Episode 27: How ABC Polymer Took On Direct Sales to Grow Their Business
Randy Reed: I think there’s definitely a trend for more and more manufacturing in the US, folks decoupling from China and becoming less reliant on overseas production. Our country is on the verge of a super cycle of construction projects for manufacturing.
Adam Honig: Hello and welcome to Make It. Move It. Sell It. On this podcast, I talk with company leaders about how they’re modernizing the business of making, moving, and selling products, and of course, having fun along the way.
I’m your host, Adam Honig, the CEO of Spiro.ai. We make amazing AI software for companies in the supply chain, but we’re not talking about that today. Instead, we’re talking with Randy Reed, the CEO and president of ABC Polymer, probably the most interesting producer of extruded polypropylene products in the market.
And I’m so happy I said that correctly. Welcome to the podcast, Randy.
Randy Reed: Thank you, Adam.
Adam Honig: Hey, tell us about ABC Polymer. What are you guys doing?
Randy Reed: ABC Polymer is comprised of two business units today, FlexSack and FullForce. Our FlexSack business unit imports and distributes commercial packaging products throughout the United States. We believe we probably have the largest inventory of FIBCs in North America. Our FullForce business unit manufactures and sells polypropylene fiber, steel fiber, and a suite of liquid admixtures that address waterproofing, moisture mitigation, and topical densification applications for concrete applications.
Adam Honig: Gotcha. This is all cool stuff. I want to dive into the details, but before we get to that, before starting this business, you were a banker. So maybe you could tell us a little bit about the journey where you woke up one day and you were like, yeah, polypropylene; that’s where it’s at. How did that happen?
Randy Reed: It’s interesting. I can remember when I first got out of school, I really did not have a clue as to what I wanted to do. I just knew I wanted to do something. My father, who was an electrical engineer by trade, was, at the time, the largest private commercial real estate developer in the state of Alabama. He gave me, I thought, some very sage advice. He said, son, if you want to go into business one day, you need to know what the guy on the other side of the table is thinking, and banking would be a great training ground for you to learn what the guy on the other side of the table is thinking. I did learn, and it was good advice.
That’s how I got my start. I did that for 6 years, and I was fortunate enough to have the opportunity to take the point on a family investment in what is now known as ABC Polymer Industries.
Adam Honig: When you first got into the business, it wasn’t offering all these different services and products that you guys were offering today it seems, right?
Randy Reed: It was not. When we got into the business, our predecessor company had been locked up and closed by the banks for 18 months. We just decided, we would try and resurrect the business of our predecessor company, which was the manufacturing of specialty bags for the explosives industry. We would resurrect that business and then just see what we could get into after we got that part of the business stabilized.
Adam Honig: When you say explosives industries, it’s people making munitions to carry around bombs. Is that what the bags were used for?
Randy Reed: Our customers, which were the major explosive manufacturers in this country, there’s been a lot of consolidation in that industry: Dyno Nobel, Nelson Brothers, Austin Powder Company. Those companies did a lot of work for the mining and quarry industries. They would use our product to transport sometimes products that would have the consistency of liquid mayonnaise or fertilizer to job sites where they couldn’t use a bulk apparatus to load product directly into the blast holes.
Adam Honig: So they needed a very special kind of container for that, it sounds like.
Randy Reed: Yes. You need that to be approved.
Adam Honig: Was that dangerous to move that kind of material around?
Randy Reed: We never had to move that material. We sell our product to them empty, and then they would sell it.
Adam Honig: It was all their problem to get it there.
Randy Reed: I’m sure they took strict precautions.
Adam Honig: Yeah, no, it sounds pretty risky to me. How did you expand into other markets? Can you tell me a little bit about the story behind that?
Randy Reed: Sure. When we bought this place, there was a lot of equipment. One of the pieces of equipment that was on the floor was a large jumbo loom. When we first got into business, we were weaving narrow-diameter, circular-woven polypropylene fabric. But they had one jumbo loom where they had taken a look at either using it to produce bags for the feed and seed industry or bolt bags.
