CMTC's Shifting Gears

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Episode 1 - A Whole New World: How Manufacturers are Navigating the Challenges of the Pandemic

Posted by Rachel Miller

 

Episode Show Notes

In this episode, Gregg sits down with three small and medium-sized California manufacturers who have had to pivot their businesses several times in significant ways to overcome the challenges presented by the COVID-19 pandemic. Susana, Meir, and Barbara talk about their experiences dealing with the health crisis as it evolved and how CMTC helped them through it. The group closes with some enlightening conversation about how their approach to planning for 2021 is different.

Almack Liners was started by Susana Almack in 1992. Located in the San Fernando Valley, the company produces liners for leading manufacturers as well as the government. By 2003, the company had outgrown its space and moved to the north end of the San Fernando Valley in its current Chatsworth location.

Stone Flowers Apparel, a women-owned and minority-owned fashion brand, designs and produces every piece of clothing in-house with the collaboration of a few knitting mills in Los Angeles. All garments, patterns, dyes and fabrics are made in the United States, while the sophisticated artwork and print designs come from European textile studios in Italy and Germany. Stone Flowers prides itself on their commitment to the environment, that’s why they've decided to create their brand as an alternative to “fast fashion” competitors. Stone Flowers' dye-process ensures sustainability by allowing them to produce a small number of production orders and giving them the flexibility to have a wide variety of beautiful colors and prints.

Optical Zonu Corporation (or “OZC”) is a privately-owned, Los Angeles-based designer and manufacturer of Fiber Optic Components for Analog Transmission, Digital Transmission, Business Class Services and Coarse Wavelength Division Multiplexing. OZC is the leading supplier of Full Duplex, Single Fiber, Single Wavelength Transceivers and RF over Fiber Optic Links. OZC maintains important strategic and global relationships in the Industry and cooperates with major vendors and suppliers of optical, communication and electronic devices, to enable rapid production of cutting-edge solutions.

Classic Cosmetics is a well-known leader in turnkey contract manufacturing of high-quality color cosmetics and skin care products. Classic Cosmetics services a wide variety of clients ranging from large global and domestic brands to “direct to consumer” and influencer labels. The family-owned company has been developing cutting-edge formulas that have led the way in this industry since 1988. From concept to launch, Classic Cosmetics partners with their clients to provide outstanding customer service at every turn. They are certified to ISO 22716:2007-2008 European standards. Classic Cosmetics is an audited and approved Global Supply Chain partner for many of the world’s largest beauty brands.

Highlights

00:00:00 – Introductions

00:03:47 — COVID-19’s effect on their industries

00:16:21 — The business issues and challenges exposed by the pandemic

00:22:44 — The competitive advantages revealed by the pandemic

00:30:35 — How business would change if the world went “back to normal” tomorrow

00:35:00 — Planning for 2021 amidst an uncertain pandemic and economy 

00:38:31 — Their experiences with the peer councils

Transcript

Gregg Profozich [00:00:02] In the world of manufacturing, change is the only constant. How are small and medium-sized manufacturers, SMMs, to keep up with new technologies, regulations, and other important shifts, let alone leverage them to become leaders in their industries? Shifting Gears, a podcast from CMTC, highlights leaders in the modern world of manufacturing, from SMMs, to consultants, to industry experts. Each quarter we go deep into topics pertinent to both operating a manufacturing firm and the industry as a whole. Join us to hear about manufacturing sectors' latest trends, groundbreaking technologies, and expert insights to help SMMs in California set themselves apart in this exciting modern world of innovation and change. 

I'm Gregg Profozich, Director of Advanced Manufacturing Technologies at CMTC. I'd like to welcome you. In this episode, I speak with three small and medium-sized California manufacturers who have had to pivot their business several times in significant ways in order to overcome the challenges presented by the COVID-19 pandemic. Susana Almack, President of Almack Liners, Incorporated, and CEO at Stone Flowers Apparel; Meir Bartur, Cofounder and CEO of Optical Zonu; Barbara Weg Glassman, Vice President of Administration and General Manager of Classic Cosmetics, Incorporated. Susana, Meir, and Barbara talk about their experiences dealing with the health crisis as it evolved and how CMTC helped them through it. The group closes the discussion with some enlightening conversation about how their approach to planning for 2021 is different. Welcome. The first question for each of you, to get the conversation started, is about you and your company. Can you give us a brief overview of who you are and what your company does? Meir, let's start with you.

