"Inteplast Group: Turning Plastic Into Gold" from American Executive

D E C E M B E R
Living and breathing service
is only part of the story for
Gerald Leary and his team at
Fed Ex’s international and
global trade services group.
Inteplast Group:
Turning Plastic into Gold
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Inteplast Group
This plastic manufacturer achieved a leadership role in the industry
by focusing on quality and social responsibility, said Dr. John Young.
Turning Plastic
Into Gold
American Executive December 2008
corporate spotlight
ometimes the easiest way to make a buck isn’t the
right way to establish a legacy. For Dr. John Young,
president and one of the founders of the Inteplast
Group, financial success isn’t worthwhile if it doesn’t come
hand-in-hand with excellence.
S
“We’ve built a large, loyal client base by focusing on economy
of scale and quality,” he said.
Something for everyone
Inteplast is a global one-stop-shop plastics manufacturer that got
its start in Lolita, Texas. It has since reached out to other locations in the US, Canada, and Asia. When the company was
founded in 1990, many companies, including those in the
plastics industry, began heading completely outside of the US.
But Young felt that Inteplast could marshal its resources,
integrate operations, and invest in the latest automation and
technologies to thrive while still maintaining a firm presence
in the US. It is today among the few plastic companies still
in the US that doesn’t rely on imports and hires an almost
100% American labor force.
The company is split into three divisions: AmTopp, Integrated Bagging Systems, and World-Pak. Inteplast makes mostly
institutional or industrial products that are either finished
or intermediate. Its products include bi-axially oriented and
cross-laminated films, stretch
wraps, plastic bags used by retailers, trashcan liners, fluted plastic
sheets, PVC sheets, and expanded
boards. Most of Inteplast’s clients
are processing or converting companies that use its products as raw
materials.
For the company’s US-based concept to work, Inteplast focused
on products it could generate in
large-scale quantities. It was initially dealing with a largely inexperienced labor force, so the company
built its foundation making lowend products. For example, the
company’s bi-axially oriented film
is used for packaging on products
like bags of chips and tape. At
first, the company concentrated
on making mainly tape films,
which were standardized and
easier to make. This allowed the
labor force to begin producing high-quality, low-end products
and grow into producing higher-end products.
“It was a clear cut strategy. We moved in steps, training our
personnel to make products each step up,” Young said. “We
have stringent quality standards, and this tiered step-by-step
progression helped our managers work with staff to learn to
crawl before we walked.”
This helped Inteplast create long-term customer relationships
and garner a solid reputation by being seen as a quality producer from the beginning. Customer service was also a focal point,
as the company invested in ensuring paperwork was automated
so inventory and on-time delivery could be monitored.
At the beginning, growth was solely internal because of the
capitally intensive and technologically sensitive nature of the
needed infrastructure investments. The company felt it could
create a better product this way by not cutting corners and
acquiring underperforming companies. By looking for the
widest and fastest lines and the latest gauge controls, it established production capacity and quality benchmarks.
As growth continued and the company entered foreign markets, it became more important to enter regional relationships.
A multi-regional presence was easier to establish through acquisition, so it acquired 12 plants in various locations in addition
to its existing nine world-scale plants in Lolita.
“That acquisition strategy complemented our earlier organic
strategy, allowing us to increase our customized presence
across the country and beyond,” said Young.
Inteplast also established a long-term relationship with
Formosa Plastics, one of its largest suppliers of resin. The
companies are both physically close to each other, and
Inteplast gets large volume discounts on supplies. The
company also buys resin from Dow and ExxonMobil, but
Young believes success stems from internal quality standards.
Inteplast took a methodical, Six Sigma-esque manufacturing
December 2008 www.americanexecutive.com
Inteplast Group
approach before the term was even coined by ensuring each step in its operation, not just manufacturing, was completely defined, transparent, measured,
and followed. This ensures that Inteplast never deviates from its standards.
Leading the way
Inteplast takes a proactive approach to socially
responsible behavior. According to Young, every
Inteplast product was initially designed to have a
positive impact on the environment. Young cited
Inteplast’s PVC sheets or boards known as TUF
Board, now sold through Home Depot and other
outlets, as maintenance-free wood replacements.
Other products like film and bags were meant to
replace paper and other thicker plastic substrates
and are designed to cut down waste and conserve
natural resources.
Young also feels Inteplast can respect the environment and be financially successful by undertaking
parallel initiatives that can be wins for both the earth
and the company. One major project Inteplast is
pushing is the development of geopolymers, taking
material from soil and putting it through similar
polymerization processes as resin to derive geopolymers for the fabrication of buildings.
The cement industry is one of the worst carbon
dioxide emitters, accounting for 5% to 10% of
CO2 in the atmosphere because of the calcination
process of limestone. By doing a simple reaction using a cold
ceramic process with geopolymers, the industry can yield a
stronger and affordable material used for building homes and
cut emissions.
Inteplast is involved in building low-income homes in Central America and creating villages. It is now involved in the
construction of the City of Light in Guatemala, as well as the
now-completed Village of Hope. These projects are transforming lives for the buyers who are acquiring not just an
asset but a tool that allows them to see a better life. Inteplast
is also working on ways to convert garbage and biomass into
diesel. With another initiative using geopolymers, material
can be used to make tiles and create porous concrete for
water to seep through.
“Being green isn’t mutually exclusive to economic activity,”
said Young. “We can fund a lot of these initiatives by developing viable products that can be self-sustaining.”
American Executive December 2008
With its leadership position in the industry established, the
company is doing everything it can to treat clients fairly and
anticipate their needs before they come looking for catastrophic solutions. It is still positioning itself as a truly global
firm as it hasn’t moved into Europe yet, where Young says
there is a fragmented plastics market.
But the company’s legacy stems from its commitment to
quality. Rather than take shortcuts on products like trashcan
liners, which has historically been normal industry practice,
Inteplast makes an effort to publish its specifications to change
the mindset of the industry. Today, many manufacturers are
following Inteplast’s lead.
“You have to commit to your own principles internally. If you
do that, others who work for and around you will believe it as
well,” said Young. “Those new values will grow throughout
the industry, and you can change minds in the process.” E
—Eric Slack`