Make the Most of a Do-or-Die Crisis

By listening to its customers’ needs during a downturn, a beleaguered plastics company uncovered a promising new product—and a lucrative market

 
Written by John Lorinc

In 2009, MSW Canadian Plastics, a small PVC-product manufacturer located in Palmerston, Ont., was facing a “do or die” crisis, recalls the firm’s president, Steve Bosman. As with so many companies that depend on the building-construction trade, MSW’s order book was running dry because of the economic downturn. So, the company’s top sales and marketing managers hit the road, probing customers about what they still needed to purchase. As Bosman describes the frantic search for new business: “Putting in a lot of windshield time.”

Finally, the company found what would become its salvation—a new application for PVC plastic. Typically used for pipes, builders were using PVC for various other applications; Bosman and his colleagues reckoned they could sell flat sheets as wall coverings in damp spaces, replacing mildew-prone drywall.

Bosman didn’t have to look far afield for inspiration. The firm is located in an agricultural area northwest of Toronto, and Bosman grew up on a farm. He knew that in food-processing facilities, damp walls were always an issue and that flat plastic sheets could effectively eliminate the problem. “You knew there was a call for this product,” he says, adding that MSW’s new wall coverings were unique when first launched. Most of the firm’s early customers for the product were agricultural or food-processing firms.

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In the five years since, MSW—which ranked 17th on the PROFIT500 in 2013, with sales in the $7 million to $10 million range—has sold large volumes of its new product, not just in Canada but increasingly to U.S. customers. Over five years, the company went from having virtually no exports to deriving a third of its revenue from exports.

The initial foray abroad, Bosman says, was in the horseshoe of states around the west end of Lake Ontario and Lake Erie. To build awareness, he and his sales team spent plenty of time visiting customers in these Midwest and northeast states, talking up the product and taking orders. Logistics weren’t difficult: the shipping was straightforward, and many customers—building-supply wholesalers and retailers—like to keep plenty of inventory on hand.

As the U.S. housing market came back to life, Bosman says, the company discovered that some home builders saw an opportunity to use the plastic wall coverings in garages, which also are prone to dampness and rot.

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Bosman also learned that the U.S. market is conspicuously fragmented: “Every state is almost its own country.”

Besides the mishmash of building codes, Bosman found that the wholesalers and distributors he was selling to had a wide range of needs and demands: “They wanted to be treated differently.”

He cites the example of one customer that insisted that MSW ship its plastic sheets in a different form of packaging than MSW typically used. The customer wanted a change in the packaging, and Bosman knew that would eat into his margin. But in the years since 2009, MSW had taken the view that it had to be as flexible as possible with customers, so Bosman changed the packaging for this client and swallowed the cost. “It’s being able to change quickly,” he says.

Since MSW established a growing presence for itself due to the success of the wall covering, Bosman says, the company has taken advantage of its new relationships with customers to sell more conventional PVC building products. It is a classic cross-sell strategy. “As the building industry is coming back,” says Bosman, “our salespeople are asking, ‘Do you want fries with that?'”

The company also has felt emboldened enough to pursue a growth strategy aimed at finding customers in western Europe and Latin America, where MSW already does a bit of business. This autumn, Bosman says, MSW sales reps will attend several trade shows, aiming to have more face-to-face meetings with potential customers. The difference now is that MSW is no longer in a do-or-die situation.

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Originally appeared on PROFITguide.com

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