Basic Rubber's family focus still strong after four decades

WALLED LAKE, Mich.—Family is the most important value for the owners of Basic Rubber & Plastics Co. Inc., according to David Smith, president and one of the three brothers who own the company.

David and his family showed off the company during a recent plant tour for the Association for Rubber Products Manufacturers.

Basic Rubber started in 1973, when David's parents decided to begin a company where his older brother, who was receiving chemotherapy treatments for leukemia, could work around treatments. After his brother passed away, the family continued developing the company. Then, three years later, David's father also died from a massive heart attack, leaving his wife with six children, and a die-cutting and rubber coating company to run out of their basement.

David, in his first year in college, came to help complete the last few orders and close the company down.

"The goal was, let's just complete all our orders, and get what cash we can from it and go from there," he said at the ARPM presentation. "What started happening was, when we were finishing our orders, we started getting repeat orders of the same things. So the company started to grow."

His brothers Tom and Thaddeus each joined in after beginning college, when David needed help maintaining the company's expansion, each taking an equal salary as they developed the family owned company.

By 1982, they moved into their first true production building and established a team of 10 employees, seven of whom were family. The company had sisters, brothers and cousins working together, and have continued that trend through the history of the company, David said.

"We are literally a family business. That was our culture, running a family business to help support the family," he said.

As a small shop, the company worked on short-run items, and expanded into molding after picking up a molding press to meet customer demand for jobs of 10 to 20 pieces, David said.

One of the defining growth points for the young company came when a big job offer came through from a company based in California. It seemed too large for Basic Rubber, and David turned it down. After some goading by a colleague at a metal supplier in Detroit, Basic Rubber took the job and the risk.

"We had to buy a press that was a $100,000 press. We had a mold that cost $100,000. We were a $200,000 company at the time," David said. "We succeeded doing the job. If that job hadn't gone, we might not be in business today. But the job worked out."

But that style of growth wasn't uncommon for Basic Rubber, David said. As jobs or opportunities presented themselves, the family found someone to champion the process and take the lead. By 1995, they had built and moved to their Walled Lake, Mich., location. By 2000, they had purchased their first water jet, and bought a second soon after because the first worked out.

"When we have a team member saying, 'Hey, we can do this,' I say, OK. And then we go out and buy it," David said. "As a rubber company, now we mold rubber, we soak stuff, we water-jet it, we router it. We make our own molds now."

Not long after that, Basic Rubber added sewing and extruding to the list of processes, usually in response to an employee coming along to push development for a job.

"That's how we've been able to grow, by taking those challenges," he said. "Not by saying, 'I can't do it.' But by saying, 'I can do it, but here's what we're going to have to do.' That's how we've grown our business as a family business."

As a company, Basic Rubber does about 60 percent of its work for the U.S. government, according to Mike Smith, sales and quality manager and David's son. The parts might not seem exotic: plugs that prevent birds from building nests in engines, rubber fenders for Bradley Fighting Vehicles or covers for the ends of tank cannons. But they serve specific purposes that are necessary for durable military vehicles.

"They're only making 100 or 200 of each (product), but that's again what we're good at," David said.

And even when they have their differences, the family comes together to get the job done. Though David is president by title, he or any other family member will jump in to help in production when work gets busy, he said.

"We make decisions as a collaborative group. We don't make decisions on our own," David said. "The great thing about having a family business is that those two guys always have my back, and vice versa.

"While today it's very profitable and we've grown the business tremendously, at the end of the day, if one has to give in to the other, the business is going to go. The family is going to stay together. We're not going to fight over money, and we're not going to fight over politics."

Basic Rubber's challenge going forward will be less about dreaming up new products and processes, and more about the transition from David, Tom and Thad to the new generation. Mike is one of the younger Smiths involved in the company, and was joined at the ARPM event by Jon Smith, shipping and receiving manager, and one of Thad's three sons, all of whom are working at Basic Rubber.

"I don't think any of us are ready to retire, but we're all in our 60s," David said. "We've all been in this business for more than 40 years. At some point, they want to take the reins and grow it the way they want to grow it, and we need to get out of the way."

Mike, like each of the Smith relatives at Basic Rubber, grew up in and around the company.

"When all my friends in the summer in junior high were screwing around and playing baseball, my dad said, 'I need help. We've got jobs that need to get done.' It was challenging from that standpoint," he said. "But you saw the pride that he and my uncles had in what they were doing."

Though it didn't connect with him when he was younger, as he reached college and continued working with the company, he started to see things differently, he said.

"As I got older, I really saw, that's when I started to take pride in it," said Mike.

The company has done some preliminary research into valuations and what it will take to transfer the company to the next generation, but it's still early in the process, Mike said.

"The understanding on how big it is, and what the scale would be and what it would mean to take over isn't there yet," said Mike. "They've never done anything like this. When they took it from their father, it wasn't a company yet. Now it's an established company."

On top of that transition, the company's work force is aging alongside its owners, and bringing in younger employees has been difficult, David said. Currently, the company employs about 60 people.

"Most of our employees have been with us for more than 20 years," he said. "So the challenge is now how do we bring another generation in? To get a high school student who's used to working on a computer, we're having a hard time getting kids interested in what we do."

Part of Basic Rubber's response is updating its computer system and looking for more ways to streamline and modernize, Mike said. The computer system is the same one that the brothers started with more than 30 years ago.

"For the immediate future, we really want to streamline and use technology as much to our advantage as we can," Mike said. "That's what our second generation has a little more skill with than the first generation. We're a little more computer-savvy and have the ability to automate a little more than they were willing to do."

Basic Rubber is looking at some box solutions, as well as working with the programmer who developed its current software. The process will be painful, but end up making the company more attractive to younger employees and more effective, Mike said.

"We've already realized that it's going to be expensive. It's going to be a painful transition, but we'll come out the other side a little bit better, a little more efficient," he said.

As a whole, growth for Basic Rubber has been slow for the past few years, with little change from the defense industry. But the future outlook for the next five years is strong, Mike said. In the meantime, the company will stay the course with its current customer base. If that growth does come along, the company might be poised to expand in manufacturing space.

But regardless of how the future changes for the company, family will remain a featured characteristic, Mike said.

"At this point, I've got 15 years in doing this," he said. "It's something we all take pride in, and that's the family aspect of it. They've built something nice, and we don't want to burn it down. We want to keep it going."