The Aftermath: Cautious optimism guides three of northern Michigan’s manufacturers
Virtually every northern Michigan manufacturing company was touched, in some way, by the devasting coronavirus pandemic. Many were forced to close for months.
Some, however, became essential businesses under Gov. Gretchen Whitmer’s executive orders and in several cases found new business lines. Here’s how Shaggy’s Copper Country Skis, Petoskey Plastics and EJ all made it work these past few months.
Shaggy’s Copper Country Skis
Jeff Thompson wasn’t at his ski shop when a McLaren Northern Michigan hospital administrator called in mid-March, wanting to see if Thompson could manufacture face shields for the hospital’s caregivers as the coronavirus pandemic rapidly spread.
But it didn’t take long for McLaren officials to track down Thompson. He was at the Petoskey hospital at the time with his wife, who was giving birth to their daughter.
“I said, ‘Just bring them to our room,’ and they brought some samples,“ said Thompson, the owner of Shaggy’s Copper Country Skis, a Boyne City-based snow ski manufacturer. “I told them that as long as we can source the materials, we can make them. They wanted tens of thousands.”
Thompson’s company had just been shut down under Gov. Gretchen Whitmer’s non-essential business closure order. Business had been falling off, anyway, as ski resorts nationwide also were forced to close.
“Our people needed something to do, but I had no idea what it was,” Thompson said.
He wrote a post on Shaggy’s Facebook page listing the company’s manufacturing capabilities and saying it wanted to help local communities in the fight against the deadly COVID-19 virus “in any way we can.”
A McLaren administrator saw the post, which led to a new business opportunity for Shaggy’s.
“We were shut down for one day,” Thompson said. “The next day we had a purchase order” from McLaren.
The business took off so quickly that Thompson soon enlisted his brother Jonathon Thompson’s Boyne City company, 1-800-Stencil, to jointly produce disposable face shields. 1-800-Stencil makes stencils used for highway and parking lot markings.
Shaggy’s and 1-800-Stencil have since manufactured about 175,000 shields for McLaren and many other Michigan hospitals, including Munson Healthcare in Traverse City, Beaumont Health in Royal Oak, Henry Ford Health System in Detroit and Sparrow Health System in Lansing.
The work prevented layoffs at the two companies, which employ 15 workers — seven at Shaggy’s and eight at 1-800-Stencil. The companies even brought on several new workers to meet production demand.
In late April, Shaggy’s started manufacturing reusable face shields that have been more in demand as dental and other medical offices have started to reopen.
Although the businesses are completely different, Jeff Thompson said it wasn’t difficult to shift from making skis to building face shields.
“We’re so used to changing things around,” he said. “Changing for us is just part of our nature.”
Thompson said his company will continue manufacturing shields “as long as there’s a need,” but said Shaggy’s has started making skis again.
“It’s good to be getting back into ski production, finally,” he said.
When auto factories across the United States began to close in early March because of the coronavirus pandemic, Petoskey Plastics also faced shutting down and laying off hundreds of workers.
“Our automotive orders vanished,” said Jason Keiswetter, president of the family-owned company.
Automotive is the largest segment of Petoskey Plastics’ business at its Petoskey plant. But a contract with McLaren Northern Michigan hospital to produce disposable hospital isolation gowns helped replace some of its temporarily lost automotive revenue and kept it operating legally as an essential business.
“If that hadn’t happened, I don’t know where we would have been,” said Keiswetter, who became the company’s president this year.
The company quickly converted multiple automotive production lines to manufacture gowns.
That switch kept Petoskey Plastics from having to furlough or lay off any of its nearly 500 workers in three states. The new business, plus a steep drop in raw material prices, resulted in stronger-than-expected first quarter financial results, Keiswetter said.
Petoskey Plastics was able to maintain profit-sharing bonuses and paid out $87,000 in pandemic-related, worker-appreciation bonuses in April.
The company’s overall business is so good, it is currently scouting sites for a new North American manufacturing plant.
