In this article taken from the May 1988 issue of Plastics Business Magazine, there is a detailed profile of Vittorio De Zen’s business strategies in the late 1980s. Although this was written 18 years after the establishment of Royal Plastics, Mr. De Zen continues to strive for excellence in business today in 2009.
Processor Profile
The secret of my success
Page 18, Plastics Business, May 1988
Vittorio (Vic) De Zen Plastics Business Magazine May 1988
Vic DeZen is a quiet, unimposing and shy individual. As a man of few words, he doesn’t ramble on using officious executive cliches to describe his achievements at Royal Plastics. In fact, he says simply, “I feel good about it.”
It is this honest and direct approach, supported by a simple and basic premise, that has propelled Royal Plastics high enough to claim the number one spot in the North American custom, profile extrusion market. Being number one was a prophecy of De Zen’s 18 years ago when he and two fellow Italians bought a machine and started up with 2,000 sq.ft. on Weston Rd. in north-west Toronto. Royal was into everything back then-window and door parts, weather stripping, appliances, picture frames and some pipe and siding. Today, Royal Plastics is the flagship for a fleet of other companies-80 in all-and the group has its sights set on reaching the $1 billion sales mark by 1990. In actual fact, it probably won’t take that long. With sales of between $700 and million projected in 1988, and plans to announce a new operataing venture a month for the next 12 months, the forecast is clear skies and smooth sailing ahead.
From the very beginning, DeZen concentrated on one basic principle-the customer, and every move he has made since, has been to provide his customers with the best quality and the beset service at the best price. This unwavering focus and commitment has been responsible for an infinite list of accomplishments he is justly proud of. It was responsible for the development of new manufacturing technology which DeZen holds the patents for; it led him into new markets which promise enviable market positions; it forced him to develop industrial parks which require in-house property management activites; it sent him into foreign terrain which now is home to three of his plants; and it was the basis of a corporate philosophy that is responsible for the 80 member companies that form the Royal Plastics Group empire.
DeZen believes that once a company reaches 100 employees in size, it becomes too unwieldy to give the customer the attention and service synonymous with smaller, entrepreneurial type shops. As a result, key personnel are given the opportunity to leave the operation and become partners in a new venture with a new name. Besides providing an environment conducive to DeZen’s beliefs, it establishes incentives for bright and aggressive employees to stay with the Royal Group instead of leaving to start-up competing operations of their own. Currently, DeZen has over 200 partners.
One example of this is Royal Pipe Limited. As a self-contained operating unit with their own sales force, the company is located in one of the three industrial park developments established by DeZen. Phase One of Royal Pipe came on stream in August last year with eight extruders producing ABS and PVC pipe for the drain, water, vent (DWV), electrical, sewer and pressure pipe markets. Phase Two, once completed, will produce large diameter pipe for the sewer and pressure pipe markets. Besides being a product of a proven corporate philosophy, Royal Pipe has been equipped with leading-edge equipment custom designed to oeprate within tight quality control specs. In addition, the plant was builtt with the concept of computer integrated manufacturing (CIM) in mind which permits production with minimum staff available.
Although this may give Royal Pipe a competitive edge in marketplace, price isn’t given a priority post in contract negotiations.
Says Royal Plastics Group sales manager David Woolf, “If a customer comes just because of price then you will eventually lose them because someone else will cut their prices. So if it is the only reason it won’t work.”
DeZen supports Woolf’s comments by adding that Royal Plastics is still doing business with a customer it started off with 18 years ago.
The customer base was expanded into the U.S. in 1976 when the company was approached to manufacture a complex jamb for a replacement window and DeZen discovered his company was ideally suited to compete in the U.S. market. He had become accustomed to typically short Canadian production runs, generalIy 5,000 feet in total, and had learned to change dies and set-up quickly to increase productivity. The result was an efficient operation more than willing to accept U.S. orders which involved production runs 10 times the size.
About this time, DeZen had decided to tackle the vinyl window market and set about acquiring calibration and vacuum sizing equipment to achieve the tolerances and control the market demanded. The problem was, the best technology available was in Europe and required heavy tooling costs which restricted the market to companies willing to invest nearly $250,00 in tooling costs. DeZen knew that if he could develop the technology that would reduce tooling costs to 1/10 the European cost, itw ould enable smaller window fabricators the luxury of owning their own window systems and designs, and ultimately, break the vinyl window market in North America wide open. WIth the help of a research and development grant, DeZen went to work and the result has been patented and licensed around the world.
The growth the company has experienced in the last few years has been, to sasy the least, staggering. In 1984, the Royal Group consisted of 29 companies, over 700 employees and wrote $130 million in sales. In 1986, this figure rose to $400 million in sales with 2,000 employees and 50 member companies. Today, over 3,000 employees occupy over 1.1 million square feet of space designed and built by Jovien Associates Limited, a member company of the Royal Plastics Group.
“What was once a dream is now a reality”
Woolf is one employee the was around in the beginning and remembers the day he was interview for the job. “Vic said that although the company didn’t look like much now, it would one day be the largest in North America. I sort of chuckled to myself,” he said.
Now he smiles openly, confident in the knowledge that what was once a dream is now a reality-complete with one corporate plan and two pilots on staff to fly it.
Woolf said the DeZen is very protective of proprietary technology and processes, a style no unlike other innovative and creative entrepreneurs. The technological secret of his success is well hidden within the walls of the 20 plus manufacturing facilities and custom built into the more than 300 extruders they house. But, there is one secret he was unable to keep and ironically, it was his success that eventually sold him out.
Woolf has no trouble identifying it. “When he says the customer has to be serviced it is exactly what he means.”