Meir Bartur [00:01:43] Thank you, Gregg. Optical Zonu has existed for 17 years as an independent entity that designs and manufactures fiber optic communication equipment for customers like AT&T, SpaceX, Boeing, NASA, NSA, T-Mobile, and all the rest. So, we are really high tech in a very, very specific niche. We are doing all our manufacturing and design in Van Nuys. The majority of it's design, and a lot of it is in the fabrication. That's what we are.

Gregg Profozich [00:02:13] Thank you, Meir. Susana, would you like to go next?

Susana Almack [00:02:16] Sure. Almack Liners, Inc. We manufacture, and we are involved with federal contracts. We manufacture everything in the United States. My contracts are mainly with the physical fitness uniform for the Army, Air Force, Marine, Navy, and we supply to UNICOR/Federal Prison Industries and/or private sectors that they also have similar contracts. Stone Flowers Apparel is a woman's line that I own. So, we also manufacture in the United States, and it gives us the diversify of being into the private sector and government contracts. We do all cut and sew in-house. We are located in Chatsworth, California. And that's pretty much it.

Gregg Profozich [00:03:06] Thank you, Susana. Barbara?

Barbara Weg Glassman [00:03:06] No, thank you, Gregg for doing this. Classic Cosmetics is a contract manufacturer of cosmetics and personal care since 1988. We service both large global brands as well as direct to consumer and influencer brands. We offer full turnkey services, which includes packaging. We also have a variety of TPM, third party manufacturers, globally that we also offer as a service to our clients to bring in other items that we don't manufacture on-site. We have over 100,000 square feet at our facility. We have both liquid and powder compounding departments and labs. We also do all the assembly on-site.

Gregg Profozich [00:03:47] Thank you, Barbara. Three very diverse, very different industries, different spaces: cosmetics, apparel, and telecommunications fiber optics. So, we should have some varied perspectives today as we talk through things. So, let's get started. I'll throw it out to the group. How did the COVID-19 pandemic affect your industry?

Meir Bartur [00:04:05] The pandemic started hitting us in January because we have a supply chain that comes from China. And we could already track it down in China in some of the preparation to the national holiday. As you all know, it was at the end of January, and that's basically when it's all shut down. So, we were already trying to expedite and anticipating a problem on that. So, the supply chain for us of components and some of the hardware that is not manufactured in the US is coming for us as component was the initial issue. The major impact on us came when they may be conflicting or maybe coalescing. The stay-at-home order from the mayor and from the governor appeared in the same day with a lot of confusion. So, the first step we took on our own to declare ourselves essential business. And once we declare ourselves a special business, we acted like one. And we started getting letters from our customers demanding that we will be an essential business and demanding supply on time. So, that's become basically a self-fulfilling prophecy. But once we started operating, the issue was to train the people to get their wellness and to get consistent message and consistent information to the workforce, because the confusion around us what need to be done, how it needs to be done, what can be done, what cannot be done, can you test temperature for people or the nickel is waterproof? All those ambiguities will have a real impact. The third wave of confusion was when the government support start to flow in, and it was not clear exactly what do you want to get, how you want to get it, how are you going to get prepared for it, what do you need to do to get it, and how resilient are you not to let people go, because our customers within a month basically stopped ordering. The majority of the telecommunications segment that we serve, that we provide, is high-capacity arenas, sports, airport, convention centers, universities. All of those basically stopped operation, and a lot of places, even if they want to install, they didn't have access for installation. So, a lot of our orders dried up. So, we have to be more creative on our marketing, and use some new tools and trying to solicit other markets, and use some of our posts without reducing the workforce so that we can stay afloat. We have multiple challenges. I still think there is a tremendous lack of clarity with respect to procedures was really how to test people, when to test people, when to accept people. The CDC is very ambiguous in its requirement. They say, "We don't know what we think, and maybe it's like this, or maybe it's like that." So, we navigate that one way. We try to provide very clear message to an employee. But we have a daily executive meeting to deal with how we operate today during the pandemic.

Gregg Profozich [00:07:18] No shortage of challenges, Meir, it sounds like.

Meir Bartur [00:07:20] No shortage of challenges.

Gregg Profozich [00:07:22] And you got the one-two punch, right? You got the early low in demand and the early supply chain interruption in January before the US shut down in March.

Meir Bartur [00:07:29] Correct. And on top of it, the people that have placed orders, we start getting a lot of leads. We get, "Are you delivering on time? Are you delivering on time?" No. They wanted all the stuff they ordered already to be delivered. We stood up to the challenge. We manage to do it. We do have an employee in Asia that takes care of our supply chain in Asia, and that employee was quarantined, as well, for a significant amount of time. We had a lot of balls in the air. But no, we did basically on every step we have to take common sense and decide on our own, because there is no established way. I must say that CMTC was extremely helpful, both as a sounding board but also as a resource provider. So, for me, it was a very valuable angle, nothing but to show frustration but also getting an idea of what they were doing for me was very, very high marks, because it was really productive, and we’ll use it.

