Business Leaders: All In The Family At FLEXcon | McDonough draws on childhood experience to lead Spencer company into the future
Neil McDonough grew up alongside FLEXcon.
His father, Myles, started the company in a garage in 1956, the year before he was born. As a kid, McDonough said, he literally watched the company expand, renting more space in a neighboring building. He judged its success by the location of his father’s office: The further the office went into the building next door, the better business was doing.
Since those early days, McDonough, now president and CEO, has learned a few more sophisticated ways of measuring, and driving, the success of the company he now leads. That sophistication has helped to make the Spencer-based film and adhesive company a local poster child for lean manufacturing and to earn his place as the Worcester Business Journal’s 2009 Big Business Leader of the Year.
FLEXcon’s products show up in a wide range of places, from hazard warnings on lawnmowers to the clear labels on Snapple bottles. The company works closely with customers, matching materials and adhesives with the needs of each project.
Despite the time McDonough’s spent running the multi-million dollar enterprise, he says he still draws on the things he learned and the connections he made as a teenager working for his dad.
McDonough said he decided at about 11 years old that he wanted to join the family business. Not long after that, he started spending summers filling in for vacationing workers. Over the years, he worked in maintenance, operated a machine, helped out in the lab and even went on the road with a sales representative.
First Impressions
Walter Dow, CEO and owner of Dow Industries in Wilmington, a label maker that has been a longtime FLEXcon customer, remembers meeting McDonough when he was working as a “junior sales person.”
“His heart was in it,” Dow said. “He did a spectacular job.”
McDonough said the connections he made during those years, and in the years after graduating from college and getting an MBA, when he took a number of different full-time jobs at the company, helped him once he became president and CEO in 1990.
“There is that channel of communication and trust that comes from that long relationship,” he said.
Relationships like that may have helped McDonough push the company into lean manufacturing. He said he became interested in the concept back when Japanese companies were widely perceived to be taking over the world.
“I read a lot, and I’ve always considered myself kind of a student of business,” he said.
But McDonough said many of the lessons weren’t immediately applicable to a company like FLEXcon that has to offer lots of customization. Then, around 2002, he saw a flyer for a workshop put on by the Massachusetts Manufacturing Extension Partnership called “Lean for Job Shops.” He and a couple of his top managers attended that event and others like it, and soon became evangelists for the lean approach.
The company applied lean thinking to a problem with getting certain orders out in time and soon found that an approach they had thought promoted efficiency was actually tying workers’ hands.
“It was incredible what a problem we caused ourselves,” McDonough said.
Steve Szydlowski, a project manager for MassMEP who works with FLEXcon, said the company has become an example that his organization uses to explain the benefits of lean policies to other companies.
“Just about every aspect of lean they’ve tried and driven through their organization,” he said. “There are very few companies that can embrace lean and make it part of their culture.”
Continual Improvement
Szydlowski said one key to FLEXcon’s success with lean has been the company’s willingness to try new things, including ideas that come from people in all parts of its organization.
“It’s also the encouragement from the top down,” he said. “Lean people will tell you that lean is grassroots — the ideas are going to spring forth from the people on the floor—but the grass only grows as high as the lawnmower. Neil lets the ideas come up.”
Dow said FLEXcon’s openness to new ideas sets it apart from other suppliers. He said if his company comes up with a new idea for a product it can count on FLEXcon to develop the specific materials and adhesives necessary to make it work.
“They continue to come up with innovative ideas for our industry, which sort of makes our job easier,” he said.
Another area where the company is continually trying new things is conservation. With higher-efficiency equipment, it’s reduced its use of natural gas by 45 percent since 2004, and its lean techniques have allowed it to cut a quarter of its waste in the same period.
Though it stayed away from layoffs, McDonough said, the lean efforts did allow the company to reduce its workforce somewhat by attrition over time. Still, in general, FLEXcon’s story is one of enormous growth. From its beginnings in a garage, it now employs about 1,200 people, including 800 in Massachusetts, and has annual sales in the range of $350 to $375 million.
Of course even an impressive history is no guarantee for any business in the current economic climate, but McDonough said FLEXcon has been quietly preparing for recession since 2006. It’s adjusted prices, reintegrated portions of the business that it previously contracted out and generally battened down the hatches.
“We’re in the best position for what looks like the worst recession in my career,” McDonough said.
The company is also adjusting in reaction to longer-term changes in its markets. Many of the company’s traditional core products are used in labeling products that are used outdoors—things like tractors that are less and less likely to be made in America. As that market moves away, McDonough said, the company is turning to products for the optical, barrier film and flexible electronics industries. Among other things, that means a lot more time and effort put into researching new products.
“For someone who grew up in this business and understood it all, I don’t understand some of this stuff,” McDonough said.
In another new move, FLEXcon is considering opening a facility in China. McDonough said he resisted the idea for years, but was forced to reconsider when several big customers moved operations there and refused to do business with suppliers that didn’t have a presence in the country.
Some things aren’t changing for the company, though. McDonough said he’s as committed as ever to the idea of improving the business by drawing ideas from all corners of the company. Last year he started a year-long “book club,” bringing six people from all different jobs and experience levels together to read and discuss business books that relate to the company. He’s starting the second round of the club now and says it’s helping to generate new ideas.
“It’s also great cultural sharing,” he said.
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