Small business leaders must attract and retain skilled employees to offer quality goods and/or services, yet also minimize labor costs to offer competitive prices.
Having the right employees and using them efficiently is critical to maintaining the proper balance.
“When do you pull the trigger (on additional hiring)? That’s a hard thing to do,” said Dean Sonquist, president and co-owner of Plas-Tech Tooling in Garner.
“If we’re bringing someone on board, it’s based on the assumption they’re going to have permanent employment,” Sonquist said. “We want stability for our employees.”
Working in the weld shop at Winnebago Industries after high school, Sonquist found himself impressed by the jigs and fixtures used in the manufacturing process.
Community college training in tool and diemaking eventually led Sonquist to Alexander Batteries in Mason City, where he worked on building molds to produce plastic parts.
“That’s where my love of the trade really set in,” he said.
In 1993 Sonquist and his wife, Marcia, founded Plas-Tech, an injection mold building and repair business housed in their garage.
Today the company has a 10,000-square-foot facility with 13 full-time and two part-time employees.
Plas-Tech offers injection molding, injection-mold building, production machining and product design services to a variety of large manufacturers, most within a 30-mile radius.
“There’s plenty of work here in North Iowa,” Sonquist said. “The community industries here have supported our growth.”
Sonquist is proud of that growth, but admits he’s struggled at times with the transition from machinist to manager.
“I used to be on the floor a lot with the guys, but there just wasn’t enough time in the day for it,” Sonquist said. “I’ve been away from cutting chips now for four or five years. It was the hardest thing to do.”
With Marcia handling accounting duties, Sonquist spent most of his time on customer relations, estimating, taking orders, managing inventory, product design and troubleshooting.
He had difficulty keeping up. Jobs were often assigned haphazardly based only on immediate needs rather than on optimal utilization of staff and equipment.
“Orders would come in and I was only looking ahead one to two weeks max,” Sonquist said. “Everything was either hot or on fire.”
“Firefighting” left Sonquist with little time to deal with insurance, workplace safety, government regulations and similar administrative needs.
Personnel matters were handled on a case-by-case basis. Sonquist tried to treat his employees well but worried whether he was always being consistent and fair.
“If I don’t get my hands around these things, we’re going to be in trouble,” Sonquist remembers thinking. “I needed some help, but what was the position I wanted to fill?”
Such struggles are common for small business owners, said business consultant Jerry Wells.
“What are they familiar with? The tangible product,” Wells said. Many, he noted, lack expertise in the administrative side of running a company.
After a long business career, Wells has spent the last 14 years operating his Mason City consulting firm, Enterprise Performance Solutions.
He and partner Tom Guerdet are certified instructors in Lean Manufacturing principles and were among the first to bring these concepts to the state.
While many believe Lean is about eliminating employees, Wells said it’s about eliminating waste by improving the way work is performed.
“Question the process, not the people,” Wells said. “People are often the victims of process.”
For every step in a process, business owners should consider whether it is helping staff to better serve the needs of customers.
“(Ask yourself) is this necessary to do?” Wells said. “If so, how do we do it in the shortest amount of time with the least amount of effort?”
Manufacturers had long embraced lean concepts, striving to utilize space efficiently and to minimize unnecessary movement of materials and people.
“If you don’t need it get it out of there,” Wells said. “If you need it, have it accessible.”
He noted this may be difficult for many entrepreneurs, who often tend to keep obsolete materials or equipment “just in case.”
Maintaining logical work flow in a clean and uncluttered environment decreases errors while increasing employee satisfaction, Wells said.
In addition to reducing overhead, he believes this helps businesses to attract and retain employees in the current tight labor market.
“Most people want to go to work in an environment that’s clean and organized,” Wells said, “and in an environment where they don’t have to do a lot of rework.”
These principles have not traditionally been applied to administrative functions. Wells hopes to change this.
“There’s as much opportunity to improve administrative processes as there is manufacturing,” he said. “There’s a lot of waste in administration.”
Wells and Guerdet have developed the Diamond Point Analysis system to improve and manage administrative processes, where they commonly see redundancy and errors.
While employers understand manufacturing errors result in lost time and wasted material, Wells said they are less likely to recognize the costs associated with mistakes on forms, reports, computer databases and the like.