Gregg Profozich [00:08:30] Well, thank you, Meir, for those comments. We appreciate that. Barbara, I think you also experienced a bit of a one-two punch if I remember correctly. Do you want to talk about that? Do you want to go next?

Barbara Weg Glassman [00:08:38] You're correct, Gregg. We had a very similar experience at Classic Cosmetics as Meir did. We started seeing the end of December and January our clients' packaging not arriving from China. And basically, we were sitting here waiting. No explanations were really given on the interruption of the supply chain. Then I do, very much like everyone else, remember the announcement that evening from Governor Newsom. I immediately got on the phone with our insurance company, two different attorneys—a labor attorney, our general attorney—our owner, our president, trying to determine if we were going to be laying off 150 people the next day, what we were going to be doing. We were able to determine that we were going to get into the hand sanitizer business and also declare ourselves an essential business. And that's what we did. Although we weren't making hand sanitizer for wide distribution, we were making it for ourselves internally and our local neighbors in the area that needed some, also, to use internally. So, that was the first challenge—trying to determine if we were going to stay in business. A second challenge was from a staffing and production standpoint and also from our sales standpoint. Our clients, especially the global clients that are tied to retail distribution outlets, when all the retail stores were closed, all the malls were closed—all your Nordstroms, your Macys, your Bloomingdales, all those stores—immediately, they put all their orders that were in the pipeline on hold. They did try to cancel some orders. But conversely, all our direct to consumer, a smaller portion of our business, was some brands that are direct to consumer or influencer brands. And they did not have those retail distribution challenges. And as we've seen so far, online shopping, alcohol consumption, all these things have increased 500%. So, while that segment of the business was doing really well, we had to figure out a way to pivot our business to attract those types of clients more. And we did that. We lowered our minimums; we lowered our development fees for getting in the lab so that we could attract some more of those smaller to medium-sized clients. From a personnel standpoint, it was difficult. You had a lot of people with, as Meir also said, a lot of misinformation, changing day to day. And then just from a physical manufacturing standpoint, we have a pretty big space here. The offices are definitely far apart, but on the production line, how do we keep the assembly line six feet apart? We were fortunate, because the industry we're in, we already had about six months' supply of PPE we use on a daily basis. We follow FDA and CGMP standards for manufacturing. So, we have gloves, masks, and eye protection. But how do we keep people on the assembly line? How do we stay running with people six feet apart? It was a challenge, but we rose to the challenge. We had a meeting today, as a matter of fact, and we're going to continue. Each obstacle that comes up, we will try to meet it. There's no other option. Failure is not an option. 

Gregg Profozich [00:11:52] Absolutely not. A lot of pivoting and a lot of daily problems. It sounds like that scene in The Martian where he's talking at the end about you've got 1,000 problems. You have to solve the one in front of you now, and then you solve tomorrow's problem tomorrow.

Barbara Weg Glassman [00:12:04] Yeah. Here we call it whack-a-mole. You know that game?

Gregg Profozich [00:12:07] Absolutely.

Barbara Weg Glassman [00:12:09] It used to be a little game where something pops up and you gotta hit that one. Another one pops up. You gotta hit that one. And that's what we do.

Gregg Profozich [00:12:13] Well, thank you, Barbara. Susana, I think that you had a slightly different experience, not so much a one-two punch from China demand dropping down.

Susana Almack [00:12:21] Correct.

Gregg Profozich [00:12:21] But you've got a different set of challenges, if I understand correctly. Do you want to talk a little bit about how the COVID-19 pandemic has affected your industry? 

