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'In-touch' focus helps Petoskey Plastics win Processor of the Year

Hartford City, Ind. — Petoskey Plastics Inc. is a blown film company that is big — generating $140 million in sales from 26 blown film lines and converting equipment — but acts small.

Petoskey is a major maker of recycled-content film, reusing more than 30 million pounds of bags and stretch film a year that otherwise would go to landfills. Some 20 million pounds of that is done as closed-loop recycling, where customers send the company scrap plastic and get new bags back.

Petoskey's GreenPE material goes into coextruded three-layer blown film and bags with up to 70 percent recycled content, sandwiched between two layers of virgin plastic. Petoskey also makes five-layer film.

The results are on display at Petoskey Plastics' 330,000-square-foot recycling plant in Hartford City, which also extrudes blown film and makes trash bags. The company has purchased an $8 million wash line set to be installed this year.

Petoskey employs 420 people and runs a total of 500,000 square feet of manufacturing space at the Indiana recycling plant, a factory in Morristown, Tenn., and its headquarters city of Petoskey, Mich., a small town in northern Michigan known more as a vacation spot than a manufacturing mecca. The automotive segment also has a sales location in Birmingham, Mich.

Big numbers. But the small-company feel comes from what officials call an "in-touch" commitment to stay in close contact with customers. Employees say credit goes to the Keiswetter family that owns the company. Duke Keiswetter and his son, Paul, founded Petoskey Plastics in 1969. Today, Paul Keiswetter is president and CEO, and his son, ​ Jason, is executive vice president.

Mike Barto, Petoskey's sales director for automotive, said the motto of "in-touch" is for real.

"We try to be as accessible as possible, and that goes all the way up to Paul. I mean, I'm not going to our customers, ringing their bell and saying, 'Hey, call Paul whenever you want.' But, the times where it has been appropriate, it works fine," Barto said.

Jason Keiswetter said direct communication is the best way to keep in touch.

"That's something we take pride in. You're on the phone. You're on a video conference. You're just emailing. You're not getting that feeling. You're not building that relationship," he said. "And if we have the ability to get in front of the customer, we want to take that opportunity to get in there and build solutions face-to-face vs. opposed to just trying to email back and forth."

Petoskey has 5,000 customers in 47 countries. Those seem like unbelievable numbers, but Jason Keiswetter says it's true.

"They might buy $20 from us, but they might buy millions. And everybody's getting touched. We have sales people. We have internal marketing activities. We have CRM tools. So, everybody's being touched and communicated with on a regular basis," he said.

The customer list includes about 30 Fortune 500 companies.

And it's a diverse mix of markets and products: protective seat covers for new and used cars and trucks, film used to protect cars during auto body repair, trash bags and can liners, sheeting for home improvement work, medical containment bags for preventing infectious disease, and Greencore recycled-content trash bags.

Petoskey makes GreenPE resin in Hartford City, a sprawling operation where bales of plastic pass through an X-ray machine to detect metal and other contaminants, then get broken down and fed to a manual sorting operation where employees — Petoskey calls them "associates" — move quickly to pull out bad material and any metal. Then it goes through shredding, washing, extrusion and pelletizing, and ultimately back into blown film.

In a tour of the Hartford City factory, plant manager Steve Schmidt pointed out the space being prepared for the giant new wash line, stretching across one side of the building. It is Petoskey's single-biggest investment ever and proof that company management and employees want to keep moving forward.

Now, Petoskey Plastics gets some more proof: The company has become the newest Processor of the Year. Plastics News presented Petoskey officials with the award and honored all the finalists at a dinner March 7 during the newspaper's Executive Forum conference in Naples, Fla.

Pamela Colby, Petoskey's marketing leader, nominated her company.

Petoskey was a finalist for last year's award, which was won by Dymotek Corp., a custom injection molder based in Ellington, Conn.

A buyer at one major customer said Petoskey is "very, very easy to work with" as managers react quickly to any problems and even jump on a plane. "They will be very forthcoming and resolve the issue 99 percent of the time before you are even aware anything is going on," he said.

