills to get the job done, up front? Today’s training world is filled with a wide range of technologies and methodologies that can skill, reskill or upskill employees efficiently and turn them into a productive piece of your puzzle more quickly. Arguably, the most effective way of achieving this is through the One-To-One or 1T1 training model. Studies have proven that smaller class sizes improve subject comprehension and retention for the learner. The 1T1 model is based on this principle. One student taught a new skill from one consistent knowledge source with the material being presented in the learner’s native language at their cognitive comprehension pace. Scenario: There are 15 new hires, each who natively speaks a different language. English may be their second language, but their fluency is unknown. They are being trained for the same position within the organization. Do you hire 15 translators? What about next month when the next class of 15 speaks different languages or if five of those translators aren’t available? Does one feel comfortable with the idea that the message is consistent between each language and facilitator? Would an employer places their worker’s safety and OSHA recordable track record on it? No. A 1T1 E-Learning solution is really the only way to effectively train employees today. These Learning Management Systems or LMS based solutions engage the learner by letting them manually advance through the course-work and complete intermittent knowledge checks and assessments to ensure comprehension. Oftentimes these assessments are in a
gamified structure keeping the learning engaged. Courses are developed and delivered in any language; therefore, using the terminology and dialect the learner is most familiar with. Quiz and test scores are automatically tracked and recorded in the LMS for instantaneous record retention and certifications can be issued on the spot. Another benefit to the 1T1 E-Learning solution is the inherent response to current labor shortages. Companies no longer must pull subject matter experts or leadership away from their jobs to orient and train new employees. While nearly every production facility continues to struggle with staffing, this solution allows companies to keep current employees to stay productive on the production floor. Less need for additional training staff, less burden on current employees, consistent messaging, and this can all be achieved at less than the annual, total compensation of one full time employee. The biggest benefit to a 1T1 E-Learning solution is that to the employee. This solution works with them at their pace. It speaks their language. It gives immediate feedback through knowledge checks and assessments. It increases confidence and comprehension, which results in a better employee. A better employee means less accidents, increased productivity and potential for promotional opportunities. By
helping an organization’s bottom line and ensuring content consistency, employers are bolstering employee confidence, comprehension, career pathing and earning potential. In conclusion, the best advice is to follow the Three E’s: • Embrace the acronym. • Enhance training. • Empower employees to succeed with (the organization).u Chris Clark is the director of communications with 180 Skills, which provides a turnkey skills training system that empowers manufacturers to create, grow and retain their workforce. The organization’s library offers nearly 800 skills courses, including a variety of courses on rubber manufacturing processes that are exclusively available to ARPM members. To learn more about how 180 Skills could transform your employee on-boarding process, contact ARPM’s membership & events director, Kaitlyn Krol, at kkrol@arpminc.org.
www.arpminc.com 33
EVENTS CALENDAR MAY 2022 24 Webinar: Reverse Analysis Data
JUNE 2022 15-16 Sales and Marketing Forum
JULY 2022
ACE Laboratories......................................................21 www.ace-laboratories.com Akron Rubber Development Laboratory, Inc. (ARDL)............................................23 www.ardl.com ARPM Membership...................................................12 www.arpminc.com ARPM Publications....................................................28 www.arpminc.com ARPM 180 Skills........................................................35 www.180skills.com/ARPM Barwell Global USA...................................................17 www.barwellusa.com Blair Rubber Company................................................5 www.blairrubber.com
13 ARPM Connects
Chardon Custom Polymers.......................................33 www.chardoncp.com
20-21 HR Forum
ChemTrend...............................................................19 www.chemtrend.com
26 Webinar: Mobility Value Chain Relationships
OCTOBER 2022 5-7 Benchmarking and Best Practices Conference 10-13 International Elastomer Conference
NOVEMBER 2022 16 Finance Forum For the most up-to-date information and to register for events, visit www.arpminc.com/ events. 34 Inside Rubber // 2022 Issue 2
Grainger......................................................................2 www.grainger.com IceMiller.....................................................................31 www.icemiller.com PartnerShip...............................................................31 www.partnership.com/ARPM REP Corp....................................................................7 www.repinjection.com Rubber Division, ACS................................................20 www.rubber.org Sigmasoft................................................... Back Cover www.sigmasoftvm.com Smithers......................................................................9 www.smithers.com
