Pivoting manufacturing operations to support COVID-19 efforts

May 19, 2020

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How BDO is helping Novo Textiles shift to Canadian-made PPE production

As the COVID-19 pandemic hit the manufacturing industry in Canada, Jason Zanatta of B.C.’s Novo Textiles knew he needed to make some quick decisions to save his business. With over 20 years in the textile industry, his team was positioned to adapt and pivot their operations into something essential and sustainable—PPE (personal protective equipment). The coronavirus disruption has created a fundamental need for masks in health care, food processing, and other frontline industries.

After gaining various media coverage, Novo has been working full-force to completely pivot their operations and drive this initiative home. With two decades of producing bedding and linens to back their expertise, Novo has started making level 1 surgical masks for medical professionals, and can take pride in being among the first manufacturers to start producing all-Canadian-made N95 masks.

Pivoting manufacturing operations

With COVID-19 developments changing by the day, and the immediate impact on business, Jason needed to move quickly:

“It was a two-prong driving force. First, we were in survival mode—recognizing that the bulk of our major customers were either closing or would be closing indefinitely—and us along with them. Second, I recognized that we have enough skillsets, experience, and knowledge in the realm of processing non-wovens to shift from bedding to masks. It was a fast decision, but something that was crucial.”

Starting to produce masks required full production line transformations. With that, old equipment was stored and new equipment was installed. With the retooling of the factory, all staff were retrained and the company repositioned their marketing to reflect the new changes: transforming entirely from household textile product manufacturing to medical product manufacturing.

With a daily production capability of 50,000 masks, Novo is producing and delivering 250,000 masks per week to clients in health care, retirement homes, long-term care facilities, police forces, and others. Once new equipment is added for N95 production, they’ll be able to deliver 400,000 masks per week—and counting.

It starts with your people

A large part of the decision to shift operations focused on the people behind making it happen. As Jason describes:

“I thought about my business, but I thought about my people, too. Most of my core staff have been with me for 10-15 years. The idea of having to lay them off was not an option. Not only was I able to provide them with full-time work, it enabled me to increase their hourly rates.”

In the month of April, Novo doubled the size of their full-time production staff for the level 1 surgical mask production—with plans to double it again after adding N95s to the fleet of production lines.

BDO Partner, George Stefan is helping accelerate Novo’s new shift by providing guidance in accessing grants and incentives. George notes:

“What matters most is maintaining jobs and creating new ones—direct and indirect. Not just labour workers, but also mechanical engineering jobs that help permanently expand production lines. There are lots of government incentives that support this type of job creation.”

How BDO is helping

In an effort to support Novo’s quick response, George and Jason got in touch a short 2-3 weeks before the writing of this case study. As George so aptly put it, “It’s the perfect time to pivot into medical supply manufacturing while stressing the importance of Canadian-made products and securing supply chains.”

BDO is helping Jason move more quickly to pivot the business—with applications for NGen Supercluster grants to fund the two new N95 mask production lines, and an eye on SR&ED and government grant opportunities for the future. There are more plans on the horizon for scaling these operations nationally and internationally:

“I want to scale operations to a point where we can satisfy demand as much as possible within Canada; but also continue increasing capacity so we can look to export markets as well.”–Jason Zanatta

Maintaining solid manufacturing partner relationships

Building a successful manufacturing business depends heavily on the relationships with everyone who touches your supply chain. Delivering on what both sides of that partnership commit to while inspiring confidence in the business are key, Jason says. He continues:

“I’ve known a lot of these vendors for 20 years. I developed long-standing relationships built on trust; so in this time crunch, I was able to call in every favour I’ve ever earned.I’d like to think that I’m repaying those favours by supporting my vendors’ businesses and employees.”

A robust Canadian manufacturing sector is an essential service

Canadian manufacturers, local health, and government authorities are now urgently coming together as part of a broad effort to give the communities across the country what they need. As Jason so poignantly put it:

“In the Western world, we’ve relied too much on exporting these kinds of jobs in manufacturing. This pandemic has highlighted how much of a weakness that was in the global supply chain. Having critical manufacturers within our own borders is absolutely essential to dealing with these types of challenges.”

Now is a prime opportunity to prove the value of Canadian-made and engineered products. Novo is upgrading the engineering on offshore-supplied machines to have Canadian-built equipment of their own—with a higher output and improved reliability. They’re also partnering with an Ontario-based engineering and robotics company to develop Canadian-engineered robotic systems to automatically sew surgical gowns and produce the N95 masks. “We want to bring manufacturing back into Canada and are engaging with all levels of government support aimed at helping us make it happen,” Jason adds.

Moreover, the availability of these PPE products within our borders will ensure the Canadian government can more quickly respond and support any safety mandates required in the event of a second wave of COVID-19, or future pandemics.

Planning for the future

This shift in production has completely changed Jason’s mindset for future business planning:

“In the past, it was always about selling the next widget and hoping the retailer would buy from you again. Now, we’re building a future-proof, automated, integral part of the Canadian medical supply chain.”

Looking to the future, Novo intends to expand their PPE offering—which will require Canadian-built, automated machines for production. There will always be a place for PPE in our communities as we all do our part to stay safe and protected.

If you’re a manufacturer and would like to discuss shifting your operations, our team would be happy to help.

Contacts 

George Stefan, Partner, MBA, PMP, PEng.

Mike Gillespie, Partner, National Manufacturing Leader, CPA, CA