Susana Almack [00:12:28] Well, fortunately for us, because of the government federal contracts that we do, we were labeled under essential business from the get-go. So, I didn't have a problem of having to shut down. That said, not all my employees were a part of essential business. So, we have the Almack Liners portion of employees that they cater to the government contracts, and then we have the other portion of employees to Stone Flowers Apparel. So, we had to lay off the nonessential workers, the people that did not qualify under the government contract. So, that was hard. But we kept a fourth of the crew and tried to run the business with just a fourth of the people. And of course, on the Stone Flowers Apparel side, we had all of the orders ready to ship, and all of the stores they had to shut down. And here we have merchandise. Like, "What do we do now?" and boxes and boxes. Going back to the government sector and as being under essential business sounds great. However, most of the cut parts that we do here are shipped to federal prisons, and they were hit badly with COVID. Because the factories at the federal prisons they had to close immediately if one person had COVID. So, all my government orders were pushed... We didn't have much work. We are just starting and we are at the end of the year to see orders coming and fulfilling the orders that should have happened through the year. The private sector that caters to the government contracts, we don't see the merchandise here. It gets shipped directly from the mill in the south. So, my employees don't have anything to do with that. So, that was a challenge. What do we do? What do we do to bring the sewers back? I've been in business for 30 years. My employees, they've been with me, most of them, 30, 25 years, 20 years. So, laying them off, it was a very hard thing for us to do. So, we got involved with PPE equipment, face masks. Of course, you guys at CMTC have been a big, big help into doing contact, and liaison, and the laws, and what was happening, and PPP funding, and small business. And so, that was great to have you guys as part of the team. So, that let us bring the sewers back, and Stone Flowers Apparel started to do face masks, also, with the prints. So, it's very challenging. We are working a lot. We are stressed to the max. We just go, "Okay, you're not just a cutter now; you're going to do and help us with this," because what we found out is we can't get employees. So, although I might want to hire more people, we don't get qualified... We don't get anyone to call. And regarding my industry, in the apparel industry, I do have to say the Made in America movement, mainly in the south, but the companies that manufacture fabric for Hanes, mainly, they pivot all their production to start producing face masks and start producing gowns. And it was such a huge movement. I'm part of the SEAMS association. And like everyone how they started to help each other. We need fabric; we need masks; we need this; we need that, and how the Made in America movement moved to provide to the essential workers what they needed. It was outstanding.

Gregg Profozich [00:16:20] Absolutely. Thank you so much, Susana. I think that we've gotten a real good sense of the fact that all three of your industries were challenged in very unique and very unexpected ways. So, it leads me to my next question: what issues and challenges did the pandemic expose in your business that weren't previously as obvious but became obvious because of the way the pandemic unfolded? Barbara, do you want to start?

Barbara Weg Glassman [00:16:43] I can speak to... One of the main issues was succession planning departments, having backup for people who decided to stay at home, realizing that in some cases we only had one individual that held the key to the knowledge base in that particular department or area. So, we were able to do that. We were able to create a business continuity plan, which we really didn't have fleshed out, which is really important, not just for a pandemic but for any kind of industry to know how you're going to face some kind of major issue. I feel fortunate that we have a great safety committee here, who would be the HR leadership team. Pulled together all the new SOPs, how to deal with an infectious disease program, which we put together. And we had all that in place when last week we received notification from CMTC, which has been invaluable. Kathy has really been such a beautiful source for all of us manufacturers here to rely upon. And we are also enjoying the Made in America logo, and we are sharing that with our clients to use, as well. And that trend has also been really recognized, which I didn't realize was as strong with our global brands, but it is. So, it really helped us clean up a lot of our departments and cross our T's and dot our I's in a lot of areas that we didn't realize. You can have all the meetings you want about safety, and your departments, and training, but until you're actually faced with it, it's a completely different situation to see how you actually react.

Gregg Profozich [00:18:24] Absolutely. Working from home presents no shortage of challenges. And having a portion of your business working from home was not what it was previously. It is a big change for everybody. So, lots of things in that list, though, that you talk through that I think are very relevant and I think a lot of manufacturers are experiencing, also. Susana, do you want to go next?

Susana Almack [00:18:44] Sure.

Gregg Profozich [00:18:44] What issues and challenges did the pandemic expose in your business that weren't previously as obvious?

Susana Almack [00:18:49] The main challenge, and issue, and surprise was that COVID will affect the federal prisons' factories, and the workflow that we will get stopped in a way. You think, "Okay, you have these government contracts. You ship; you have orders; you have projections," but then all of that stopped. So, that was something like, "Oh, okay. Well, now what do we do?" So, we had all... It was something that I never thought about in 20 years that I have done government contract that it will hit to the end user, not the end user but the manufacturer in that sense. Other things that were mainly the boutiques having to reopen for Stone Flowers Apparel, all of that stuff. But mainly for us as well, we are planning X amount of garments a month, and for our government contracts that it wasn't happening. So, that's just trying to keep afloat with the cash flow with all the fabric that I had here. So, it was a challenge on its own. Production is going to come again fast and furious and play catch-up.

Gregg Profozich [00:20:01] Thank you, Susana. That's a very unexpected thing, right?

Susana Almack [00:20:05] Yes.

Gregg Profozich [00:20:05] The prison industry going to shut down as quickly as they did and such drastic radical movements.

Susana Almack [00:20:10] Yes.