“We’re out of space,” Keiswetter said.
Producing hospital gowns was a natural fit for the company, which also manufactures a variety of medical bags and coverings.
The McLaren contract became a launching pad for Petoskey Plastics to supply dozens of hospitals in Michigan, Indiana and Tennessee where the company has manufacturing operations.
Keiswetter said manufacturing hospital gowns will become a permanent product offering and could produce as much as 12% of the company’s approximately $150 million in annual revenues.
Petoskey Plastics has cranked out three million gowns so far and can produce as many as one million gowns a month.
“We quickly realized how big the gown market is,” Keiswetter said.
The global market for hospital gowns is expected to hit $3.87 billion by 2025, growing 6% annually, according to a forecast by San Francisco-based Grand View Research.
Prior to landing the McLaren contract, Petoskey Plastics faced an uncertain future as it was unclear when auto plants would reopen and get back to something approaching normal production levels. Most resumed limited production in mid-May.
Petoskey Plastics applied for and received a $4.7 million federal Paycheck Protection Program loan to keep workers on the payroll. But it returned the loan after getting the McLaren contract.
Keiswetter said in a May statement that “we have a little clearer view of the future and we feel other companies are in greater need of these funds.”
But the company is still being “a little cautious” about business prospects for the rest of the year, he said in a June interview, and most of the company’s salaried employees were still working from home at the time.
That’s a problem in a manufacturing environment, which depends on personal interactions, Keiswetter said.
“We prefer to bring people back to the office,” he said. “We’re a family owned business with a family culture. It’s just nice to have everybody around.”
But the pandemic, which prompted Petoskey Plastics to seek a new line of business, produced an intangible benefit.
“As I look back on it, I’m very proud of our team,” Keiswetter said. “It really kind of sparked our entrepreneurial spirit.”
EJ (formerly East Jordan Iron Works)
EJ started operations at its $125 million foundry in Antrim County’s Warner Township a little more than a year ago, relocating 350 workers from a foundry in East Jordan that had been in operation since 1883.
The foundry’s business was growing. But the coronavirus pandemic brought that to a halt.
“Prior to COVID-19, we were actively hiring on a regular basis for the first time in many years,” said Tom Teske, EJ vice president and general manager.
EJ’s foundry, which manufactures manhole covers, drainage grates, valve boxes and other products used by public utilities, property developers and telecommunication companies, continued to operate as an essential business under government guidelines.
But it was unable to hire new workers because medical offices providing pre-employment physicals were closed, Teske said.
Some hiring has since resumed, with the company looking to hire around a dozen more workers in skilled trades and other foundry jobs.
While EJ’s business generally held up during the early months of the pandemic, Teske said it faced disruptions in its materials supply chain.
The foundry uses 500,000 pounds of scrap metal a day in its manufacturing operations. Much of that scrap comes from auto plants, many of which were shut down for about two months in the pandemic.
Business is picking up again as government infrastructure projects resume and developers build subdivisions requiring water, sewer and telecommunications.
“Sales are picking up as construction returns,” Teske said. “And California and New York never stopped home construction.”
But the future economic climate is uncertain for EJ, which is heavily dependent on public works spending.
State and local government budgets are under severe strain, which could lead them to cut spending on roads and underground infrastructure projects.
“That’s the million-dollar question,” Teske said. “We’re cautiously optimistic.”
While the coronavirus has slowed the economy, it hasn’t erased the perennial labor shortage problems in northern Michigan. EJ, for instance, has been having trouble hiring qualified electricians for its foundry.
EJ’s future business also depends on keeping its existing workers healthy while a COVID-19 vaccine is being developed. A safe, effective vaccine could be months or even years away, some experts have said.
In the meantime, EJ is taking numerous steps to prevent an outbreak in its workforce, including taking workers’ temperature when they enter the foundry, requiring them to wear face masks, enacting social distancing and doing extensive, regular cleaning.
“We have to be very cautious,” Teske said. “We need to run safe operations and keep everyone healthy. That’s the challenge.”