Michigan business found a niche in COVID. Its second act may prove harder.
Coronavirus seemed to change business overnight at TentCraft of Traverse City, as abrupt cancellations of nearly all of its orders in March threatened the livelihood of dozens of workers.
But the pandemic also meant the beginning of a new speciality: manufacturing temporary medical facilities. In a world where testing and field isolation centers had to be set up within days, often outside of virus-filled hospital settings, a broken international supply chain couldn’t keep up.
Suddenly, instead of producing promotional tents for brands promoting themselves at concerts and sporting events, the northern Michigan factory took a place on the frontlines of fighting the coronavirus.
“It was really nice to have a sense of purpose and a sense of urgency and a feeling like what we were doing was special,” said Matt Bulloch, president and CEO of the company.
But today, medical systems are not overrun with patients. And as health care providers adapt to COVID-19 operations, the rush to buy tents is slowing.
That leaves Bulloch looking ahead to 2021, like hundreds of other MIchigan businesses that raced this spring to convert their operations to make in-demand products like personal protection equipment (PPE) and other items needed to fight the virus spread.
After seizing the opportunity to fulfill extreme needs during the international crisis, TentCraft now faces uncertainty for the year ahead.
However, unlike in March as major orders dried up, the company gained a solid financial footing from the wave of medical sales that became 95 percent of its business from April through July. Just as important, Bulloch said, is what he and employees learned about their creativity and ability to adapt.
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“Hope is not a strategy,” Bulloch said. “You have to do something. You have to have a tolerance for failure, or sloppiness or things that aren’t 100-percent right out of the gate.
“For us, [the pandemic offered] a mindset shift,” he said. “We have to learn, and learn a little bit more.”
State manufacturers adapted on the fly
“Michigan was uniquely positioned in a lot of ways” to fulfill pandemic manufacturing needs, said Adam Carlson, senior director of government and political affairs for the Michigan Health and Hospital Association, a hospital industry group.
Some of the largest global brands that make their home in the state played roles in shifting to PPE production, including Whirlpool and Dow Chemical, which collaborated on headgear respirators; Ford Motor Co., which also worked on air purifying respirators for first responders, and General Motors, which shifted gears to make ventilators and face masks.
Major products like N-95 surgical masks and respirators took center stage during the start of the pandemic amid extreme shortages. But smaller companies, like TentCraft, fulfilled a lot of other needs, Carlson said, such as eye protection, gloves and gowns.
Most of these manufacturers now are seeing less demand, prompting a new wave of questions for their futures.
“I worry more about next year than this year,” Bulloch said. “We’re trying to figure out how to budget.”
TentCraft is the only U.S.-based manufacturer of specialized commercial tenting products, from making the extruded aluminum frame to sewing canopy covers and designing graphics.
The “bread and butter” product since Bulloch joined in 2007 and later bought the company has been a customized 10x10 tent, the kind that can be made cheaply overseas and sold to consumers in warehouse clubs or big-box retailers. But when a client — typically an advertising agency — wants better quality with just a few unique elements, TentCraft will make that from start to finish in-house.
The company in early March had been gearing up for its busy season, which included products that would be at major festivals, starting in March with South by Southwest. As the events were canceled, TentCraft’s pipeline of orders dried up.
Bulloch describes his immediate response to the cancellations as “scrappy.” He knew the company’s position as an American maker of tents offered some leverage as governments, hospitals, and other health care providers were scrambling for temporary spaces. Because a new manager had suggested holding off on making 10x10 tents over the winter to avoid possible overstocks, TentCraft also had the materials and capacity to adapt products to the larger sizes that were needed, like 10x20 and 13x26 versions.
He quickly pursued any possible business, from signing up with a commercial lead generator to exploring whether his status as a military veteran could unlock any jobs.
It wasn’t long before TentCraft was able to fill a market need ahead of international competitors. It’s something the Michigan Manufacturers Association hopes to see more of. Bulloch said that’s possible.
“For products where quality matters or speed matters, or some level of customization, I think [Michigan companies] can manufacture things competitively in the U.S.,” Bulloch said.
Finding new opportunities
TentCraft is going into the fall with fewer employees than usual, about 65. Fifteen summer interns already are gone, and 10 others remain on layoff as sales and graphics needs remain slimmer.
It’s unclear when traditional marketing events will bounce back. Last week, both the North American International Auto Show and the Mackinac Policy Conference announced fall 2021 dates, suggesting large gatherings may not restart before then. Bulloch wonders if it will take until 2022 for concerts and big public events to resume.
In the meantime, some “regular” business returned to TentCraft in July as places like restaurants and schools added temporary capacity. From here, Bulloch’s strategy is to keep seeking that business, plus conserve cash, refinance or cut debt where possible, and pause hiring.
He’s also looking at creating new opportunities. Summer interns in engineering programs helped to develop new product ideas, like a swimming pool cover and inflatables. That innovation will drive the business forward, Bulloch said.
“[We’ll] invest time, money and effort in some of our new products and ancillary stuff that we tried to get off the ground in the last few months,” he said.
Financially, shifting gears in the early days of the pandemic paid off. Revenue for the past three years fell between $14 million and $16 million, Bulloch said. The company should reach $16 million again in 2020, thanks to some large regional orders in spring from the VA Medical System.
The Paycheck Protection Program — which allowed businesses to apply for low-interest loans that could be forgiven if they met employee retention goals — also played a role in keeping the company afloat, Bulloch said. His first application through a national bank didn’t make the funding cut, but a local bank got TentCraft hundreds of thousands of dollars in the second round.
Competition is back in the domestic market, as shipments from overseas are possible again. But tools like automation and lean manufacturing principles still give TentCraft an edge with customized products, he said.
Today, Bulloch is watching news on possible COVID-19 vaccines and unwilling to make any forecast. Yet he said he remains firm on his strategy: “Keep pushing on new things, hoping that we can start to get back to normal.”
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