Gregg Profozich [00:20:10] Meir, anything in your supply chain in your experiences that was the same?

Meir Bartur [00:20:13] We have not had to change much internally. We did put the Plexiglas separation that changed our workflow a little bit. But it was really minor tweaks. The biggest challenge was demand that is diminishing, that there's not much more that we can do about it, and keeping the employee informed and functional. The one thing that we have done that we have not done before—and it was a glaring miss, even though it's small miss—we did not have a phone tree, such that if we need to let people know the night before if the company is open tomorrow, because an employee received the positive, and now we have to freeze everything, and we need to do a contact tracing who was in contact on what days, and then what is the criteria for coming back. All of those... The phone tree per se was something that we had to invent in relatively quickly. The one thing that I found in the middle of the summer to be a challenge was to keep the employee alert. So, we established a large screen data terminal in the front that everyone had to witness how many people died in Van Nuys, and how many new cases we had lost yesterday in Van Nuys, trying to bring it home to the employees that they have to be careful not only at the factory but also at home. Because the main emphasis that we had was whatever we do here is irrelevant if you don't do the same at home, and we are not going to police you; we are going to trust you. And the same way that you want to trust us that we are doing the best for you, and we will keep the workforce. The other element that was new to me during the pandemic is that people are moving to Texas. We lost two employees that relocated to Texas. That had never happened before losing employees like that. But learning all of it does not help us much. And we cannot design for it; we cannot plan for it; we cannot do other things, just need to react for it. So, we have tried to stay resilient and use our phone tree as little as possible.

Gregg Profozich [00:22:29] I think that really is the key there, Meir. It's about pivoting. It's about resilience. It is, like Barbara was talking about, playing whack-a-mole. If something pops up today we didn't expect, we have to knock it back down, and then tomorrow it will be something else new.

Meir Bartur [00:22:42] Yeah.

Gregg Profozich [00:22:42] So, I would guess that inside of those gray clouds are silver linings sometimes, though. So, the next question for all three of you is: are there any competitive advantages that your business has that became clearer in light of the effects of the pandemic? Susana, let's start with you.

Susana Almack [00:22:58] We thought it was great, because we manufacture everything in United States. So, A, the government contracts and B, Stone Flowers Apparel. A lot of these small boutiques or large stores, they are counting from overseas deliveries that in a way stopped coming, and they were very delayed. So, once the stores opened, we couldn't keep merchandise on the shelf. We were shipping like crazy, because they needed stuff, and they needed it quickly. And so, for us it was a good thing that happened. And keeping it in the United States shows that doing it here is better. That's from my point but... 

Gregg Profozich [00:23:43] Hear, hear.

Susana Almack [00:23:43] Yeah. Yes, yes. So, that was for us a huge advantage. We didn't have to rely on anything overseas, and we had everything here, and we are able to produce better than a lot of our competition.

Gregg Profozich [00:24:00] Okay. Thank you, Susana. Meir, how about if you go next? Any competitive advantages your business had that became clear?

Meir Bartur [00:24:06] We know nothing became clear. If anything, stuff got much milkier. If we can say that when the going gets tough, the tough gets going, we got tougher. So, maybe we get some resilience training out of it and a quick recruitment training in some of the position that we have had. We did have some sales coming out of the fact that we manufacture in Southern California, and people can write to us or get it locally.

Gregg Profozich [00:24:40] Thank you, Meir. Barbara, any competitive advantages your business had that became more clear, more obvious?

Barbara Weg Glassman [00:24:46] Yeah, that we have an amazing leadership team here. Cooperative. We were able to pivot. Quite frankly, our competitors, other contract manufacturers in this particular industry, closed down for three weeks to a month. The fact that we were able to the very next day declare ourselves an essential business and be part of that supply chain was vital. We received many new clients because of that. They couldn't get hold of their current contract manufacturers. So, we did... That was a competitive advantage. And also the fact that no one client owns us. So, we are not totally reliant on our global brands. They're a large part of our business. Their decline of 60, 70% in sales hurt us, yes. But we had other clients that we can rely upon, our bread-and-butter clients, that were going to be able to support us and help us with the cash flow in addition to the PPP. And also that, as well. Our financial team, being able to pull together all the paperwork, being first in line with our bank to be able to get that loan, which was key to keeping us operating. Well, I was really impressed with our team. We definitely have some great advantages here.

Gregg Profozich [00:26:00] Thank you, Barbara. Sounds like some impressive work was done in a very short period of time.

Barbara Weg Glassman [00:26:04] It was.