We did the math. We quickly realized that we were never going to be able to be competitive making these products. But it did give me the idea. Our business is unique because every single line of business that we’ve been in, we have gone to local companies, and they have helped us establish ourselves. So we’ve established ourselves locally, and then we’ve transported it throughout the country and in some cases, in many different parts of the world.
Adam Honig: Now this is really interesting. So you jointly developed a product with a customer, is that how it worked, or helped them sketch out what the need was?
Randy Reed: They were already using a product, either we could sell them, or we were thinking about putting ourselves in a position to sell them, so basically work with companies giving us the chance. In some cases, they’re sharing information with us to help us determine whether or not we can be competitive if we chose to enter that market.
Adam Honig: Gotcha. So you would say to them, hey, we’ve got this idea. You guys are already doing it this way. Here’s the way we could do it with the special sauce that we have and see if it worked for that.
Randy Reed: That’s right. That’s right.
Adam Honig: From a FlexSack perspective, is that the natural evolution of that product line came from this kind of customer interaction?
Randy Reed: The FlexSack product line is 100% imported, I’d say the vast majority of it coming out of India. We went to a couple of local companies and said, we can do it for this. Would you be interested? Yes, we would. Again, we were well ahead of the curve with respect to recognizing the benefits of imported product from a cost perspective. You never want to sell on price, but it was so compelling that it got their attention.
Adam Honig: What kind of cost differential was there between the FlexSack and what they were using before, would you say?
Randy Reed: 30% to 40%.
Adam Honig: Pretty significant. What types of applications are they using for the FlexSack line?
Randy Reed: Oh, gosh. Anything that’s being packaged that typically is granular in nature and free flowing would be a candidate for this type of packaging. This packaging has displaced what used to be packaged in Gaylord boxes, steel drums, 50-pound bags, the benefit of it being that you can get more billable weight on a truck, and it’s less expensive and less labor intensive in some cases, particularly if you compare it to a 55-gallon steel drum or a 25kg bag.
Adam Honig: I know this might be a dumb question, but is the flexibility of it, which gives it that utilization, better because it can fit and be contoured into the truck?
Randy Reed: It’s more because it’s lighter. If you think about a Gaylord bag on a pallet might weigh 75 to 100 pounds empty, our bag, empty, might weigh 5 pounds. So you can get more billable weight in your container and ultimately on your truck and reduce your transportation costs.
Adam Honig: I think it’s something that people who are not familiar with the industry don’t think about a lot, the weight of the containers and the shipping materials. It can be a pretty big percentage, especially for commodity products.
Randy Reed: That’s right.
Adam Honig: Gotcha. Tell me a little bit more about the FullForce business unit then. What does that specialize in?
Randy Reed: The FullForce business unit has really evolved in a pretty significant way over the last nine years. We’ve been in the fiber business for 20 years. And really about 9 years ago, we had gotten wind that our two largest customers were each kicking the tires, for lack of a better term, evaluating the merits of establishing their own manufacturing capability. We had the opportunity to meet with a gentleman named Tim Hartsell, who was an industry veteran, about affiliating with our company. Really, when I first met with Tim, it was to talk with him about establishing a relationship like we had with all the other folks that we dealt with.
We were a wholesaler manufacturing and wholesaling all of our products. What was happening is we were getting 100% commoditized on microfiber component of our business, and we were completely getting boxed out of the engineered fiber, which typically carries a higher margin. There’s a lot more research and testing that goes into those fibers and really, we just had no control of our destiny.
So it was really an inflection point for us and a lot of gnashing of teeth for me as I ultimately made the decision to push all the chips to the middle of the table and say, we’re going to control our destiny. We’re going to build out our own sales force. A lot of this was Tim Hartsell’s vision of what could be. He just convinced me that we could do it. It was absolutely the right move as time would tell.
We have evolved from being a wholesaler to now, we sell direct. Our primary sales channel is the concrete ready-mix community. We work hand in hand. If you think about our fiber products, those products do very well with what we call slab on grade, composite metal deck, or concrete paving applications. We’re almost always add value to the project, both in terms of quality and also from a dollars and cents perspective.
