Myers Industries masters manufacturing in a downturn Featured

7:01pm EDT February 28, 2011
John Orr, President and CEO, Myers Industries Inc. John Orr, President and CEO, Myers Industries Inc.

John C. Orr learned the importance of partnerships from a boss and a shoeshine kid.

When Orr was director of manufacturing for The Goodyear Tire & Rubber Co.’s Latin America Division, every place to which he traveled with his boss, his boss would create a partnership — even with the boy shining shoes in the hotel.

“When he needed something, he would call the shoeshine kid and the shoeshine kid would get it for him,” Orr says. “The partnership was created because he spent some time talking to the guy; he gave him time and effort and created a relationship.”

Orr has tried to replicate his observations ever since.

“You have to build partnerships with your employees; you have to build partnerships with your customers and your shareholders,” he says. “To me, a partnership means communication, it means openness, and it means a willingness to tackle things.”

Never has that theory proved more important then in the recent economic conditions. As president and CEO of the manufacturer and distributor Myers Industries Inc. (NYSE: MYE), Orr has worked hard to strengthen customer and employee relationships and, in return, strengthen the company.

Myers’ net sales were $701.8 million in 2009 and were up 7 percent at the end of the first nine months of fiscal 2010. While part of that growth is due to the uptick in the economy, part of it is due to Orr’s three keys to managing during difficult times, which, not surprisingly, are all linked to strong relationships.

Help customers

Knowing that the recession was hitting most businesses hard, Myers tried to maintain constant contact with its customers to understand their situations and their needs.

“In a downturn, a lot of people try to do without,” Orr says. “They try to last longer with the same material handling products or our automotive and custom products. Talking with them and encouraging them to tell us what they need allowed us to innovate some new and exciting products during that time.”

In difficult economic times, good communication with your customers becomes even more essential as their needs and cost structure shift to deal with their own struggles.

“The worst thing you could possibly do is put your head in the sand and say, ‘Well, we’ll see you when things get better,’” Orr says. “You’ll be out of business as easy as that.”

One of the ways you can deepen that relationship, besides communication, is by being visible. And that isn’t limited to your sales team. Sure, Myers emphasized that members of its sales team should make regular calls and hopefully take orders on new products, but the company also pushed for its people to get past the purchasing desk and into the customer’s facility. Not only does it show that you’re interested in understanding more about their business, but it allows you to actually observe operations, see where your products or services might help and see where innovation may be needed with new products and services.

“Innovation starts with our people,” Orr says. “Our people have to get out there and find out what it is we can do to help our customers. They do that with feet on the street. It’s getting into their business; it’s looking at it with the idea that we have a different value proposition than perhaps what they’re using. Why not use reusable plastic containers that save you money on many trips, rather than using a cardboard container or a wooden pallet that gets two or three trips and then you have to throw it away?”

Ask the basic questions to understand your customers’ needs and make sure you’re helping them focus on their cost structure.

“You have to always ask, ‘What can I do to help?’” Orr says. “That’s probably No. 1. No. 2, ask, ‘What is your objective? What are you trying to do? Are you trying to lower your cost? Are you trying to put a better product out to your customer?’

“To me, it’s really kind of common sense. What is it that we can do for you? We want to be here to help you.”

Your salespeople shouldn’t be the only ones asking those questions. You and your managers need to make an effort to follow up with customers and show what the partnership you have with them means to you and the company.

As the leader, you set the example. Orr tries to visit at least the company’s top 25 customers. For instance, Myers has been in Brazil for five years.

During a recent trip to a trade show in Brazil, Orr made time to visit customers. But it’s nothing for the managing director of the company’s material handling segment to be on the road five or six days a month calling on customers and listening to their feedback.

“What’s important about it is sometimes salespeople tend to want to bring back and give to management what management wants to hear, ‘We’re doing great; don’t worry about it,’” Orr says. “Then we start to see numbers that show our business is falling off with that particular customer. In some cases, the salesperson might not be doing the job. That reflects on us.

“It’s important that you understand and hear it from the customer directly: ‘How are we treating you? How are our salespeople doing? How are our sales engineers doing? How is the quality of the product? How is the delivery?’ It’s very, very important to make sure that that happens. By management doing it, we’re making sure it’s actually happening.”

A greater presence and emphasis on your customers during difficult times will pay off in the long run.

“It’s really about communication and making sure you have their hand with your hand and you’re walking forward together in trying to help get through the situation,” Orr says. “I’ve found that customers are really appreciative of that. Even if you can’t maybe do something for them, at least they realize that you’ve been there, you’ve tried. As things pick up, things get better, they remember that. I’ve found that we secure additional business down the road when things do get better, because you were there trying to help.” Keep an eye on cost

Myers’ costs were high going into the recession, because it was still running at full capacity. But as business started to wane and plants began running at less than maximum capacity, they took the opportunity to restructure, which meant closing facilities, laying off employees and investing in more efficient technology.

Depending on your industry, your cost analysis might be directed at people or the price of your product and, to no surprise, you need to constantly monitor whether reductions need to take place.

“When you get into a downturn, that has to be one of the top three items that just absolutely has to happen,” Orr says.