Gregg Profozich [00:26:06] So, I think we've touched on this, but I'll ask the question anyway to be a little more specific: what were the most important adjustments your business made in order to adapt to the pandemic reality? We've talked about a lot of them. What were the one or two most important? Barbara, why don't you go first?

Barbara Weg Glassman [00:26:19] Yeah. Well, from our perspective we've definitely stepped up our safety, communication, our employee communication. We're touching everybody. Every department, every day, managers are actively involved in checking in with them. And, like Meir said earlier, the key for us is making sure you are not going to get COVID here. You're going to come to work, and you're going to be safe. But if you bring it here from the outside, you could shut a company down or shut a department down. And we've become very communal now, because we have our bubble. And we all have to trust each other, and trust that we're going to work together, and be as diligent on the outside as we are inside. And, like Meir also said, it's fatiguing. It's absolutely fatiguing, and you have to... Every day we are communicating with them, "It's going to be okay. By June of next year, we're going to be on our road to some positive changes." But every single day, you have to remember... It's like every day is the first day.

Gregg Profozich [00:27:24] Thank you, Barbara. Susana, do you want to go next?

Susana Almack [00:27:27] We don't have the amount of employees that Barbara has or Meir has. So, it was easier for us to say, "Okay, we are keeping our distance, and be safe at home." For us the biggest adjustment, like I said before, was to work with less people. So, to work with a quarter of the crew, half of the crew. And then when the time came to hire new people to say, "Well, we are bringing outsiders. Do we want them?" It's like we have our own little bubble here. So, it was a stepping to the plate, where each of us was doing more than what we usually do. Whatever it takes to make the company go forward, we will do it. So, that was mainly the adjustment, and so proud of everyone here that they stepped to the plate to do it.

Gregg Profozich [00:28:19] Thank you, Susana. Sounds like a very different set of challenges based on size, but the same set of things you have to do based on the reality of the pandemic. Meir?

Meir Bartur [00:28:29] I think we have made some fundamental changes that had to do initially with the fact that we were lucky to conduct a lot of Zoom meetings already before the pandemic, internally in the company. So, we had meetings, because we have people in the east coast, as well, and we were doing Zoom calls or RingCentral calls all the time, but we were not participating the same with customers. What has happened is that because the travel stopped, international trade shows stopped, and when international tradeshow stops, we cannot market with our exports, and we cannot do much with that. So, we have relatively early voted towards my model of distributor's representative in different locations. It was following a CMTC call on export and using some of the support from trade.gov, the experts there, we identified distributors in Singapore, in Italy, in Australia. We improved the relationship, because we honed in on participating in future trade shows such that we can actually at a lower cost participate and get awareness of people abroad. And I think that those changes will stay. The big conferences, when you have a lot of people that you don't know and a lot of expenses, we can do it now with significant cost savings. And we have invested heavily on that. I cannot say it's paid off yet. We're still in quotation, and we're still in different product, but we do have a stream of leads that are coming away from that, which is a positive change in a way, because it changed the modality of doing business. We might have to fly less and to connect more.

Gregg Profozich [00:30:35] It's a very interesting observation. I'm curious as to how much the world of telecommuting, and Zoom, and virtual meetings has impacted us and how much of it's going to remain after the pandemic. If we had a vaccine tomorrow and everybody could come out of their caves, if you will, how's it going to change? Do you think your business will change much, Meir?

Meir Bartur [00:30:54] I think it's going to change. We were on that trajectory already, as I mentioned before. We were using this type of electronic meetings before the pandemic, simply because of the ability to screenshare. And the ability to work on documents jointly it's much more effective. So, to move it towards the customer domain, meaning to move it in such a way that we can interact with customers, and we can support customers, and we can do things remotely will be much more prevalent, and I believe the trend will continue. I think that the tools are now widely available to everyone. So, if previously people were more concerned about participating on our platform, in a conference call right now they will be less so. And we hope that using those tools will reach more people, and that will have more impact in our sales and marketing department.

Gregg Profozich [00:31:47] So, technology can have some benefits. And the fact that we're all using those technologies and proving them is something that... Were we ever going to find new ways to exploit now for competitive advantage, sounds like. Barbara, what are your thoughts on this topic?