The newer markets that we’re in with the liquid integral products that we have with our DuraForce product line, we’re very excited about that because we’re gaining traction. We’re in months 14 or 15 now of taking that product to market, and that’s waterproofing, topical densification, and moisture mitigation.
Adam Honig: Before Tim got involved with you guys, you said you didn’t really have a sales team. So how were you doing business with customers? Did you have manufacturers’ reps?
Randy Reed: We had one person who managed more than a handful. The 80/20 rule applied to our customer base, but they managed all of our accounts.
Adam Honig: So the change was really, okay, we want to expand. We want to break into new areas, and so we really have to go build up the team. That must’ve been a really challenging decision to make.
Randy Reed: It was. Like I said, we pushed all the chips to the middle of the table and said, we’re going to go for it.
Adam Honig: Did you ever have a moment where it was like, oh, I don’t know if this is really going to work?
Randy Reed: Yes. Anytime you start something new, even if you have everything in place, it’s still hard. You know this, Adam. You’ve started a company. Even with all the institutional knowledge that you have and you know what it can do to help your customer, it’s still hard to gain traction in the marketplace.
Adam Honig: Oh yeah. My personal experience is that when things are going well, it’s only up, and when things are not going well, it only looks down. It’s like you’re on the tangent of a curve. At any point, that’s where you’re looking.
Randy Reed: Well, and the pendulum can swing the other direction awfully fast.
Adam Honig: Yeah, it’s true. Fast forward to today, your business has got multiple divisions, multiple product lines. It sounds a little bit complicated. How do you organize things? How does that work for you guys?
Randy Reed: I’ll tell you one thing that’s been very helpful for us is about two and a half years ago, we started running our business on the EOS operating system.
Adam Honig: Oh, yeah, we do that too. That’s great.
Randy Reed: Yeah, and of course, as you know, that whole system, you start with establishing your core values, which we did, and forces you to really take a hard look on a quarterly basis with all of your personnel. We use the mantra, right person, right seat. Nobody bets a thousand when they’re hiring folks, but we tell people up front very candidly that right person, right seat is the lens that we look through. To be the right person in the right seat, you’ve got to get it. You’ve got to want it, and you’ve got to have the capacity to do the job. Getting it, embracing our core values, wanting it– I use the football analogy. You’ve got to be like Lawrence Taylor trying to get after the quarterback and sacking. Then capacity to do the job is just interpersonal skills, aptitude, and all the things that you have to have to be effective in the market that you’re serving.
Adam Honig: That’s great. We’re very big fans of quarterly rocks as well.
Randy Reed: Yes.
Adam Honig: For those people who are not familiar with this EOS enterprise operating system, it’s a philosophy of how do you organize the business, learning from people who’ve done this before and not having to invent it all the time, which is something that entrepreneurs tend to do. We love to invent new things, but why do that? We really want to improve the business, not the way we run things. So one of the precepts is to have these quarterly rocks, which are the most important things that the business focuses on during the period.
Randy Reed: Absolutely. I’ve been guilty of spreading myself too thin. The next shiny object that comes through comes flying by and grabs my attention. The establishment of those rocks, which, to be a rock, it’s got to be impactful, measurable, and realistic that it can be achieved, forces you to remain somewhat focused and creates a form of accountability.
Adam Honig: For sure. We had a meeting just before this call about our rocks for the quarter. It’s great. Let’s shift gears for a minute. I know you’re a big supporter of manufacturing in the US as a lot of our customers are. I’d love to get your view on what’s going on. First of all, do you feel like there is more manufacturing coming to the US? What are you seeing?
Randy Reed: I think there’s definitely a trend for more and more manufacturing in the US, folks decoupling from China, becoming less reliant on overseas production. I just read an article a week ago talking about how our country is on the verge of what they tabbed, a super cycle of construction projects for manufacturing. What’s interesting is we’re seeing design changes for those facilities because of the advent of automation. The slab designs they’ve got for the floors of these facilities are different today to take into account the automation that’s being incorporated into the production facility.
