Weathering the Economic Storm:
Companies rise to challenge through diversified portfolios, adapting to meet demand

October 8, 2020 – This article was featured in the October 2020 Edition of Specialty Insights

With an unprecedented economic shutdown during the first half of 2020, many companies scrambled to adjust their business models and product lines to survive. Businesses best weathering the storm are those with diversified portfolios and connections in key locations across the globe, or those currently making or capitalizing on products vital to fighting the pandemic. Polysciences, Inc. and AVATAR shared their approach for overcoming business challenges and leveraging the opportunities that have unfolded throughout the year.

Global presence and product line a safety net for Polysciences

The demand for COVID test kits, supplies for clean rooms and injectables, among a myriad of other specialty products, coupled with global locations, has been a lifeline in 2020 for Polysciences.

“Our diversified products and offerings have served us well and helped our company survive and prosper dramatically during this time,” said Mike Ott, President & CEO of Polysciences, Inc., a manufacturer of specialty and fine
chemicals and laboratory products in Warrington, PA. “It has truly been a safety net for our company through this crisis.”

Supply chain disruptions due to the global crisis have also reignited a call to return manufacturing to the U.S., but Ott said having facilities in Germany and Taiwan has been instrumental to Polysciences’ success.

While accelerating the inclusion of those sites into the U.S. supply chain, Ott found value in the paramount intelligence he gained through his company’s international engagement. As countries closed borders and businesses
implemented their own guidelines to address the pandemic, “it was extremely helpful to have those global offices where we could have a greater understanding of what was happening across the world,” he said. Ott emphasized just how much it helped the Polysciences team adjust and make key decisions on how to navigate challenges.

Capitalizing on opportunities

While many companies experienced immediate raw material shortages due to the pandemic, Polysciences, which manufactures products for many pharmaceutical companies, had ample supply to meet demand. “We were in a great position with isopropyl alcohol, which is a primary ingredient integral to disinfectants and cleaning materials. Though we are not a key player in those verticals, we did supply the ingredient to pharmaceutical companies for clean rooms where injectable products are made,” Ott said.

Polysciences also benefitted from other opportunities, especially in the supply of raw materials to diagnostic manufacturers for COVID-19 test kits. These kits break open the COVID virus particle, where DNA can be analyzed and better understood.

The key to success for Polysciences was their agility in meeting requests for expedited turnaround. “Customers were asking for early delivery of orders, and many were doubling their orders,” Ott said. “They didn’t need them next week. They needed them tomorrow.” There were a few scale-up issues, but Polysciences was there to fulfill their call.

That international presence also was valuable to Polysciences in providing materials for the COVID kits, Ott said. “There are a lot of different strategies for how to make a kit, but because we have such a wide range of products, we were able to participate in a lot of surprising ways, particularly in China,” he said. “Demand there was almost insatiable for some raw materials, and we were very much helped by that.”

As for business in the United States, things really hit a wall as the pandemic ramped up, Ott said, but it started picking back up in early June. “We were negatively impacted by some parts of the pandemic and positively by others,” he said. “But overall, because we have such a wide range of products that we actually make, we have been very well served by that strategy.”

Continuing to expand

While many companies are pausing with capital expansion projects and riding out the COVID-19 storm, Polysciences is not. “Our company has not slowed down on capital investments,” Ott said. “We are continuing to expand as fast as we can, so that we have the capability and space to make things that are not widely available.”

Polysciences recently completed a new facility in Indiana that has Class 5 and Class 7 clean rooms. Ott and his team are also working on a new site in New Jersey, and they are moving one of their smaller divisions under the Polysciences umbrella from downtown Philadelphia to Center Square, NJ.

And as the company expands its efforts, the safety and care of his employees are of the utmost importance to Ott and his sons, Andrew and Ryan, who are part of Polysciences’ administration. Not only did they implement a host of safety policies and procedures to mitigate risks to employees throughout the pandemic, but Polysciences also gave every employee a pay increase as an incentive. And those who were required to come to the plant every day received an additional stipend. “This has been an unbelievable time to live through,” Ott said, but it has brought his team closer together as a result.

What’s on the horizon?

In looking to the future, Polysciences will add more biochemicals to its portfolio, which is a direction they were already moving toward, Ott said. They are developing an increasing amount of diagnostic materials and antibody-based products because of their value-add, especially during this time of crisis.