Barbara Weg Glassman [00:32:00] Yeah. So, I think we're going to have a mix. So, on the client side, we're definitely going to hop on a plane as soon as we can go and visit our clients. Cosmetics is a very tactile kind of experience and so, we have to be in front of our clients. Doing it through Zoom and through the cameras is okay, but it is a bit different. But on the supplier side, I've participated in many supplier trade shows, virtual trade shows, and I am loving it. Able to connect internationally on video chat with the client, I don't have to put up a booth; I don't have to go and travel; I don't have to stay in a hotel for the weekend to meet all potential suppliers. It was really convenient. And then on the intranet side for our team, we installed Microsoft Teams. So, we try not to go from office to office or bog down our emails, because we all get so many emails. I can quickly log on to Teams. We will continue to use that technology, and we'll continue to use Zoom for our suppliers. I really like that kind of meeting. But as soon as we're able, we're going to have to go see our clients. There's no way around it.

Gregg Profozich [00:33:03] Understood. So, varying impacts, exploiting it where we can use it for cost savings, and the same benefit of shaking hands is never going to go away.

Barbara Weg Glassman [00:33:12] I don't think so.

Gregg Profozich [00:33:12] Susana, how about your sense of this virtual world, this virtual environment, doing things remotely? How's it going to impact the apparel industry and your company?

Susana Almack [00:33:21] It's not feasible. We have to be hands-on. First of all, my employees cannot work remotely. Some of them, if he's going to be just entering orders and all of that, yes, but we are manufacturing. Same thing in the textile industry. The trade shows, yeah, but we have conferences. Every November we have an Army conference in New Jersey. DLA puts a big conference, like 1,000 people. They had to be a Zoom this time. You can join, and they told us what's coming, and all of that. It's not the same.

Gregg Profozich [00:33:57] Right.

Susana Almack [00:33:57] You need to meet the people. You need to... It's totally different. And there are trade conferences that we do via the association of SEAMS and speakers. In my industry, you can't. I know that my sales rep, for example, yeah, you can have virtual showrooms that you're showing the garments and working with the clients. What we did for Stone Flowers, for example, we will send samples to the boutiques, a box of samples with a whole binder of their line sheets and samples of fabric. And then when they will get it, our sales rep, Valerie, will work with them. You can do it to a point, but they need to come and see the whole collection. So, we were able to fulfill orders that way. And more clients who are in Alaska, for example, that they couldn't travel at that time. But we have to be one-on-one.

Gregg Profozich [00:35:00] Yeah, and a lot of manufacturers experienced that same dynamic. We have a varied group here, and I just wanted to make sure we got all the different perspectives and understand all the different angles on it for our listeners. I think I have one last question for the group, and it's a multipart question: how are you looking at planning in 2021, given some of the uncertainty of the pandemic in the economy in general? Is it a business-as-usual approach, more conservative and risk averse, fewer capital investments, actively looking for cost efficiencies? What are those things, and how are you planning for that for 2021? Meir, why not go first?

Meir Bartur [00:35:32] It's the first year by which I don't trust focus. So, I did not even ask my people to give me focus, because I've seen what happened to last year’s focus, and I don't think that next year with neither the recovery, not going forward will be really productive. So, basically, what we do, we hunker down; we reduce expenditures. We are very, very careful in what we spend in R&D. We are trying to use the time to cost reduction in the places that we can. And basically, our plan is to monitor the progress on a quarterly basis, and be ready for both, to be ready for success, because we believe that it's going to recover. But by the same token, if it does not materialize, we'll have to take some drastic step to maybe reduce the workforce to take the necessary cautions to ensure the long-term stability. So, we're really going into it almost informal, planning to improvise as we go, because we don't have any fundamentals to rely upon.

Gregg Profozich [00:36:44] I think planning to improvise is a great way to say it for the way you're describing that.

Gregg Profozich [00:36:48] Yeah.

Barbara Weg Glassman [00:36:48] Very, very similar response. So, we are hunkering down. We're trying to be optimistic, but we're cautiously optimistic. Forecasting, that doesn't exist anymore. We used to be able to roll up an 18-month forecast for our suppliers with our clients. That doesn't exist anymore. But through Q1 and Q2 of next year, we're going to be conserving cash, reducing expenses, holding on to whatever we have, and we're creating our wish list. As soon as we can let things loose, we are going to let things loose and buy equipment, and give raises, and bring back staff, or whatever it is. But right now we are in saving mode.

Gregg Profozich [00:37:29] Thank you, Barbara. So, continue to uncertainty and more planning to improvise.

Barbara Weg Glassman [00:37:34] Yes.

Gregg Profozich [00:37:35] It sounds like it. Susana, anything different in the apparel world?

Susana Almack [00:37:37] We are just taking one step at a time, being very cautious on inventory. It might cost us business, because I might not have a print or a fabric ready for Stone Flowers Apparel. But we can roll the dice and said, "Oh yeah, let's just get X amount of yards of these prints and that print, because we don't know what's going to happen." So, we are just one week at a time, one month at a time. What's going to happen in January we don't know. Just minimizing. Offering less prints, offering less colors. Just make our life easier.

