Plant Tour: How to buy a business on the cusp of a recession, and live to mold another day

Four months after he purchased the business and began his transition from aerospace engineer to small business owner, Steve McLean might have been new to the industry and his recently acquired company, but he could still sense that something was awry.

It was the fall of 2008 and as doubts about overleveraged consumers, companies, and countries grew from concern to full-fledged panic, the entire global economy came screeching to a halt in a way that it hadn't since the Great Depression. "I bought WP in June of 2008 and by September, things were acting strange," McLean recalls. "By December, [the company's largest customer] had completely changed all its forecasts for the upcoming year, dropping sales for us from about $3 million to $2 million. We had two good months, and then the bottom fell out of the world."

 Steve McLean (right), owner of WP Inc., and Richard Bradbury, director of business development, stand in front of a mold built in-house for the pump action on a U.S. Ordinance firearm.Riding out the storm

Two years removed from his decision to leave Ball Aerospace (Broomfield, CO) and buy the company, McLean and WP Mfg. (Longmont, CO) are back on their feet after the economy collapsed around them. WP kept enough cash reserves through the worst of the Great Recession to stay afloat, and in the interim, realigned its business model and restructured the company from the ground up.

"Luckily we made adjustments in time, and had just enough reserve to carry us through," McLean says. "I can see how so many companies could go under, because if you don't have the reserves, you can't wait it out. It reminded me of being in a storm and in a life preserver; there'd be a big wave, and you'd just have to hold your breath long enough to pop up and get the next breath and then the next wave would come over."

Some 11 months after he bought the company, WP bottomed out in May 2009, when monthly sales fell to an all-time low of $40,000, dramatically off the historical average of $250,000-$300,000/month. "Oh, I'll tell you-what a body blow," McLean says.

While the recessionary wave crashed around it, WP knew it would dissipate, and wanted to emerge from the tumult as a better company. To do so, during this slow time WP made a series of key investments designed not only to help it weather the storm, but also to emerge on the other side even stronger. On a basic level, McLean reorganized and revamped the company's people, processes, and production space, including painted lines along the floor to delineate areas and create distinct cells, while maximizing the company's reduced labor force.

The facility's water, lighting, and electrical systems were upgraded, and strategic investments in a Stratasys fused deposition modeling (FDM) rapid prototyping system and a fifth CNC machining center were also made. On the company's second floor, rows of pallet racking were installed to store and retrieve the company's materials and tooling more efficiently, with two assembly areas created. McLean admits that when he bought the company, the floor upstairs was buried in clutter and barely visible. Today it's a picture of organization, although he can readily point out areas that he feels require further tidying up. He also walks off the additional space that will soon be upgraded into a clean assembly area, with plans to tile the now-bare concrete floor. 

In addition to the structural changes to the company, WP made another key investment, hiring Richard Bradbury as its new director of business development. Working nearly his entire career in key account selling, with stints in Canada, Europe, and Latin America, Bradbury represents a dramatic departure from how WP would generate business, breaking from a 40-year-old passive word-of-mouth strategy.

"We needed to start sales efforts early, as the sales cycle in the manufacturing business is extremely slow," McLean says. "We needed someone who could really get out there and get after new business, so that by the time the recession ended, we would already have some momentum, and hit the ground running."

Poised for growth

When IMM visited in July, WP had steadied itself and has been enjoying double-digit growth since the start of the year. The staff reorganization and gains in efficiency made as the company took on water in 2008 and 2009 pushed WP's breakeven point down more than 30%, so that, for example, instead of needing $240,000/month to cover overhead, it requires less than $180,000 in revenue before it starts accumulating profit.

"It's a much better company [for the recession]," McLean says. "It was extremely painful, lots of sleepless nights and good people lost, but I'll tell you, now that we're on the other side of the knothole, I feel a lot better about the company. We are now poised for extensive growth. We've got the infrastructure, we've got the capacity, we've got the ability to really just take off. We are all very excited for what is to come."

Located in an industrial park in Longmont, CO about 30 miles north of Denver, WP Mfg. was founded in 1970. The company today is ISO 9001-2008 certified, completing the most recent certification in February, and it offers injection molding, in-house moldmaking/repair, precision machining, and rapid prototyping. WP has 17 full-time employees, including McLean, but it also has a network of part-time contracting help.

WP has strategic alliances with the local school district and other programs to allow unemployed and disabled individuals to take on some postprocessing work, including sprue/runner removal and some assembly and packaging. In addition to bringing these individuals into the plant, WP also sends work out to help people in the community who can't leave their homes.