What began in the late 1970s as a humble in-house effort to regrind plant scrap has skyrocketed into a powerhouse "green" company. Petoskey actively markets its specialty in recycled-content film, which it makes available in a wide range of products.

Barto, the automotive sales head, said most of his customers like that feature.

"It's a big competitive advantage for us," he said. "We know it's a cost advantage for us. Where our competition [in seat covers] doesn't have that capability. So, we know that we are able to withstand raw material increases, for example, better than them because we have our own recycled content."

More than half the seat covers contain recycled content, Barto said.

Don Loepp Employees at Petoskey Plastics Inc.'s Indiana facility. A buyer at a major customer said the company is easy to work with and managers react quickly to problems. From plastics to burgers and back

Paul Keiswetter tells the story of Petoskey Plastics — including the part about the Big Boy restaurant.

After World War II, his father bought into a company in Detroit, Acme Laminating & Plastics, making door panels and armrests for cars. After stresses from union issues and other internal tension, the business failed.

Duke Keiswetter knew the Elias brothers of Detroit, the Big Boy franchise operators, because their first restaurant was next door to the factory. They also had a Big Boy in Petoskey, some 270 miles north of Detroit.

"So, they found out he was in a little bit of trouble. They called and said, 'Listen, we've got a restaurant in northern Michigan. If you want to go up there and take it over, we'll sell it to you for a preferred price,' Paul Keiswetter said.

Duke moved his family north in 1962. Paul, meanwhile, went into the Marines. The restaurant industry can be grueling, plus in a vacation area, business falls off in the winter. Still interested in plastics, Duke went to trade shows.

"He came back and told me one day that he saw this product called plastic bags," Paul said.

The father-son team founded Petoskey Plastics in 1969. They bought roll stock and a small machine to convert it into bags in specialty sizes because soon the pioneers like Carl Allen of Heritage Bag Co. began churning out bags in-line, making blown film directly into finished bags.

Times were tough for the fledging bag maker until the Arab Oil Embargo caused havoc in resin supply. Petoskey began brokering bags and film and made enough money to buy its first extruder for $35,000 in 1975. That same year, the company moved to its new plant on Lake Michigan.

Petoskey's green quest started with an in-house recycling effort in the late 1970s that used industrial scrap from Ziploc bags from Dow Chemical Co.'s plant in Bay City, Mich. Paul Keiswetter said the little film business had to convince the big chemical company.

"They started selling it to brokers, and the brokers were just repackaging it, and they found the product out in the field. So, they had unscrupulous brokers out there," he said. "And they were actually landfilling it. And I showed them that we would grind it up and turn it into trash bags, right up the street."

Keiswetter said the Ziploc industrial scrap became a "fabulous source of raw materials," adding that it was " great break for us."

But he said the Ziploc material became less attractive for recycling as Dow began to print on the bags. Plus, they were low density polyethylene, which could dilute the linear low density used to make stronger, tear-resistant trash bags, he said.

In the meantime, Petoskey was looking for other sources of scrap.

"We went out, and we did a major study. We would go to the plastics shows in Düsseldorf, Germany, every three years. And we would walk the floor for days. And we found the wash lines. We saw the Italian wash lines. And we saw the German wash lines," Keiswetter said.

They looked at companies that recycled heavily contaminated agriculture film. He said they equated that to bags Petoskey was making to hold returnable bottles under Michigan's bottle deposit law.

After an in-depth economic analysis, Petoskey officials decided it would cost too much to put together the big wash line and pelletizing systems. They shelved the idea.

Then they learned about money available from the Michigan Department of Natural Resources to promote waste reduction. Sue Maskaluk, the corporate treasurer, handled the application. At the time, she said, the company had developed a compostable bag working closely with MDNR, but it pulled back when "biodegradable plastic" claims began giving the industry a black eye.

Petoskey Plastics was a major producer of the collection bags, contaminated with soft drink syrup, cigarette butts and other foreign matter. After use, they went to the landfill. Paul Keiswetter had found some recycling equipment that could work.

