Analytics, digitization and talent are taking this manufacturing business to the next level
7-minute read
Paul Kalia on the left is the owner of E. Hofmann Plastics Inc.
A few years ago, Paul Kalia had a vision: He wanted to build a world-class company.
Fortunately, he already had the company. The challenge was to reinvent it, aiming for best in class and bigger profits.
Kalia owns E. Hofmann Plastics Inc., a plastics manufacturing business in southern Ontario. The company produces a range of containers for customers across North America in industries ranging from food and beverage to construction and chemicals.
Founded in 1980, the company takes its name from its original Austrian owner, Ernest Hofmann. Kalia and three partners bought the company in 1988, retaining the name.
For a while, they continued to focus on making plastic pails for transporting and storing bulk commodities, like foods, chemicals and building materials.
But by 2009, Kalia had bought out the partners and begun diversifying the company’s product offerings. He invested in R&D and new production machinery with a view to technological innovation and sustainable packaging.
Today, the company has 260 employees and a 225,000-square-foot manufacturing facility that runs 24/7. With a focus on fully recyclable plastics, it produces more than 21 million thermoformed parts per week and more than 80,000 injection-moulded parts per day. It offers one-stop-shopping, with in-house design, manufacturing, assembly, packaging, labelling and inventory storage. It can even ensure just-in-time delivery with its own fleet of trucks.
We started analyzing the whole business and asking: How can we improve shipping? How can we improve production? How can we improve scheduling? And then with digitization, it just spread like wildfire.
Paul Kalia
Owner, E. Hofmann Plastics Inc.
Digitizing the entire manufacturing process
The company is now experiencing a dramatic surge in productivity because of shifts that began four years ago, when Kalia decided to make a significant investment in automation.
His business was profitable, but overly reliant on currency exchange for profits: With 70% of its customers in the U.S., E. Hofmann made money when the Canadian dollar was low, but lost money otherwise.
To step off that treadmill and grow, it could produce for less (by introducing efficiencies) or sell for more (by adding value). Kalia wanted to do both.
He credits his sons, Sameer and Vikram, for insisting that he could accomplish both goals and boost productivity by automating and digitizing.
The first problem they set out to solve was how to store more product using less space. Doing so would mean using software to track products more closely throughout the entire manufacturing process—but the project grew as one thing led to another.
“We started analyzing the whole business and asking: How can we improve shipping? How can we improve production? How can we improve scheduling? And then with digitization, it just spread like wildfire,” says Kalia.
A key change was the implementation of robotics in the warehouse. These days, the company has a robot that travels on a track, lifting and placing pallets of product on an
elevator that moves the pallets forward, backward, up and down on racks. The robot also digitizes the location of each product, making them easier to track and locate.
Now we can do just-in-time production, pull orders out, ship anywhere in North America, and schedule our machines for maximum efficiency.
Paul Kalia
Owner, E. Hofmann Plastics Inc.
Watching the investment pay off
The digitization and inventory management project took four years to complete and required a significant financial investment. The company spent a total of $60 million in recent years, including additional amounts spent on automation, capacity and new products. But the rewards have been huge, says Kalia.
E. Hofmann is now growing aggressively and is on pace for double-digit growth this year. Its sales doubled from 2019 to 2024, and its team of engineers and technicians is now four times bigger than a decade ago.
The warehouse automation and digitized inventory have improved quality control. For example, products can be traced back to when and how they were made. As Kalia explains, this traceability also ensures that “everybody in the front office knows what’s going on in the back office,” making it easier for salespeople to meet client needs.
Digitizing has made E. Hofmann more competitive in North America and given it greater flexibility to meet customers’ demands.
“Now we can do just-in-time production, pull orders out, ship anywhere in North America, and schedule our machines for maximum efficiency,” says Kalia. “We can produce better-quality products faster because every single piece is monitored.”
Kalia is watching his business take off in all directions these days, with plans for ventures in Switzerland and the Czech Republic. The company is also more sustainable because its increased efficiency has reduced its energy use.
Ultimately, we needed to be able to process more product per employee so we would have more money to reward our staff with.
Paul Kalia
Owner, E. Hofmann Plastics Inc.
Finding the right people—and keeping them happy
In E. Hofmann’s case, automation and robotics did not eliminate jobs. Quite the opposite: It meant bringing in more expertise.
Part of building a world-class company, Kalia believes, is attracting top talent, which means paying people well. “But to do that, you need to be able to compete with the multinationals. That’s why we had to get so much more efficient. Ultimately, we needed to be able to process more product per employee so we would have more money to reward staff with.”
After securing financing for the digitization project, E. Hofmann hired and retained staff to run the initial analytics, determine what needed to be done, implement and oversee the new processes, and steer the company through its projected growth.
Kalia has one piece of advice for manufacturers considering digitization, and it doesn’t concern budget, timing, approach or software: Recognize that although you may think you’re in a product business, you’re actually in a people business.
“Recruit the kinds of young leaders who may some day run other companies, and treat them well, because they are the keys to growing yours right now,” he says. “Technology makes a lot of things possible, but it is people who choose, apply and manage it. Your goal should be to find the best minds and keep them motivated.”