Past Winner Stories
Genesis Plastics and Engineering
www.genesisllc.com
Genesis Plastics and Engineering, a custom plastic injection molding company has experienced the challenges of quick success. It has also learned the dangers of focusing on one big customer and experienced firsthand the reality of a client's move to offshore assembly.
When the company was incorporated in 1995, the intent of president James Gladden was to include some assembly business to support the company's core focus on injection molding. But the company quickly got an offer it couldn't refuse and in 1996 won a five-year contract to assemble a variety of business equipment products far the printing industry.
"When the opportunity was first considered, we thought that it was a perfect opportunity to quickly earn enough to expand into our core business - injection molding," said Gladden.
The company sought financing far the necessary building expansion, secured working capital far the expected growth in inventories and receivables and hired additional employees. The building was expanded twice to accommodate a sales volume of $13.5 million during 1999, including more that $8 million in assembly activities from its major customer - at that time, its only customer.
By the end of December 1999, employment had reached 141 employees and the company was profitable.
"For a company that began production in June 1996, this was quite an accomplishment," said Gladden.
The only problem was that nearly all the assembly work was for one client, and more than 90 percent of the custom injection molding was for the same customer. "We recognized the dangers of 'one customer' but still felt we had time, at least three years and probably more, to concentrate on our core business and diversify our customer base, "Gladden noted.
As it turned out, they didn't have that time. "To our surprise, our customer notified us that the assembly business would be moved overseas starting in early 2000," Gladden said.
The client wasn't waiting far its five-year contract with Genesis to end, either. The phase down and transfer was to start immediately.
Genesis had planned far at least the original five-year commitment and had hopes of extending it a few years beyond. Suddenly, the company was faced with the loss of its primary customer and the need to quickly adjust to a very different situation. How would they tell employees? What would they do with the building space? Could they attract new customers? How would this affect their banking relationships?
Unfortunately the company had more questions than answers. But Gladden decided to face them head-on. "Bad news travels fast," he said, "and the only way to stem the tide is to let everyone know what plans were to be undertaken."
At an employee meeting, he explained that their major client's assembly products would be transferred overseas, but that he hoped work force reduction could be handled by attrition. Employees were offered the opportunity to move to the molding department as openings developed.
Assembly sales dropped to $4.646 million in 2000 and $771,777 in 2001. Assembly far Genesis' main client had plummeted to zero by the end of 2001.
But with that loss came a renewed focus on growth. Major efforts were made to expand the client base; a strategic alliance was made with a Michigan engineering firm; a new salesperson was hired, and the company signed a licensing agreement for a patented microcellular molding process. Genesis expects 2004's sales volume to nearly be at the same level as 1999 and anticipates reasonable profits.
"The best move made by the company was to keep the employees informed and provide opportunities for them when possible," Gladden said.
He considers the loss of assembly work to be a pivotal point in the company's evolution. "Since the start," he said, "we have had systems in place, a good management staff and a desire for efficiency, which enabled Genesis to manage a bad situation."
When the company was incorporated in 1995, the intent of president James Gladden was to include some assembly business to support the company's core focus on injection molding. But the company quickly got an offer it couldn't refuse and in 1996 won a five-year contract to assemble a variety of business equipment products far the printing industry.
"When the opportunity was first considered, we thought that it was a perfect opportunity to quickly earn enough to expand into our core business - injection molding," said Gladden.
The company sought financing far the necessary building expansion, secured working capital far the expected growth in inventories and receivables and hired additional employees. The building was expanded twice to accommodate a sales volume of $13.5 million during 1999, including more that $8 million in assembly activities from its major customer - at that time, its only customer.
By the end of December 1999, employment had reached 141 employees and the company was profitable.
"For a company that began production in June 1996, this was quite an accomplishment," said Gladden.
The only problem was that nearly all the assembly work was for one client, and more than 90 percent of the custom injection molding was for the same customer. "We recognized the dangers of 'one customer' but still felt we had time, at least three years and probably more, to concentrate on our core business and diversify our customer base, "Gladden noted.
As it turned out, they didn't have that time. "To our surprise, our customer notified us that the assembly business would be moved overseas starting in early 2000," Gladden said.
The client wasn't waiting far its five-year contract with Genesis to end, either. The phase down and transfer was to start immediately.
Genesis had planned far at least the original five-year commitment and had hopes of extending it a few years beyond. Suddenly, the company was faced with the loss of its primary customer and the need to quickly adjust to a very different situation. How would they tell employees? What would they do with the building space? Could they attract new customers? How would this affect their banking relationships?
Unfortunately the company had more questions than answers. But Gladden decided to face them head-on. "Bad news travels fast," he said, "and the only way to stem the tide is to let everyone know what plans were to be undertaken."
At an employee meeting, he explained that their major client's assembly products would be transferred overseas, but that he hoped work force reduction could be handled by attrition. Employees were offered the opportunity to move to the molding department as openings developed.
Assembly sales dropped to $4.646 million in 2000 and $771,777 in 2001. Assembly far Genesis' main client had plummeted to zero by the end of 2001.
But with that loss came a renewed focus on growth. Major efforts were made to expand the client base; a strategic alliance was made with a Michigan engineering firm; a new salesperson was hired, and the company signed a licensing agreement for a patented microcellular molding process. Genesis expects 2004's sales volume to nearly be at the same level as 1999 and anticipates reasonable profits.
"The best move made by the company was to keep the employees informed and provide opportunities for them when possible," Gladden said.
He considers the loss of assembly work to be a pivotal point in the company's evolution. "Since the start," he said, "we have had systems in place, a good management staff and a desire for efficiency, which enabled Genesis to manage a bad situation."