WP's two-story building covers around 10,000 ft², with the upstairs housing engineering, tool/material storage, two assembly areas, and a 20-ton Morgan vertical injection molding machine. In addition to offices, the main floor is largely split between two production areas representing the two sides of WP-the molding area and machine shop/toolmaking area. Off the conference room and beyond quality control, where all parts are checked, is the company's machine shop. In addition to precision grinding and a plunge EDM, there are five CNC milling machines and one CNC lathe, as well as a full precision grinding area.

A 130-ft wall separates the metal side of the house from the plastics shop. The molding bay, with doors open at both ends on this July day, holds eight injection molding machines. Down one side are four 24-ton Boys, with four Milacrons down the other side, covering 55, 85, 120, and 330 tons. The 330-ton press is an all-electric with Fanuc controls.

On one of the 24-ton machines a worker is inserting soldering terminals that will be overmolded with Santoprene. Insert molding is prevalent at WP, and with good reason; it combines the company's metalworking and plastics capabilities. For many jobs, WP is able to design and manufacture the molds, as well as  any necessary inserts and their fixtures.

At the end of the line of smaller machines is the key to another WP expertise, an annealing oven. The company considers itself an expert in the molding of Ryton polyphenylene sulfide (PPS) from Chevron Phillips Chemical Co. The high-temperature, chemically resistant material can have its properties further enhanced through postmold annealing, where parts are essentially baked at high temperatures in an oxygen-free environment.

WP's expertise extends to its ability to anneal the Ryton without damaging the electrical components that have been overmolded. Its largest customer is Emerson Process Management, for which it makes sensitive hardware like Coriolis flowmeters, which require fully annealed Ryton and uncompromised mechanical features.

Across from the 24-ton Boys, a Milacron machine molds a 30% glass-filled nylon terminal block for a metering device. Running in 10-second cycles and dropping to a conveyor that supplies an operator with parts, these components, as are all, are compared against a quality control book that details the exact specifications of every part molded at WP.

Further down the line, another Milacron molds the front cover for an LCD bezel. An operator takes the molded parts off a conveyor and situates them in a fixture, where two brass inserts are heatstaked in. On the opposite wall, another operator assembles parts using an ultrasonic welding device.

In between the company's molding bay and its main conference room sits the Stratasys FDM machine. Initially purchased for fast production of prototypes, it's increasingly being used to make production parts, since instead of building in a stereolithography (SLA) process, it fabricates components in engineering plastics such as ABS, polycarbonate (PC), PC/ABS, and even Ultem polyetherimide (PEI). Today it's running production Ultem parts for Ball Aerospace. "This gives our customers an option they didn't have before," McLean says. "Getting production plastic parts without molding or machining is a new option many engineers do not know about."

Falling in love with molding

In the two years since he bought the company, McLean has been served up a series of unfortunate events, but in the face of those challenges adapted himself and his company to a changing business environment, while learning some things about himself along the way.

"I was actually looking for a machine shop," McLean says, explaining that WP came up on an Internet search as a business for sale and was only 5 minutes from his house. "Everybody knows when a mechanical engineer dies and goes to heaven, he gets a machine shop," McLean jokes. "Well, WP was right up my alley with the machine shop, and plastic injection molding to boot. I wasn't as familiar with plastics, but since then, I have fallen in love with that side of the business. The possibilities and versatility of plastics are limitless, and I enjoy that kind of potential."—[email protected]

Vital Stats: WP Mfg. Inc., Longmont, CO

Facility size: 20,000 ft²
Annual sales: $3 million pre-recession, $2.4 in 2010; capacity for $8 million-$10 million
Markets served: Medical, aviation, automotive, instrumentation, computer, aerospace, and other commercial industries
Customers: Emerson Process Management (largest)
Capital investment: More than $300,000 since purchasing it
Parts produced: 1.6 million annually
Materials processed: Ryton PPS, Torlon PAI, Ultem PEI, PC, PC/ABS, nylon, other commodity and specialty resins
Resin consumption: >80,000 lb
No. of employees: 17
Shifts: One shift five days/week, some weekends with additional shifts added as needed
Molding machines: Nine, 20-330 tons; Boy, Cincinnati Milacron, one Morgan (vertical)
Molding technology: Insert, vertical, overmolding
Secondary operations: Ultrasonic welding, hot/cold staking, assembly, packaging, threaded insert installation, heat treating/plastics annealing
Internal moldmaking: Depending on complexity, can build 20-50 molds/year
Quality: ISO 9001-2008
Contact information: Richard Bradbury | (303) 772-1325