So when do you make a reduction or even an investment? Before the recession, Myers was analyzing making changes to its material handling and lawn and garden businesses, so management took a deeper look at the metrics and weighed the cost against the long-term benefits.

“First off, you have to look at an objective,” Orr says. “What is the goal? Is the goal cost, quality or what is the end all? Let’s take, for instance, cost. If you’re looking at cost and you decide we’re in a downturn situation, we have an excess capacity [and] we probably don’t need that capacity in years to come. If we do, we would buy new or better capacity or equipment. The analysis comes in around what is it going to take to make that change.

“All in all, there has to be a fundamental goal to why you go ahead and do it, because they’re not easy decisions and they’re not fun. Anytime you’re involving people in the situation where it might reduce your manning of your employment, that’s a very, very tough decision, and we certainly don’t take it lightly.”

While all of those steps are crucial in maintaining the strength of the company, you can’t forget the aspect of cluing employees in on your decisions or even involving them in the decision-making process. Clearly communicating an investment in technology is a plus compared to closing down a plant, but good or bad, conversation has to happen.

“It’s very important to communicate,” Orr says. “I’ve always found that people are more willing to cooperate if they understand why. Before we take on a project, we make sure in our businesses that we have communication, discussions whether they be meetings or whether they be one-on-one information-type meetings to explain to our people why we have to do what we have to do. In a lot of cases with those projects, we try to enlist ideas and thoughts from folks who are actually doing the job, because I think that’s where you actually get the biggest bang for your buck.”

In a time when you’re probably looking for more efficiency and making operational changes, directly ask your employees for ways to streamline processes and perhaps save money. You not only gain respect but also the cooperation needed from employees for the company to move forward and succeed.

During Orr’s years running manufacturing plants, he realized no one knows the job and knows how to do it better than the person actually in the position. Orr brought a process with him to Myers that analyzes work. Called “Block of Work,” the company even has a room dedicated to walking through the process.

“What’s interesting about it is that you actually get the people who are doing the work involved in it,” he says. “It’s a brainstorming session, and they put up on the wall little 3-by-5 cards that are each pieces of the work that they’re doing. What you find is that when people look at it that way they understand sometimes, ‘Gosh, I may be doing some things I don’t really need to do. It’s an extraneous step in the process, so we can eliminate that.’ One of the things we’ve found is we’ve improved the efficiency of our operations by using that particular Blocks of Work technology, which allows people to have input.”

In the end, your cost structure and employees’ ideas on how to make a process run smoother come back to the metrics by which you understand your business.

“You need something to drive your business,” Orr says. “If you don’t have objectives or goals, you’re certainly not going to get there. … You’ve got to have metrics and you’ve got to be able to analyze how the business is doing with those metrics and analyze the parts and pieces of it, whether it be people, whether it be equipment, whether it be safety. You have to have something to measure. If you measure it, you’ll move it.”

Watch the cash

One thing Orr is proud of is Myers’ balance sheet. While the board of directors pushed the focus, Orr and his team made sure they held on to the company’s cash in recent years. Holding on to your cash means making sure you’re collecting from people who owe you money and you’re making wise investment decisions.

“Sometimes people are out looking for acquisitions or they’re spending money on equipment and they haven’t necessarily thought it through,” Orr says. “When you’re in a downturn situation, there might be something that is appetizing, but we believe at Myers don’t go to the grocery story when you’re hungry because you end up buying a bunch of stuff you don’t need.”

Another decision, which has positioned the company to add shareholder value and reinvest in capital in the long term, is using the last few years to pay down debt.

“We’re cautiously optimistic that the economy will get better in 2011,” Orr says. “We feel we’ve gone through this recession and we’ve learned a lot about going through it. If it happens again, and usually the economy does cycle, we’ll be even more ready and prepared to defend ourselves.”

How to reach: Myers Industries Inc., (330) 253-5592 or www.myersindustries.com The Orr file

John Orr

President and CEO

Myers Industries Inc.

Born: Akron

Education: Bachelor’s degree, organizational communication, Ohio University

What is your definition of success?

I think success in my particular case is seeing that Myers is succeeding, that our people are succeeding, that we’re meeting our objectives and our goals. What I want to do is make sure that we return the shareholders their investment. It’s been tough the last two years, quite frankly, because of the economy. But success shows up every day. When I see people with a smile on their face, they’ve done something well or they come up with a new order or they’ve created a new product, then I feel successful.

What was the last book you read?

It’s called ‘Healing Hearts’ (Dr. Kathy Magliato). It’s a memoir of a female heart surgeon. I read it because I have a daughter who is a third-year resident anesthesiologist at Virginia Commonwealth, and I’m always amazed at what she has gone through — 36-hour (shifts) and that kind of stuff. I can never get her to tell me what it’s like, so I read this book because that is what this book is about. It’s about this lady’s life as an intern and a resident. It was interesting because she was a resident at Akron General Hospital and I’m on the board at Akron General. She was very, very successful. I think there are only 1,000 female heart surgeons in the United States. I’m proud of my daughter because that’s what she does all day long; she’s in those types of surgeries and trauma surgeries.