Gregg Profozich [00:38:12] Understood. So, no shortage of challenges.

Susana Almack [00:38:15] Yeah, and the most important thing for myself, and my employees, and the people around me is your health. So, when you put that in perspective, it's okay. You have to take care of what's the priorities, and then worry about what's around it.

Gregg Profozich [00:38:31] I do have one more question that popped up into my mind. Each of you participated in some peer councils and some other things that have been facilitated by CMTC. What was your experience with the peer councils? Are they helpful in getting through, and seeing other executives' perspectives, and how they were pivoting, and the challenges they had? Let's talk a little bit about that.

Barbara Weg Glassman [00:38:48] Yeah. I knew we were not alone in this. You don't operate in a vacuum. But nonetheless, it helps hearing that other people are going through what we're doing. And we don't have a phone tree. So, I'm going to create a phone tree now, just out of this conversation, because we rely so heavily on email and technology. I do have our leadership teams' numbers all in my phone, but I don't have supervisors or line leads, folks like that. And really, I was planning on coming here the next day after the closure, and standing at the door at 5 AM, and telling people, "Come in. It's okay. We have a plan. Let's talk," but I learned something. So, it's really important to participate in these peer groups.

Gregg Profozich [00:39:35] Thank you, Barbara. Meir, Susana, any thoughts?

Meir Bartur [00:39:38] Yeah. It was useful to have in the time just to see what people are doing, because the biggest sense in the beginning of the pandemic is that we are missing something, or we don't know something, or maybe we are all over the place. So, by trying to basically say, "Okay, we give CMTC to come up with a benchmark that this, how we are going to react," we don't have to look elsewhere. Basically, it was a bench line. I'm very happy that over the years CMTC have played a role in our company, I think it's the consistency, and able someone like Kathleen to know us such as she does need to know who we are doing, what we are doing, what are the type of the issues that we are handling, what are the challenges, and such that the communication can be very fast and very efficient. So, there is something in an ongoing peer group. So, in ongoing maintaining of a relationship, because you don't have to reinvent yourself or to reinvent the presentation of what the company is about and what do you expect to get from other people.

Susana Almack [00:40:39] One of the things that I have to say. In all of the groups that I have participated through CMTC and other groups talking about the pandemic and what's going on, one thing that I want to reflect on. That because a lot of the people were working out of home, and dealing with the kids, and the Zoom classes, and the spouses there, if you ask them how their life was or is, they're all, "We're having such an amazing experience working from home and a family life." So, I think that all of this gave us a different perspective. I see it in all the different peer groups that I participated for being more united in what's important, that it's family. And how people took the time to say, "You know what? I'm going to make the best of this, and I'm going to make the best of the pandemic." And being at home with the kids, and doing the Zoom classes, and being there and being present is priceless.

Gregg Profozich [00:41:47] I couldn't agree more. There are ways to make lemonade out of lemons, right?

Susana Almack [00:41:51] Yes, totally.

Gregg Profozich [00:41:52] A lot of us have found ways to do that. And even though it is an unprecedented time of disruption and significant change, there also are some very positive things that can come from it.

Susana Almack [00:42:04] Yes, yes.

Gregg Profozich [00:42:04] Susana, Meir, Barbara, thank you for joining me today and for sharing your insights and experiences both with me and our listeners. And to our listeners, thank you for joining us with this conversation with Susana Almack, Meir Bartur, and Barbara Weg Glassman, on the National Institutes of Standards and Technology National Emergency Assistance Program. Thank you. Stay safe and healthy. Thank you for listening to Shifting Gears — a podcast from CMTC. If you enjoyed this episode, please share it with others and post it on your social media platforms. You can subscribe to our podcast on Apple Podcast, Spotify, or your preferred podcast directory. For more information on our topic, please visit www.cmtc.com/shiftinggears. CMTC is a private nonprofit organization that provides technical assistance, workforce development, and consulting services to small- and medium-sized manufacturers throughout the state of California. CMTC's mission is to serve as a trusted advisor, providing solutions that increase the productivity and competitiveness of California's manufacturers. CMTC operates under a cooperative agreement for the state of California with the Hollings Manufacturing Extension Partnership Program (MEP) at the National Institutes of Standards and Technology within the Department of Commerce. For more information about CMTC please visit www.cmtc.com. For more information about the MEP National Network, or to find your local MEP center visit www.nist.gov/mep.

Topics: Supply Chain, Sales and Marketing, Business Management, Innovation & Growth

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