Coastal Automotive Team,
This update is a bit late in coming, but I wanted to be certain that we communicate to everyone that, regardless of COVID, we are continuing to stay true to our systems and processes and one of the most important processes we have is our planning process whereby we set plans for the future. Two weeks ago the executive team met and set our 90 Day Action Plans for the second quarter. No doubt, that this quarter will be a be weird from the stand point of timing and connection to the vision for our company. Regardless, here are the priorities for Q2 and a bit about the reasons why (What and Why).
- Inventory build to optimize PPP grant funding
Reason: We have until June 8th to consume our PPP dollars and have them be applied as a grant. As noted, we will then reduce to a skeleton crew for 4-6 weeks when our cash flow will be at its most challenging level.
- NPD – Complete TASL Review for GM Battery, identify alternatives / acquire samples
- NPD – Evaluate Armacell sample materials for over molding and energy absorption
Reasons for 2 and 3: COVID or no COVID, we have plans to diversify our product base and market scope. These two projects are the leading contenders. We need to keep pace in product development.
- NPD – Saw 1/2 volume requirements solutions
Reasons: We have a new saw on order and saws 1/2 have unique capacities and huge needs for Tesla and others. Originally, we were concerned that we did not have sufficient capacity to meet March demand…guess we solved that issue. We took the opportunity to move Saw 1 back to Rochester Hills and after the homecoming party to clan and fix her up we anticipate running bigger and more complex parts and low volume parts in RH. Saw 2 has also been retrofitted and will be online in Holland.
- Toyota bundle pricing – connect for large volume programs
Reasons: Jason is working to entice Toyota to come fully on board and is offering clever bundled pricing models to the senior folks there. Our hope is that we get a large percentage of Toyota’s 201U needs into our operations quickly.
- Determine scrap market for IMPAXX
Reasons: There is increasing evidence that that global market for extruded polystyrene is drastically shrinking and we will need to find solutions for our scrap.
- Safety Corner: Execute a Safety Corner for safety information. Finalizing Emergency Action Plan Flipchart.
Reasons: Aligned with, but extending beyond, COVID is the need to emphasize safety in our operations. Zoe will be setting up protocols and communication processes to enhance safety in our new operations areas.
- Contingency Planning: Develop a plan with Department and Finance to support positive EBITDA.
Reasons: It is a significant challenge to manage staffing with people coming and going, working here and there, federally funded and Coastal funded all the while trying to maintain a viable and healthy company. Zoe will work with department heads and finance to help make decisions about how best to get this done.
- Signed DOW agreement
Reasons: The original Dow contract expired on April 30 of this year. On May 5, we had a signed deal that will last three years, with options for automatic renewal. In this contract we gained, better payment terms, 3 years duration, lobal exclusivity in mobility markets, a commitment to better quality through process control, clarity about use of non-Dow materials, a 7% price increase but no price increase in 2021 and a commitment to negotiate any further pricing changes.
- Engagement and Retention: A series of events and strategies consistent with Pulse survey
Reasons: COVID is scary. Not working is scary. Now I’m not saying that Coastal had anything to do with either of these issues, but they walk through our door every day. To that end, we will, from time to time, schedule events and communications the purpose of which will be to say thank you, and to keep everyone fully engaged in Coastal Automotive.
So, there you have it. We all a have a lot on our plates as we scramble back to more normal lives at home and at work. These are the work priorities that the Leadership Team will be working on to advance the cause.
If you have any questions…AMA