Adam Honig: What does that mean, the floor plan, so they’re allowing more space for robots and things like that?
Randy Reed: It may be load bearing capabilities. It may be traffic wear and tear. You need higher abrasion resistance to account for that traffic of the automation on the floor.
Adam Honig: Gotcha. So you’re seeing this super cycle, which would mean that more investment is being made to provide more capability, which ultimately should boost production locally.
What about on the labor side of things? I know in speaking with some other people in the industry that it’s a challenge to hire and actually get people interested in this industry. Do you see that at all?
Randy Reed: We have seen it. For years, we just had fruit basket turnover. I think part of that was our fault for maybe not having the right person in the right seat leading that effort.
Adam Honig: Was that fruit basket turnover? Is that what you said?
Randy Reed: Yeah. It means just, you never knew who was going to show up one day to the next. You can take Betty. If she’d show up for three days, you’d take it because it was better than no days. It’s interesting because we of course, like a lot of folks, have had to adjust our wage rates to be competitive. But we do have the right person and the right people in the right seats that oversee our manufacturing. That, combined with our competitiveness, has really made a difference. We’ve had a lot of stability in our workforce for the last 18 months. Unprecedented stability, I might add.
Adam Honig: That’s great. From more of a macro perspective, what else do you think we should be doing to be promoting manufacturing in the US or encouraging people in that direction?
Randy Reed: Every company’s different. We’re working awfully hard to develop ourselves into what you might tab an employer of choice. We’re trying to position ourselves where people are beating our doors down because they want to come and work here versus somewhere else. So we’re trying to do a lot of even small things, whether it’s a company cookout or buying tickets to the Birmingham Legion soccer games. We redid the break rooms. We redid the bathrooms. We have quarterly meetings. We encourage feedback. And really, we’re trying to tap into what is your why? At the end of the day, we’re all human. We want to feel that the people we work with care, and we do care.
It’s interesting. We’ve got a couple of family members that work in our plant. They sent our director of operations a video. In this case, these folks are from overseas, and we do check green cards and all that. But they, like a lot of folks, send their money back home. They sent a video of their family building their house. They were like, thank you so much. We would not be able to do this if we weren’t afforded the opportunity to work at ABC Polymer Industries.
Adam Honig: That’s awesome.
Randy Reed: I love stories like that.
Adam Honig: That’s great. Another question that I’ve got for you, sometimes when I’m talking with people in manufacturing, I learn that there are special or one-off unusual things that people are asked to make. Is there anything like that going on with you guys? We have a customer who is in the crane business, and one day, they were contacted by the people who dropped the ball at Times Square because they needed a precision winch to just make sure the ball hit the ground right as the clock struck zero.
Randy Reed: I think maybe, and this is something we’re working on right now, we’re working on a variation of some of the packaging products that we sell that will be used to package nuclear waste. That’s an interesting exercise to go through.
Adam Honig: There must be special requirements for that. Does it have to be radiation proof in some way?
Randy Reed: In this case, our product is packaging another product that the waste is going into.
Adam Honig: I hope it’s got five layers. It’s like a thing and a thing, and it keeps going.
Randy Reed: There’s some tamper-proof nuances to it that you have to be able to identify if somebody’s tampered with it or not. We’re actually in the process of filing a provisional patent on this product.
Adam Honig: You started in the munitions business a long time ago, and now, maybe all the way to nuclear waste, which I guess might not be from munitions, but still, it comes to mind a little bit that way.
Randy Reed: That’s right.
Adam Honig: Super interesting. Randy, it’s been really great having you on the podcast. I really appreciate you joining us today.
Randy Reed: Thank you, Adam. It’s been my pleasure.
Adam Honig: As a reminder to our listeners, you can find every episode of the Make It. Move It. Sell It. Podcast; it’s spiro.ai/podcast. Randy, what do you think? Should people give us a good review or something like that?
Randy Reed: Absolutely.
Adam Honig: I definitely think that they should, and feel free to subscribe or tell your friends or whatever else you would like to do.
A big thanks to everybody for tuning in today, and we look forward to speaking with you on the next episode.