“People don’t think of correcting errors as rework,” Wells said. “If they don’t quantify that rework, they don’t realize how many hours they spend on just that.”
Time spent attending meetings, generating reports and manipulating data should also be scrutinized, Wells said.
These functions can often take longer than actually creating and delivering the product or service, increasing lead time and thus decreasing customer satisfaction.
Only functions that truly add value are worth retaining, Wells said. “Just because you’re busy doesn’t mean you’re productive.”
Automation and computerization have revolutionized manufacturing. Wells said properly applied information technology can likewise streamline communications, training and administrative functions.
Yet outdated, incompatible or poorly utilized technology can lead to inefficiency, he noted.
“(If) this software won’t read that software,” Wells asks, “why do you have so many different programs? Every time you enter data there’s a chance to make errors.
“Find errors and figure out how to fix them,” he said. “Most companies that have embraced lean have improved their efficiency dramatically.”
Sonquist had maintained a reasonably lean manufacturing operation. His buildings were clean and organized, his equipment modern. His product-design skills allowed him to customize machines to maximize efficiency.
Recognizing he lacked comparable administrative abilities, Sonquist decided to bring in physical therapist Paul Van Gerpen.
Despite minimal knowledge of manufacturing, Van Gerpen’s supervisory duties with a large therapy firm had provided experience in areas such as personnel management, insurance, workplace safety and regulatory compliance.
Although successful, Van Gerpen was ready to make a change.
“I wanted to be part of something fresh and growing,” Van Gerpen said, “and I wanted to be part of building something.”
The longtime friends saw potential for a seemingly unlikely coalition. Two years ago Van Gerpen joined Plas-Tech as its business manager.
“I hired the person, not necessarily the position,” Sonquist said.
Initially focused on personnel issues, Van Gerpen set up a company handbook, created job descriptions, initiated regular performance reviews and established a profit-sharing program.
He also helped Sonquist establish a chain of command by identifying and training lead people.
“That was informal before,” Van Gerpen said. “Now it’s very much more structured.”
Van Gerpen next looked at improving lead times by better integrating steps within the manufacturing process.
“How do we get from an order coming in to an employee making a part to getting it out the door?” Van Gerpen asked.
Plas-Tech already had a comprehensive software system to help, Sonquist said, “but I was using about 10 percent of it.”
Van Gerpen was able to link processing an incoming customer order with a corresponding order for raw materials and an appropriate spot on the production schedule. Production cards help employees prioritize work.
Van Gerpen and Sonquist are able to consider employee abilities and preferences as well as customer need when making assignments. They are also better able to anticipate future demand and stack jobs involving the same or similar products, reducing changeover time.
The greater consistency and efficiency allow the company to estimate labor costs more accurately and control them more precisely, Van Gerpen said.
Things are no longer “either hot or on fire.”
“I’m working on jobs for next week and next month and three months down the road,” Sonquist said. “Emergencies are so much less (common), and they’re not generally because of us.”
The process also makes quality control easier.
“If we missed something, we can go back and find out almost to the minute where it happened,” Van Gerpen said.
“So we can correct it moving forward,” Sonquist added.
As Van Gerpen continues to learn about the manufacturing side he is increasingly able to serve as a point of contact for customers, taking additional pressure off Sonquist.
“Dean and the employees have been very accommodating in teaching me the business,” Van Gerpen said.
The learning for Van Gerpen, and the changing at Plas-Tech, is ongoing.
“There’s still things I don’t have off my to-do list,” Van Gerpen said.
He eventually hopes to take the business entirely paperless as well as incorporate bar-code technology to better control inventory and product flow.
“There’s always safety things we can work on,” Van Gerpen said. “My goal is to never have a workplace accident.”
Both Sonquist and Van Gerpen emphasize providing employees with opportunities for growth.
They have already used resources for funding and job training offered through NIACC and the Pappajohn Center. Their plans are to continue this while also exploring additional opportunities for business development, networking, and leadership training for themselves and key employees.
Sonquist sees excellent potential for continued growth in production welding and larger-scale machining. He believes hiring excellent employees and providing them with the right tools and training has positioned Plas-Tech to take advantage.
“If you do good work at a fair price," Sonquist said, "you’re going to be around."