"We were a small company with about $4 million in sales. The equipment was too expensive," Maskaluk said.

The company applied for — and won — a Michigan Quality of Life Bond Grant for $1.2 million, and the company matched that same amount with its own money. In 1992, the recycling equipment started up and Petoskey introduced Can Sacks, made from recycled bottle deposit bags, its first closed-loop recycling line.

"And so we were off to the races," Paul Keiswetter said.

Michael A. Marcotte Paul, left, and Jason Keiswetter, accepting the Processor of the Year Award for 2017 at the Plastics News Executive Forum in Naples, Fla. Branching out

Petoskey Plastics expanded to Morristown in 1999, acquiring the assets of a film plant.

Then, as recycling grew, Petoskey Plastics began looking to set up a dedicated recycling operation. The headquarters plant in Petoskey is landlocked, near a yacht club and big-money condos along Lake Michigan. Paul Keiswetter got on the phone and called commercial real estate agents and chambers of commerce in cities in the Great Lakes region, asking about affordable industrial buildings. He got a call back from someone in Blackford County, Indiana.

"She called and said, 'We have a couple of big buildings in our "dinosaur program.' That looked good to me," he said, chuckling.

A 330,000-square-foot building was available in Hartford City, north of Muncie — the former plant of the Overhead Door Co. that closed in 2000. The 40-acre site is on a rail siding, and Petoskey began production in 2007. Petoskey has invested millions of dollars since then, adding wash and recycle lines, raising the roof over part of the building in 2012 to add four blown film lines and investing in high-speed CMD bag-making equipment. Today, the factory runs six blown film lines.

The X-ray machine for incoming bales came last year. Next up is the $8 million wash line.

Petoskey Plastics scored good marks in the customer relations category for Processor of the Year. For closed-loop customers, Petoskey takes back their scrap and runs it through the recycling system. Petoskey can guarantee recycled content in the bags and film it sends back — the percentage of recycled material depends on the agreement with the customer.

Petoskey also includes recycled content in many of its standard product lines. In 2016, just before Earth Day, Petoskey began providing customers with a Sustainability Scorecard. Last year, 71 customers got one. Developed with sustainability consultants, the scorecard measures water savings, carbon footprint and emissions offsets, translating the data into carbon emissions saved by the customer's specific use of post-consumer plastic content in terms such as barrels of oil and gallons of gas that were not consumed.

Petoskey has won supplier awards from several customers including automotive seating supplier Adient Ltd. and 3M Co.

And the company continually develops new products. Last year, Petoskey had 44 research and development projects and ran more than 250 production samples. Many of the products are more engineered than they seem at first glance; for example, protective car seat covers are custom-designed to fit specific seats in different vehicles. Also, one of the company's product launches last year was Slip-N-Grip MAX, an extension of its signature line of multilayer covers with the bottom layer that grips the seat to stay in place and the top cover allows easy entry and exit from the vehicle.

The "in-touch" approach helps retain existing customers and get new ones. Jason Keiswetter said that each division uses a different approach and dedicated people for winning new customers. "And then there's also a retention side — people who focus specifically on retaining our customer base," he said.

Quality efforts include laboratories that test raw materials and finished films. Technicians do functional ASTM testing, as well as Petoskey-developed tests like one that simulates a person walking with a loaded shopping bag.

Petoskey has developed a continuity plan to ensure it can keep producing if a plant goes down due to weather problems, a gas leak or a threatening act. Maskaluk compares it to a fire drill.

"It's very important, given the nature of our business and the fact that we run 24 hours, seven days a week. We want to make sure our employees are safe and make sure we can keep our commitments to our customers," she said.

The company regularly runs through different scenarios, figuring out how production could be shuffled around to other plants.

"We just want to make sure that we're thinking through the process and we're prepared to react to those kind of situations," Jason Keiswetter said. "This is something new for us."

Production and support equipment is also tied together in a single database, a SCADA platform (supervisory control and data acquisition) launched last year that is being gradually expanded through the three factories.

