After 15 years in operation, Friesens Corporation has made the decision to close up its package manufacturing division, think4D.
Started in 2009, President and CEO Chad Friesen says think4D was intended to diversify the products offered by the company, noting, at the time, 99 per cent of Friesens business was books and book production.
"So, for many years we went out to try and build a packaging business, and the team at think4D has just done some really amazing work over that period of time and they really developed a reputation in the industry for innovation, creativity, problem solving and won many awards over those 15 years for some really interesting, creative products."
"Ultimately, we tried mightily."
However, Friesen says the division struggled over the last several years with losses.
"We were trying our best to find the right formula for success but at some point, even employee-owners have to say, 'We've tried enough. We have to stop what we're doing, and we have to reset for the future'."
Friesen went on to say that there was no single reason for this.
"Certainly, a lack of growth, lack of volume. A business in the packaging space really requires a significant amount of volume to drive profitability. Margins are usually a little bit tighter, and we just weren't able to find enough volume to support the business and to maintain some level of profitability. You can blame it on the economy, you can blame it on the pandemic. You can blame it on trying to market a premium product in a more commoditized packaging space. There's a number of reasons that prevented us from finding that success.
Ultimately, we tried mightily. We tried a number of different ways, a number of different angles to try and solve some of those obstacles."
Friesen added, he's quite proud of what think4D was able to accomplish in its 15-year existence and doesn't want it to be defined by this decision.
"Most businesses fail within the first couple of years of existence. The vast majority of businesses never make it to 10 years, and so to have a business that has been in operation for 15 years is quite a feat, and one that I'm very proud of. And in the context of Friesens, which is 117 years old, 15 years seems like a small part of the journey. But for most companies it's a long, long time. We've had this tremendous leadership group that has gone out and tried to build this division for Friesens and they've just worked so hard and achieved so many great things. We want to celebrate those successes, even though we've decided that we have to pause and reset for the future."
"This is no reflection of the overall health of Friesens Corporation."
think4D is one of four businesses that make up Friesens Corporation and is the smallest, representing less than five per cent of the company's revenue and less than five per cent of its employee-ownership group.
"While it is very significant for those that are directly involved, I just want to keep in context that this is no reflection of the overall health of Friesens Corporation," assured Friesen. "The company remains very strong, growth-oriented and positioned well for the future."
The closure affects 25 employees, representing 3 or 4 per cent of Friesens Corporation's overall employee-owners. According to Friesen, 75 per cent of that group have been offered jobs in other parts of the company.
"Being an employee-owned company, we have a unique relationship with our staff. A lot of companies, when they would do this type of thing, they would walk in, and they would close down operations, and they would lay everybody off and they'd move on. But in our organization, we try very desperately to make sure that we have landing spots for the employees that are affected by the decision," said Friesen. "Obviously, there's also some friends and some colleagues that we're not going to have a spot for, and those are obviously very difficult conversations as well, but the vast majority of the people that are directly affected by this decision are going to have comparable and meaningful work in other parts of the company."
So, what will happen with Friesens' 6th St. facility where think4D operates out of?
"Half of that building is already occupied with other business interests," explained Friesen. This includes a fulfillment centre that supports the company's other businesses. "We actually have some constraints in our facilities today that will be able to utilize some of the space in the 6th St. building for other parts of our business needs. That's good on one end, a silver lining a little bit, that Friesens is going to continue to own that building, occupy that building and it's going to be a useful space for us."
Friesen assures the community that that building won't go up for sale or be closed. "That is not on our radar," he said.
The move takes effect at the end of 2024.