Baytech Plastics

A.        The Company 

Baytech engineers, manufactures, finishes and assembles high-quality, custom-molded plastic components for domestic and international markets. Located in Midland, Ontario, Baytech operates in the midst of the largest plastic producing area of North America.

Baytech’s customers include manufacturers of household appliances, telecommunications equipment, electrical and electronic equipment, business machines and automotive components, and many others. Baytech ships throughout North America and the world.

Baytech Plastics has experienced considerable success since it was founded in 1953, and has responded well to changing market conditions. About four years ago, Baytech went through a major crisis when it lost about 30% of their business due to a customer bankruptcy. In the last several years however, sales have doubled, and they have completely recovered from the loss.

Strategic Employment Profile
 

Baytech employs 260 people and manufactures from two facilities in Midland, Ontario. Baytech’s hourly employees are unionized with the Union of Needletrades, Industrial and Textile Employees (UNITE).

Baytech's industry research shows that for buyers of custom molded plastics, engineering support is third in importance after quality and delivery. For this reason, Baytech employs a high ratio of engineering support staff relative to its competition. In fact, Baytech’s emphasis on skills means employee retention and knowledge transfer are key elements in their business strategy of pursuing higher value-add niche markets.

On the salary side, Baytech’s sales group consists of technical-sales people, such as mechanical engineering technologists from college. Their engineering group consists of process, tool and program technologists. General office staff, human resources, and supervisory staff complete the salary group. The hourly group consists of moulders and technicians, set up people, the quality group, maintenance and tool room technicians. Taking advantage of seasonal contract opportunities, Baytech has also, for the past two years, added 50 employees who work between July and December.

Retaining employees and managing skills is critical to Baytech’s developing business model. In the last few years, Baytech has migrated to more assemblies and high levels of value add. In some cases, products are assembled to 90% completion, as customers find this service extremely cost effective. This move to value-add niche markets differentiate Baytech from other moulders, and has a positive impact on margins. It also improves customer retention; since higher value add work is more difficult to transfer to international producers, particularly those in lower wages countries such as China. Baytech understands this first hand, as a current customer in the appliance industry has made the strategic decision to produce out of China, and Baytech will lose this contract as of the end of this year.

Baytech believes that the move to higher valued added markets reduces the likelihood of that happening. Considering trends in international trade and competition,

Baytech’s strategic move was perhaps less an option than it was essential. Baytech provides customers with more skills, the ability to meet unpredictable supply requirements, flexibility, high quality products and services, things it believes customers will be less likely to find elsewhere.

It is for this reason that Baytech pays close attention to the kinds of skills it needs within its organization, and the kind of business and human resource practices that help it to effectively manage skill requirements, including practices aimed at employee retention and knowledge transfer. For Baytech owner/president Anton Mudde, the rationale for their particular approach is obvious.

It just makes sense. I don’t think we could live with turnover. If you have high turnover, you can’t have consistency of product quality and customer service. And in this day and age, that’s a must. Part of our success has been picking up programs where people/companies haven’t done that. They haven’t been successful in maintaining customer service, delivery and quality.

Turnover not an issue

Baytech’s turnover runs at a rate of around 1.2 to 1.3 percent, and is not a problem for the company. Management attributes this turnover performance to a number of factors, including the nature of their work environment, their location within a smaller community, and their corporate philosophy of treating employees well. The company has no need of a formally defined retention policy or program, but has in place a number of practices that keep employee retention high.

B.        Programs and Initiatives Affecting Employee Retention

Compensating Success

Baytech’s HR group monitors compensation levels in the area, and in the plastics sector specifically through CPIA surveys, to benchmark and offer competitive and better than average wages. The company also has a pension plan, health and dental benefits.

Baytech has also introduced an innovative type of pay-for-performance bonus system it calls “rewards for success”. The development of this reward system is something that was developed internally and has evolved over the past few years. Working with the union, Baytech began by identifying the measurables of success, the things were important to the firm and the employees. A set of 10 measures of success include such things as quality, delivery, profitability, loss time accidents, and absenteeism. They then set targets for these, and added rewards for meeting the targets. Today, Baytech employees can make somewhere around $1,000 bonus meeting these targets. Baytech recognizes success in other ways as well, through annual awards banquet with long service awards, perfect attendance awards, and so on.

Training, Development and Career Planning

According to Baytech, low turnover gives them the opportunity and confidence to invest more in training. In fact, they will generally pay for any training related to the business. In the case of longer term programs, Baytech pays for training on the understanding that that the employee will finish and pass the requirements for that particular program. Currently, Baytech invests, on average, about $1,000 per employee per year. Baytech also has its own internal technical training program, comprising three different levels of expertise. The company also benefits from their membership in the Excellence in Manufacturing Consortium (EMC) ― an Ontario based association of manufacturers and exporters whose mission is to have members sharing to optimize learning, expertise and resources to achieve world class. Baytech uses its EMC affiliation to look at all the issues they have in common with other manufacturers, share information, and to leverage training dollars.

