Hard times result in hard decisions for executives
Primera Plastics CEO relates story during ACG Western Michigan event.
It’s good to have a plan during tough times.
When the caller ID on Noel Cuellar’s cell phone read “Washington, D.C.,” he knew something was up.
Cuellar, the president and CEO of Zeeland-based Primera Plastics Inc., stepped out of a meeting to take the call. It was the day before Thanksgiving 2009. The country was in the middle of the Great Recession, and he suspected this wasn’t a social call.
The female voice on the other end of the line said she was from the White House and wanted to confirm she was speaking to Noel Cuellar. To do that, she asked him to tell her his Social Security number.
He wasn’t keen on that idea.
“Yeah, OK. Well, if you’re from the White House, you could just tell me my Social Security number, right? So, tell me my number and I’ll tell you if you’re right,” he told her. She didn’t want to do that and faxing the number wasn’t going to work for her either.
“Well, I guess we’re at a standstill here,” he told her.
“Right,” she answered. “I’ll see if I can still use you.” Then she hung up.
Cuellar made a call to U.S. Rep. Pete Hoekstra’s office and confirmed it was the White House calling. He immediately called back and discovered he was being screened for security clearance. His presence was requested at a job summit in Washington on Dec. 3.
During the breakfast portion of the event, Cuellar sat next to the president of Walt Disney, he said. Then came the session with President Obama. Cuellar received texts from his wife that he was live on C-SPAN and then chided him for waving at the camera.
After Obama spoke, Cuellar stood to ask a question.
“My question to him was, ‘You want us to create these jobs, yet the banks are risk-adverse, they’re tightening up their credit on business people, and we’re paying for our own raw materials. … How exactly do you have a plan for this to happen?’” Cuellar said.
“Fourteen minutes later, after (Obama) gave his little talk, it was regulations. They just couldn’t do that. When I came back to Holland and people asked me how it went, and I met with my executive team of managers, I said, ‘OK, here it is: We’re on our own.’”
Cuellar related his story earlier this month at the ACG Western Michigan breakfast program at Kent Country Club. Cuellar and Steve Berkenpas, Primera’s CFO, served as the main speakers for the presentation “Organizational ‘Self-Defense’ for Uncertain Times.”
Cuellar spoke of how his company survived the Great Recession — a time when the auto and housing industries crashed at the same time, creating the perfect storm and turning everyone’s balance sheets “upside down,” he said.
“Right before the recession, our sales were at $16 million and it started to slide to $13 million. … People weren’t facing reality. They really weren’t facing the world as it was coming before us. This was a global market affecting everybody,” he said.
“What they didn’t’ realize was that, growing up, I came from a migrant family. My parents worked the field. Hard work — we’re not afraid of it. We’ll take on adversity head-on and we’ll punch through.”
One of the first things Cuellar did was have his team put together a plan to reduce spending. He also decided to surround himself with “the right people.” A recruitment team had advised Cuellar not to hire Berkenpas, but Cuellar decided to go with his instinct. After all, “advice is just that — it’s advice,” he said.
“It’s my call. I’m the one who’s going to be holding the bag in the end, anyway, so that night I broke protocol and called him, and he was kind of surprised because he’d already received the news that he hadn’t made the cut,” Cuellar said.
Cueller asked Berkenpas on the phone: “Steve, I’ve got one question for you: Have you ever been through adversity?”
“To hell and back, man. Have you been to hell and back?”
Berkenpas had. The two men talked for over an hour, and by the time the conversation was over, Berkenpas had the job. The recruitment team wasn’t happy, but Cuellar’s response was, “Who pays you guys?”
Berkenpas came to Primera during its most trying period. The company was doing everything it could to keep track of receipts and pay off legacy debt.
“It was interesting; it was the worst of times. We had a very short window to sign up with a bank and, shortly after, we’re in special assets,” he said.
“You just get really creative. We have never taken our eye off the ball ever since. … It’s all about how much risk are you going to take. It’s about knowing the options and the risks.”
Eventually, Cuellar had to bite the bullet and lay off workers. Even with cutting expenses from $1.4 million to approximately $600,000, he had to lay people off for the first time in the history of the company.
“I laid off people two weeks before Christmas. Sixty percent of our staff we had to lay off. It was the hardest thing I would ever have to do,” he said. “That Christmas, we didn’t celebrate because 60 percent of the people who’d worked for us did not celebrate Christmas. We didn’t even have a Christmas tree.”
One of the most important choices Cuellar made during this time was to keep a journal. He held up a copy of the notes he’d taken during the Great Recession, calling it his “playbook.” It’s not necessarily a point-by-point guide on what to do, but it offers insights into how to grow, he said.
“This is what we did during the hard times. These are my thoughts, strategies, how they worked. Every event has a unique characteristic to it,” he said.
“When I mentor smaller businesses, I tell them to start a journal. Write this stuff down.”
Cuellar’s biggest fear coming out of the recession was that it wouldn’t be a gradual climb that would allow the company to regroup. “Cash is king,” he said.
In the end, Primera held its head above water because it remained flexible.
“You change because of two reasons: desperation or inspiration,” he said. “In desperate times come desperate measures.”