The payback from customer focus and continual investment: 2017 sales of $140 million, an increase of 7.7 percent from $130 million in 2016. That reflects a trend of 8 percent annual sales growth over the last six years. Sales have more than doubled since 2009.

Petoskey Plastics has paid profit-sharing bonuses for 12 quarters in a row. That helped the company score well in employee relations, but Petoskey does much more. The company reimburses employees up to $240 a year for wellness efforts, including covering gym memberships, smoking cessation, fitness classes and team sports dues.

The company makes a major effort to recruit and retain good people. A 20-page booklet called "Hello & Welcome" tells everything about Petoskey Plastics, including its history, community activism and benefits. The booklet clearly spells out careers and job positions in administrative, sales and marketing, and operations. Four employees give testimonials about how they moved up. It is clear and easily understood.

"Hello & Welcome" isn't just for new employees. During a plant visit in Hartford City, one employee who started two and a half years ago as a sales coordinator said she read through the booklet again and remembered how the company pays 100 percent of tuition. Now, she is getting a master's degree and has taken a new job as a forecasting analyst.

Growth has allowed Petoskey Plastics to let its associates advance. The average tenure is eight years, even as the company has ramped up employment. Director of Human Resources Stephanie Licata said the company made more than a hundred internal promotions in 2016.

A simple one-page chart is titled "Manufacturing: Make It Your Career."

Another new feature: Each new employee — both full-time and temporary — takes a first impression survey after the first day and has a "check-in" meeting after 60 days to see how things are going. Those moves help retain people, as does a "swag bag" of gifts for new hires.

Communication goes both ways: Petoskey has saved nearly $15 million since an employee cost-savings suggestion box started in 2009.

Petoskey is beefing up its internal education efforts, adding written materials, observation and testing for individual positions. The company has already done that in the headquarters and Tennessee plants. Hartford City is rolling it out this year, according to Chelsea Beyers, the HR representative there.

Employees said they like the family atmosphere and the way colleagues help and encourage each other.

Public service

Petoskey Plastics plays a big role in the small towns where it manufactures. In 2017, the company provided $106,475 in donations to about 100 organizations, many of them to help children. Employees volunteered more than 500 hours of their time to community service in 2016.

Last fall, Petoskey hosted 19 forensic scientists from the Michigan State Police Department to explain how bags are produced and printed. That is key information, since plastic bags often are important pieces of evidence at crime scenes.

To help the water crisis in Flint, Mich., Petoskey worked with Schupan Recycling, a PET bottle recycler in Michigan, and donated tens of thousands of recycled-content bags to help collect empty water bottles. The used bags came back to the film maker.

And the company donated a miniature Labtech blown film line to North Central Michigan College in Petoskey. One also runs in the company's quality lab Hartford City to test film with recycled content.

The plants also host school tours, open houses and job fairs. During last Manufacturing Day, Hartford City teamed with a local manufacturing council to host 100 juniors and seniors from two area high schools.

On the industry service side, Jason Keiswetter serves on the board of the Plastics Industry Association's flexible film and bag division. He likes meeting with a cross section of film manufacturers and resin and equipment suppliers. He plans to put more energy into the trade association's recycling efforts, offering Petoskey's four decades of experience.

"We need think tanks like that to get us moving in the right direction. We're trying to make the plastics industry better and make better products," Keiswetter said. The company is also a member of the Association of Plastic Recyclers, and employees are active in the Society of Plastics Engineers.

Petoskey plant manager Allan Hopkins is president of the Northwest Michigan Industrial Association.

Barto, the automotive sales head, worked in automotive seating before joining Petoskey Plastics 22 years ago.

"The fact that we are a family-owned business is something I'm proud of," he said. "We do have a family atmosphere, a family feeling to the company. It's where we spend more time with the associates we work with than we do with people in our own families, so in my mind you might as well feel that way. Because we're spending so much time together."

Read more about other award winners:

 

» Publication Date: 13/03/2018

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This project has received funding from the European Union Seventh Framework Programme (FP7/2007-2013) under grant agreement n [310187].