As a plastic injection molder, Weatherchem Corporation designs, develops, and manufactures dispensing closures primarily for manufacturers of spice, seasonings, vitamin and dietary supplements. During the time this story is told, this 40+ year old plastic injection molding company located in Twinsburg, Ohio was privately owned.
In the mid-1980’s, Weatherchem developed and patented the first “Flapper® cap” that became the backbone for its success.In 2006, a new management team was put at the helm with the challenge to profitably grow the company, which had experienced stagnant revenue for several years, excessive spending and relatively high debt levels. To further exacerbate the situation, multiple patents for the Flapper-style closure were nearing expiration.
Since the year 2000, the company invested capital only to maintain current business. As a result by the time the new executive team was in place, sales were flat. However, during the early 2000’s, the company focused on evaluating the profitability of its customers and product mix resulting in elimination of unprofitable custom business.
New management team took several steps to improve company performance by establishing expectations in many areas and created a foundation for growth. First, unnecessary spending was identified and eliminated. Second, production efficiencies were identified and implemented. Lastly, operational practices and measurements were institutionalized to ensure production consistency.
Management team also believed that investing in the future was critical to improving the longer-term cash outlook and ultimately to grow the business beyond market growth rates. In preparation for new product introduction, investments were made in the technical staff, market research and rebranding. Product development and marketing focused on the core markets as well as initial exploration of new markets. The key turnaround happened when a decision was made to invest capital into promising and fast-growing dietary supplement & vitamin market. A few generations of closures have been created to acquire substantial market share in this market and the effort paid off handsomely: by 2011, the company more than doubled in revenue size and profits grew even faster.
Within 24 months, Weatherchem invested in 5 new product lines targeting both, traditional market segments and new. Once these new products were introduced to the market, Weatherchem sales saw double-digit growth every year since! The new product infusion helped draw attention of leading players not only in new markets, but also traditional markets where sales saw a healthy uptick.
Management team continued smart investment strategy with key focus on strategic target markets. Strategic planning was at the core of future success of this company. When the first 3-year strategic plan was created, the intent was to change the perception in the market of Weatherchem as a supplier of dispensing caps for just the spice and seasonings market. Three years later, this goal was accomplished: the focus was placed on a more profitable dietary supplement market with healthy annual growth and diversified customer base.
Through late 2000’s, investments were primarily made in developing new products; now that confidence had been restored in the future of the business, the owner infused more capital into the business.
In summary, focus and swift execution was important to the company’s renewed success. Significant spending in operations modernization as well as new product development was completed just prior to the major recession and the company was stable and well positioned for growth. Hiring top talents became easier. Key hiring and the establishment of robust processes across the enterprise led to improved company reputation as innovative, responsive and nimble. The company grew profitably in an environment that was increasingly complex with more sophisticated competitors and more demanding customers. Weatherchem had a strong foundation to continue its profitable growth.