Flexaust says capacity additions put firm in strong position

BURLINGTON, N.C.—Flexaust Co. Inc. really needs to work on its timing.

Back in 2008, just as the Great Recession was starting to take hold, the hose and ducting manufacturer was in the middle of adding to its factory in Amesbury, Mass.

Similarly, as the novel coronavirus pandemic escalated this year, the firm was in the late stages of a $6.5 million to $7 million, three-year project that saw it open a new factory in Burlington; move its facility in Las Vegas to a new, larger home; put up a new building at its main campus in Warsaw, Ind., freeing up space for the addition of more production equipment at one of its other plants there; and adding more hose manufacturing lines in Amesbury.

But you won't find Flexaust officials fretting about the timing. They say that business has bounced back from the depths of the downturn, and the hose maker will be in a good position when the world eventually moves forward from the pandemic.

"What we will find out when we come out of it, which we will, is we will be in good shape," said Michael O'Brien, Flexaust vice president of sales and marketing, based out of Amesbury. "We didn't put back. We didn't close down anything. Flexaust will be in a position to service the customer as good as we ever have, if not better."

That's not to say that Flexaust, like most businesses, didn't feel the impact. O'Brien said revenues took a hit of about 20 percent for several months, but since July have come back strong.

Certain markets, such as recreational vehicles, hobbies, and the woodworking and tool industries, were particularly strong as the public had to take a different approach to how it spent its discretionary income because of the lockdown measures taken to try to stem the spread of the virus.

"Instead of spending money on long vacations and cruise ships, they seem to be trying to find more things at home," he said.

Flexaust also had a couple of opportunities to supply respiratory hoses, a business that saw a spike in demand because of the outbreak. The firm, O'Brien said, had some customers in that market prior to the pandemic, and they became extremely busy and were under a lot of pressure to get product in the field.

"We basically sat down on a couple of Saturdays, and once we knew we were in trouble with capacity in some areas, we were all hands on deck to get respiratory hoses to the OEMs who are building the equipment or distributors supplying them," he said. "We came up with two or three other hoses that were acceptable, and from those a couple others were chosen to be used for some of the projects that were ongoing.

"The Flexaust engineering group and production (staff) really came through with coming up with solutions that were light weight and flexible—everything they needed in those applications."

Michael Harvey, the company's vice president and general manager, said when the respiratory hose projects heated up, the firm had some people working a lot, with others based on 40 hours with no overtime. Then by the end of August orders started coming back in at a high rate.

"Right now we're in a situation where we're working a lot of overtime just trying to get caught up, even though we did everything we could to set ourselves up, trying to do the right inventory, but you're somewhat guessing," he said. "But it's been a pretty interesting ride. Our folks have done a really good job of trying to batten down the hatches and stay safe, and come into work and get hose out the door."

Diversity helps
Of course, there are some areas—oil and gas in particular—that haven't come back. That area was hurt when the price of oil went negative, even before the pandemic took full hold.

"Fracking has done quite a bit over the last few years, but that price of oil hasn't come back," Harvey said. "It's definitely impacted some of our industrial distributors."

Coming out of the gate of the downturn, O'Brien said everybody was watching their cash, including inventory levels. "All those challenges a manufacturer has trying to support your good, loyal customers," he said. "I think we did a pretty good job supporting them, but it did take a hit on everybody. Some of the guys I've never seen down in the history of their companies were down this year, which was telling."

A lot of distributors that were hurting were those tied to one major industry, he added.

"Distributors who were more broad in their customer base seemed to be a little bit stronger. We are fortunate with the number of ways we make hoses, we had more business than we could have. We're still in that position in many areas."

One thing Flexaust has stressed throughout this year has been staying connected with its customers, be it through one-on-one meetings, or small group meetings the sales reps have either conducted or participated in, according to Flexaust Marketing Manager Susanna Vandenberg.

"Whether meeting to talk about our product or just talking about the industry, I think what has been important for us and our customers has been we've made ourselves available to have those conversations. And I think it has been reassuring for everybody."

For the most part, most businesses have remained closed to those outside the firm except in special circumstances.

"What was open was by appointment only and there had to be an urgency to the visit," Vandenberg said.

O'Brien said the sales staff during the past four months has done a pretty good job of dealing with the changing circumstances, mining new opportunities. "I think people look at Flexaust and they call us when they have a situation to solve a problem," he said. "Some are going gangbusters, but other industries are not. I don't think we're out of the woods yet the way it's shaping up."

Pandemic hits home
With about 280 workers at its four facilities—about 235 of those in Indiana—the manufacturer has had some positive tests come up among staff, but nothing that has led to a spread or facility closure.

"We have 280 people," Harvey said. "To us it wasn't if we were going to have an issue, it was basically when, and how are we going to contain it."

The Indiana campus had a bit of a cluster of cases, while the other facilities operate more in a bubble with the smaller footprints and fewer staff.

"It was a little strenuous there for a little bit because of doing the contact tracing," he said. "People were having to stay out until they got tested or quarantined.

"Then the kids went back to school and people are still out and about. We weren't immune to it, that's for sure," he said, noting that everything has been quiet the past month and everyone is on the road to recovery.

Harvey, in fact, was one who tested positive. He was out at the firm's site in Las Vegas, and figures he must have picked it up in the airport or on the airplane. His wife also tested positive, but both have recovered.

"What's crazy was how it affects different people," Harvey said. "My wife and I were fortunate. I never had a sore throat, fever or cough, but I had COVID. It was for a couple of days, and I was pretty wiped out. I slept a lot, had a bad headache and body aches.

"...We've been blessed and fortunate (at Flexaust) that we haven't had anything super serious.

In a strong position
Despite the pandemic and its continuing impact, Flexaust officials said they feel the firm is strategically in as good a place as they've ever been. The setup of the manufacturing footprint, with the main site in Indiana supplemented by the three satellite factories, puts production closer to customers, resulting in better service and lower freight costs.

And with business strong now and potentially even better when the crisis does pass, each of the four sites is ready to ramp up.

At the new factory in Burlington, production had just started at the end of February, heading into March, with the equipment all set up and starting to make hose, said Harvey, who re-located from Indiana and now is based in North Carolina.

"We have some ways to go on certain things there, and COVID kind of changed it a bit," he said. "We're cranking now about what we expected to do all year. We didn't get started until about May to getting much shipped out of there, but the last three to four months have been pretty solid, and it looks like it will continue to grow."

The move to the new facility in Las Vegas is about 90 percent complete, and by Thanksgiving all equipment should be at the new site. There will be two new production lines there, with a few new employees expected to be brought on.

Harvey said the new warehouse unit in Warsaw has allowed Flexaust to put up three more hose production lines in the area freed up at the adjacent factory, and two more manufacturing lines have been installed in Amesbury.

Of the 20 percent hit taken during the depths of the downturn, he said the firm has made up about half of that loss already, and likely can cut the deficit to a 5-percent drop by the end of the year.

"It would be a struggle from a capacity standpoint and when the orders are due to get it all the way back," Harvey said. "If we finish 2020 in this COVID year 5 percent off, that's a big win."