Mar-Lee Companies: Today’s Successful Manufacturing is High Tech
By Paul Danis, Ph.D., and Allison Chisolm
Massachusetts manufacturers are enjoying record productivity levels. While an important development for the state’s economy, this remains an untold story, according to Jack Healy, Director, Massachusetts Manufacturing Extension Partnership (MassMEP). Members of the WPI Venture Forum heard several sides to this success story at the March 11, 2008, meeting from a panel that included Healy, Paul McGuire of Intellisource International, and John Gravelle of Mar-Lee Companies, and whose discussion was moderated by Phil Cyr of RH White Companies, Inc.
"The perception is that manufacturing has left town, never to return," Healy said. "The nature of manufacturing has changed, but it’s still the number two contributor to the state’s GDP" in chained dollars, an average weighted over two years. For the last 10 years, he added, manufacturing productivity has out-produced the rest of the non-farm sector on a 2:1 basis, which in turn has allowed manufacturing — tied with financial services – to be the largest non-government payroll sector in the state.
Moderator Phil Cyr (far left) launched an active Q&A session among panelists Jack Healy, Paul Maguire and John Gravelle.
The Move to Lean + Value-Added Services
What has changed in manufacturing is basically twofold: First, the move to "lean manufacturing," described as "the biggest transition in US manufacturing history" and implemented by more than half the manufacturers within the state. The basic tenets of lean manufacturing are built on the elimination of waste and on respect for people, which has allowed for positive changes in the operating performances and metrics of manufacturing companies, not only in Massachusetts, but throughout the world.
The second part of this manufacturing transformation in Massachusetts has been the move to high value-added services. Companies like Nypro and Mar-Lee don’t just make parts, they deliver solutions through automation. It comes down to people, process and plant, he said, as "next generation" manufacturers:
Extend their well-trained workforce beyond the production floor to maintain future productivity requirements,
Leverage their existing technological capability and manufacturing know-how into new markets and technologies, and
Develop a high service capability for their future competitive differentiation, requiring investment in equipment, systems and plant.
Paul McGuire, founder of IntelliSource in Leominster, Massachusetts, discussed sustaining profitable growth in the face of the many challenges facing manufacturing today. A key ingredient is to identify clearly where a company’s value lies in what they offer to customers. By looking at the various offerings in terms of their trajectories in the market, management can more clearly "see around the corner." This gives management the ability to make those specific changes that will maintain and grow the most profitable opportunities. Knowing the customer and anticipating their needs is the cornerstone of this approach.
In order to achieve the conditions where managers can position their company for growth, they need to focus on several major areas. They need to evolve their thinking from focusing on what a company has always been good at (the past) to current unmet customer needs (the present) and towards the latent unspoken customer needs (the future). The result is greater margins and higher recurring revenue.
The first step is to confront the company’s current reality by asking the right questions:
Where are we and what are we good at?
What will be the winning value proposition of the future?
Can we get there? And if so, what do we have to do to get there?
Second, define the critical positions that make up the growth strategy:
Positions with diminishing future value
Positions with increasing future value
Third, fill the right positions with the right people. Maguire emphasized that this is the most critical element of the process. So by moving the focus from what is to what will be, management can create this desired future state. As Maguire said, "change is good, and it is best to go first."
Mar-Lee Companies Transforms
President and CEO of Mar-Lee Companies in Leominster, Massachusetts, John Gravelle discussed how Mar-Lee has grown to become one of the area’s leading plastics manufacturers and mold makers. Mar-Lee has successfully transformed itself from a traditional custom injection molder and mold-maker into a successful contract manufacturer specializing in medical applications and high-volume, highly automated packaging products. With annual growth of 15 to 20 percent, Mar-Lee has generated double-digit profits, while investing an average of 10 percent of annual sales into automation and technology.
John Gravelle of Mar-Lee Companies showed the novel packaging his company has produced.
Gravelle shared some of primary areas that enable success. He mentioned how it is very important to be highly aware of the global marketplace, even though one may only be participating locally. Besides understanding the situation of their customers, it also gives them a view into potential new opportunities in new market segments. These opportunities could be the big drivers of future growth.
Mar-Lee has made a clear commitment to focus on long-term growth and building strong relationships with their customers.
They learned early on that simply building parts to a specification was not going to provide growth, as that type of business is easily commoditized and shipped to the lowest bidder. Instead, they strive to operate as partners to their customers, and provide significant value above and beyond the product itself.
Finally, though it is critical to be able to see around the corner, one also has to develop the financial resources to be able to take advantage of what’s coming. By investing in improvements to their processes, increasing the skill level of their employees, and keeping everyone abreast of the direction of the company, Gravelle has guided Mar-Lee to a secure position in the medical and specialty packaging markets.
An active question and answer session followed, addressing the needs of companies that are stagnant or losing money, choosing customers carefully that seek value over price, establishing long-term contracts versus individual purchase orders and investing in the workforce.
Paul Danis, PhD is the founder and principal of Eastwoods Consulting, which helps life science companies grow through the commercialization of new technologies. He can be reached at 508-869-2303 or at [email protected]. Allison Chisolm is editor of WPI Venture Forum Vantage and owner of Choice Words/Chisolm & Co. She can be reached at [email protected].