Baytech doesn’t do as much individual level career communication and planning as they would like to, but management does discuss career and training options with individual employees on a target basis. As a result of a systematic job task analysis carried out as part of the equity plan, employees are knowledgeable about the requirements for advancement.  

Healthy Workplace

Baytech tries to be “reasonably flexible” on scheduling; employees can switch shifts or volunteer for a particular shift. On the fitness side, the company sponsors people for the YMCA fitness programs. They have a fitness group, and Baytech pays for their membership. Employees like the program. It has helped many simply feel better.

Baytech would like to improve it Health and Safety record.  According to CEO Mudde:

Our Health and Safety record is not as good as it should be. We have 2 to 3 loss-time accidents per year (issues of strain). We’re currently working on some good programs with EMC. Our performance target is no loss time accidents.

Knowledge Transfer Through Job Rotations, Cross-training and Job Pairing

Baytech uses job rotations to keep employees interested and challenged in their work. In their cellular manufacturing assembly operation, they rotate jobs within the cell, every two or four hours depending on when the employee groups themselves decide. This employee-directed work practice, in which employees plan and execute tasks under their own direction, facilitates the distribution and exchange of knowledge and skill throughout the plant. Workers are cross-trained in different jobs and skills.  New employees participate in job-pairing and mentoring through their orientation phase.

Communications, Transparency and Participation

Baytech openly communicates with employees. They want employees to understand their performance as much as they do. Although a private company, Baytech wants all employees to know what their sales and profitability figures are.  Indeed, net earnings per employee is one of Baytech’s 10 measures of success ― employees can look at what their own personal earnings look like in comparison to what the company takes home per employee.

Baytech’s CFO provides almost real-time reporting of monthly results ― the first day of the next month. This rapid reporting of monthly results is shared throughout the company, so that every employee knows every month exactly what Baytech’s sales and earnings are. According to Mudde, “It’s one of the things that keep people interested”.

Other on-going communications activities include quarterly reviews with all employees, monthly results statements posted on 10 performance measures, and monthly union-management committees.

At Baytech, communication, transparency and participation go hand in hand.  A good example is their use of KAIZEN events. These events involve a process for looking at a project or problem, and resolving it in a short period of time. One recent Kaizen event focused on re-organizing Baytech’s warehouse. A group of eight employees, from various disciplines in the organization, on both the salary and hourly side, worked intensely for four and a half days to come up with a plan for logistical improvement of the warehouse. As a result, Baytech’s warehouse was re-laid out and organized.

Corporate values

Baytech’s commitment to communications is at the centre of its approach to employee retention. For Anton Mudde, there are three words that sum up that approach: “fairness, communication and recognition”.  Baytech may not have a formalized employee retention strategy, but its human resource practices are always guided by these principles.

C.     An Employee / Union Perspective

To gain the perspective of Baytech employees on the issues of retention and knowledge transfer, an interview was held with Janice Ryan, an hourly shift working employee and press operator at Baytech. Ryan also provides workshop training to other Baytech employees in the areas of Total Quality Management and Workplace Hazardous Materials Information System (WHMIS). Having been with the company for 16 years, she has served on numerous committees, and has held various positions in the union local (Union of Needletrades, Industrial and Textile Employees), including Vice-Present, Secretary-Treasurer, and Union Steward.

In describing Baytech’s turnover, Ryan acknowledges that few employees leave Baytech because they’re dissatisfied with the workplace. In her view, Baytech employees are treated well, and she attributes Baytech’s low turnover and high employee commitment to several factors:

• Good wages and benefits. A “very important” factor.

• Good communications. Believes that employees are listened to and are encouraged to contribute ideas, concerns, or solutions to problems. Good communications are critical to tap into the knowledge of employees, which brings value to the workplace. Kaizen event are good examples of communication and participation at work.

• Good union-management relations, characterized by open communications, trust, and employee involvement through committees. Ryan admits that “we do have our problems once in awhile” but considers this “normal”, and overall sees the union playing an important and constructive role;

• Feedback from the company. Information about company’s performance and measurables are regularly posted, allowing employees “to know what’s happening, know where we’re improving and where we need to improve”;

• Good work environment and safe workplace;

• Job satisfaction. Believes Baytech employees are proud of their work and what they do, and strive to make it better;

• Training opportunities: From this employee’s perspective, the provision of training and learning opportunities at work are an essential part of good employee retention practices. It is something that can make employees feel valued, allowing them to use their skills and knowledge at work, whether directly in their jobs or through work on committees or as team members on the floor. “You don’t feel like a number, you have value, and that’s important”. Ryan’s own experience provides an example of Baytech’s commitment to training and education. With the support of Baytech, she completed her high school diploma and went on to take several courses in college. “Baytech supported me all the way, and they have done this for other employees as well”.

From her experience running workshops on Total Quality Management, Ryan knows things are changing rapidly in Baytech’s market, and that it’s necessary to keep up with change to successfully compete in the market place. For this reason, she feels that listening to the ideas of employees is a very important part of being innovative, producing top quality products, and contributing to Baytech’s success. At the same time, by communicating and listening to employees, Baytech is also keeping people interested in their work and committed to the company.