The market for easy-to-use diagnostics is also immense, Ott said. Having recently received a COVID test before visiting the hospital for a routine check-up, he said it would be much easier if tests were available where a sample could be taken, and five minutes later you could get the results, allowing for better data. “There is great interest right now in the area of
diagnostics,” he said.

While Ott uses his diverse business model to move Polysciences forward, he is also optimistic “the economy will resume and be back to normal soon because another shutdown would be detrimental.”

Heightened demand of essential products key in AVATAR meeting business goals

AVATAR Corporation, which manufactures, refines and supplies raw materials and ingredients for the food, pharma and personal care industries, saw additional requests for ingredients used in hand sanitizers in late March and early April. That increase countered declines in other product areas and kept the company on target to meet its original business goals for the year, according to Dan Hoeft, Plant Manager for AVATAR’s University Park facility in Illinois.

“It’s safe to say that a couple of our products have increased in demand and velocity, mainly because they are ingredients that go into hand sanitizers,” Hoeft said. “The COVID crisis created a lot of need, and we have been able to build on those conditions. It got to the point where a lot of clients were wanting more of what they had historically bought from AVATAR simply because of their end-use situations. They, too, were wanting to jump into that market.”

On the flip side, other segments were feeling the impact of the shutdown, Hoeft said. Certain manufacturing sectors that were not considered essential were sidelined, and no products serving those industries were going out the door. “The call for COVID-related products offset other areas where we were forced to shut down,” Hoeft said.

Some of those areas experiencing decreased demand are just coming back online, Hoeft said. “A lot of companies make products to supply meals for schools, and naturally, schools being closed reduced the product demand,” he said. “It seemed like every time one door opened, one door closed.”

Luckily, AVATAR believes the positives far outweigh and offset the slowdowns. “If you had to graph it, we are right on track for the year,” Hoeft said. “We’re very optimistic for a more lucrative second half as those businesses and customers come back into operation.”

Adjusting to meet demand

AVATAR is typically a single-shift, 5-day- a-week operation, but due to increased calls for products, Hoeft and his team went to stretch shifts that required six days a week of production. “I call it the ebb and flow of the operations world,” he said. “You have your especially busy weeks, and then those that fall back to the norm. When we had those busy weeks, we adjusted the staff accordingly to meet that demand.”

March and early April saw the peak of productivity, and since that time, AVATAR has moved back into normal business operations.

AVATAR also took action to ensure they had adequate supplies. For example, they secured a one-to two-month supply of crucial raw materials, so if supply chains tightened, they could continue with the ingredients they had on hand, Hoeft said.

“We’re all in this together”

In addition to the pandemic, other issues impacting business were even more difficult to navigate throughout these past six months, Hoeft said. “Many of the other societal issues impacting the country, such as protests and work slowdowns, suspended truck traffic.”

“Employees were arriving onsite saying they had a hard time getting to work because they had to go through three different roadblocks and prove to authorities they were essential workers,” Hoeft said. “All of these factors added to the complication of the COVID situation.”

The AVATAR management team made efforts internally to ease tensions
and assure staff that “we are in this together,” Hoeft said. Employees who
felt it was safe to come to work during that time did, and if for various reasons an employee felt at risk, the leadership showed flexibility and understanding.

Emerging trends

One of the emerging trends Hoeft sees is companies adapting to work-from home models, especially with how efficiently businesses have adapted
over the course of the year. “How many people in downtown Chicago with office complexes would have thought at the beginning of the year, ‘Well, maybe I don’t need to bring everybody into the office to fulfill my business needs,’” he said. “This crisis has changed the world as we know it. It has opened new doors and avenues to show us how we can conduct business and compete in the industry.”

But people still need to connect face-to-face across industries and establish
a rapport that cannot be captured over a computer screen, Hoeft said. People want to put a face with a name and need to read body language. “They also want to get together and celebrate, or go and have a meal together,” he said.

Optimistic about the future

AVATAR is optimistic about the future and is expecting an uptick in momentum, but that only comes when the country normalizes to some semblance of what we knew in January and February 2020, Hoeft said. “We are simply trying to get through the tough times and get back to when people can go to the store and get their hair cut without thinking twice
about it – the basic things of life that came to a stop real quick,” he said. “So,
as AVATAR continues to supply those clients with the necessary ingredients,
we’re optimistic that their business will return to normal as well.”

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