story by Kim Souza
ksouza@thecitywire.com
Jim Benton and John McCutcheon, co-owners of PolyTech Plastic Molding in Prairie Grove, say they are living the dream since purchasing the plastic injection molding facility in mid 2012. It didn’t hurt that soon after they bought the business Bentonville-based Wal-Mart Stores announced an “onshoring” initiative to buy more U.S.-made goods.
This duo projects their little enterprise to do $20 million in sales by 2020, maybe before, given the growth expected in part from Wal-Mart’s U.S. manufacturing jobs program.
The long-time business tandem was schooled in manufacturing during more than a decade of work together at Pace Industries in Fayetteville — an aluminum die casting maker — where they worked in sales. They heard the PolyTech plant was for sale so on a slow afternoon they made the drive over to Prairie Grove to check out the possibilities.
It was love at first sight, according to McCutcheon, who said they could not believe how pristine and profitable this off-the-beaten-path plant was, securely tucked away in Prairie Grove’s modest industrial park.
“Former owner John Booth ran this company very well but he was ready to retire and agreed to sell it to us, financing the deal himself with the help of First Security Bank,” Benton said.
The small business was valued at roughly $7 million by an interested private equity firm, shortly before Benton and McCutcheon cut their deal which allowed Booth to keep the ownership local.
“When we purchased this plant it was only running at 30% capacity and still profitable, which is unheard of in manufacturing. We knew there was a lot of opportunity to grow this business right away,” McCutcheon said.
THANKS, WAL-MART
Within three months of their purchasing the plant, Wal-Mart announced its U.S. manufacturing initiative which took the partners by complete surprise. In their first year of ownership the plant did $5.4 million in sales.
McCutcheon said within a month of Wal-Mart’s announcement his phone began to ring almost daily from suppliers looking for ways to onshore plastics manufacturing from China.
“It’s been incredible. The business we have attracted related to the Wal-Mart push and we’re just getting started. We knew we could fill this plant up when we bought it, but it’s happening much faster than we first believed because of the Wal-Mart suppliers who want to make products in the U.S again,” said Benton.
“Thank you Wal-Mart,” McCutcheon said in all sincerity.
The 76,000 square-foot plant employs 46 people with 18 die casting machines and more than 300 dies. The company makes the dies in their tool shop that also provides maintenance for other local plastic molding facilities such as Clack and Preferred Line Products of Rogers who also contract with PolyTech for custom and difficult jobs.
“We have our own tool and die shop and prior to us purchasing the company about 55% of the company revenue came from maintenance and diagnostics services for other local shops,” Benton said.
Plant Manager Gaylene Deere is in the process of screening applications for a few more jobs (less than 10) that will be filled in the fourth quarter when production ramps up. The plant now runs six to seven days a week around the clock, and is at about 50% capacity.
Last year the company did $6 million in annual sales and is on pace to exceed $7 million this year, with a strong fourth quarter push, directly related to products that will end on Wal-Mart shelves. One aspect that Benton said sets PolyTech apart from other custom plastics operations is the $1.4 million of inventory kept on hand for their customers at all times.
“When our customers want it they can have it right away. Most orders can be filled from the store room and then work to restock our storeroom. There is a cost in carrying inventory but it’s an invaluable service to our customers and they appreciate it,” Benton said.
This has been a real benefit to Wal-Mart suppliers who experts say typically needed nine months or more of lead production time when sourcing their products from China.
SUPPLIER WORK
Hot Springs-based Smith’s Products sells a wide variety of knife sharpeners and other products to retailers across the country, including Wal-Mart. All of the company’s plastics manufacturing – 92 separate parts for all their products – is now based in China. Following the Wal-Mart initiative, Smith’s approached PolyTech to do all of its jobs and envisions an entire section of the Prairie Grove plant being dedicated to its manufacturing needs, Benton said.
“We are retooling right now to begin running Smiths products for Wal-Mart next month. Right now Smith’s sells 400,000 of the small knife sharpeners per month in Wal-Mart. They also sell 200,000 of the larger version per month. We will be making these products in-house and packaging them for retail sale,” McCutcheon said.
Burt Hanna, owner of Hanna’s Candles, is a long-time supplier of Wal-Mart Stores and recently contracted with PolyTech to manufacture 3.5 million candle jar lids because he wants to keep the business in Arkansas if possible.
Hugh Jarratt’s taco plate invention and the recent one million unit order from Wal-Mart Stores is another local example of new business for PolyTech Plastics. Jarratt told The City Wire that he wouldn’t have a business without PolyTech who has handled all of his manufacturing, shipping and replenishment from nearly day 1.
Jarratt’s big order came during Wal-Mart’s recent Open Call held in Bentonville. The retailer has promised to make other order announcements conducted at Open Call during its U.S. Manufacturing Jobs Summit in Denver over the next two days
(Aug. 14-15). During this conference The City Wire will report on any updates in U.S. job creation from this initiative.
STARS ALIGN
“We attended a plastics summit in Florida last year and every expert there said the plastics industry is fleeing China and anyone who plans on surviving will need to get out by mid 2015. We were working in aluminum casting in 2002 when we watched the exodus of plastics to China,” Benton said.
Bill Simon, outgoing CEO of Walmart U.S., said in August of last year that the “stars were aligning for U.S. manufacturing jobs to be onshored.” Inflationary labor costs in China, long lead times for production and rising transportation costs have neutralized the benefits of manufacturing plastics and other non-labor intensive products abroad.
“It wasn’t the plastics industry itself that needed to off-shore, but it was the labor intensive assembly up the supply chain that forced the movement,” Benton said.
McCutcheon and Benton said they are convinced the Wal-Mart U.S. manufacturing push will eventually move the needle for stable manufacturing jobs in the U.S. They agree it won’t happen in a year or two, but it will in time as industries re-cluster into manufacturing centers in the U.S.
Grant Tennille, director of the Arkansas Economic Development Commission, told The City Wire that plastics injection molding is one of the promising sectors for new growth in the Natural State. He said Northwest Arkansas and surrounding counties south, and east are already seeing active growth.
DREAM MAKER
While the Wal-Mart supplier business is the fastest growing segment for PolyTech, the company has a diverse client base as a custom manufacturer.
“We just completed a job for Tyson Foods. They are new client and part of $2 million in new business we have added this past year,” Benton said.
PolyTech also does work for Rheem and York for HVAC parts and components, some of which are proprietary pieces from business the plant has been making for more than a decade. Nautilus also is a long-time client of the company as is A.G. Russell Knives. PolyTech also makes pieces for Defense Department suppliers which help to stabilize the missiles as they are packed into canisters. They also make trip wire spools at a rate of 10,000 per month and plastic guards that attach to tank tracks to make them road safe.
“Of the coolest parts of our job is meeting with all the inventors who find us on the Internet and want us to help them make their product, realize their own dream,” Benton said.
He said many times the inventor comes in with an idea, maybe a sketch, never a prototype, most always just an idea or vague concept.
“Our engineer works with them to come up with a design concept. We can print that on our 3-D printer and from there our team can build the dies needed to manufacture the product,” Benton said.
One of those product ideas is now “Paint Handy,” which is a painter’s tool sold now on QVC but hopefully in select retailers at some point, McCutcheon said.
The Christmas Tree Screen is a new product PolyTech is making for an inventor from Joplin, Mo. The plastic screen affixes to the bottom of a Christmas tree to keep cats from climbing the tree.
“We never know who is going to call or show up and need our help. It’s been really fun to see some of these inventions take off like Jarratt’s taco plate,” Benton said.