COVID-19 Employee Communications
Steady Return to Increased Production
While the weather is warming up in many of our regions, production demand in the Auto Industry is not heating up as quickly as customer releases had previously indicated due to continued microchip shortages. July demand was slightly lower than June, however we continue to see very high releases projected for late third quarter and into the fourth quarter when supply challenges are anticipated to improve. Our manufacturing teams are preparing for much higher demand while also using this time for continuous improvement opportunities such lean projects, training and “energy hunts” to search for potential energy savings.
Unfortunately, in June we saw an increase in safety incidents. The Company is still exceeding our world-class target, but it is important that our focus on safety never wavers and remains our top priority. It is encouraging to see continual improvement with COVID cases in most regions, as well as increased vaccination rates. As of July 9th, the Company had a total of 30 employees with an active case of COVID-19, which is the lowest level we have seen since we began tracking cases in August 2020.
There are three recent developments I would like to highlight. First, as sustainability continues to gain greater importance in our business and with our stakeholders, the Company recently established a Global Sustainability Council to continue elevating activities in this area. Cooper Standard has always placed a high priority on doing business in an ethical and responsible way. This council will focus on developing a comprehensive strategy around environmental, social and governance topics to help ensure that Cooper Standard will remain a sustainable business for years to come.
Second, I’m very excited about the upcoming launch of CS Connect, a new digital communications tool for ALL employees, including our hourly manufacturing colleagues. Historically the Company could easily communicate with our salaried workforce through electronic tools such as email. For the first time ever, all employees will now have access to communications through either a mobile or desktop application. CS Connect will allow employees direct access to Cooper Standard news and important resources targeted for their location and interest. Watch for more updates at your facility in the coming weeks.
Finally, I’m pleased to share that we continue to be recognized for outstanding quality with our customers. Recently, 20 of our locations received a GM quality award and our Kunshan 1 plant also received a quality award from CJLR (Chery Jaguar Land Rover). In addition, during the month of June, we beat our IpB (quality incidents per billion) full year goal. This is a great example of our team’s continued commitment to excellence.
Thank you for our ongoing engagement and hard work!
Outstanding Safety Performance and Customer Recognition
As performance indicators of Cooper Standard continue to rise, so does positive news from around the world in terms of vaccination rates and a promising start to a “new normal”.
Our team achieved an impressive all-time record for safety in May with only one recordable incident – making it a nearly perfect safety month! While one incident is still one too many, I’m proud of our team’s commitment to safety, and achievements like this are a testament to the positive results of our focus. Strong safety performance helps set a solid foundation for excellence throughout our operations and positively impacts other key metrics such as quality and delivery.
Throughout the month of June, Cooper Standard continued to reinforce our commitment to safety and bring awareness to important health and safety topics in and outside of our facilities with our first Global Safety Month. We look forward to sharing some of the highlights with you on the Cooper Standard Portal homepage at the end of the month.
I also am thrilled to share that Cooper Standard is being recognized by General Motors with two impressive awards. For the fourth consecutive year, the Company was named a Supplier of the Year, receiving this award for the second consecutive year for both our Sealing and Fuel and Brake Delivery product lines. The Company is also being honored with GM’s Overdrive Award for our Fortrex® chemistry platform. The Overdrive award recognizes outstanding achievement in GM’s six GPSC Priorities that enable them to navigate business results with focused initiatives and cutting-edge culture. GM selected Fortrex® for its lower carbon footprint and its ability to help reduce emissions.
As COVID-19 cases continue to reduce, 17 of our facilities outside of Asia Pacific have entered Phase 2 or higher in our Safe Return to Operations Plan. We must continue our diligence to reduce the risk of COVID at our facilities and employees are encouraged to explore vaccine opportunities when available in their area. It is with great sympathy that I share the passing of an employee from our Atlacomulco, Mexico facility. We extend our condolences to the family, friends and colleagues of Ignacio Lopez Mendoza. As of June 11th, the Company had a total of 41 employees with an active case of COVID-19.
Thank you for your continued focus on excellence to help keep one another safe and deliver outstanding support to our customers.
Continuing Steps in the Right Direction
Cooper Standard’s efforts to rally together and overcome challenges, combined with increased availability of vaccines and the forecasted rise of production volumes, are bringing renewed optimism.
As mentioned in our first quarter 2021 earnings call, we had strong operating performance and margin enhancement including 98% green customer scorecards, 98% green launch scorecards and $18M in manufacturing savings. Production volumes remain consistent and it’s anticipated that they will improve in June, and by July we should see even higher volumes. We remain focused on exceeding expectations daily, continually looking for opportunities to drive results for all stakeholders. That being said, we need to ensure our team is ready to deliver throughout a stronger second half with the same commitment to safety and quality.
I’m proud to share that our 2020 Corporate Responsibility Report, “Stronger: Team, Partnerships, Business” was recently published on cooperstandard.com. The report covers progress toward world-class performance in all areas of our business with new goals for renewable energy and waste reduction and provides updates on other business initiatives such as our Diversity, Inclusion and Belonging activities. Please take some time to read about the important work being done and our accomplishments on topics important to all our stakeholders, including our employees.
As previously mentioned, the Global Leadership Team strongly encourages employees to consider receiving the Coronavirus vaccine when available in their area and reminds all to continue practicing safety measures to reduce exposure and the spread of the virus. Please see more details included in the right column. I am pleased to share that as vaccination rates increase and governmental/health guidelines are enhanced, updates to Cooper Standard’s “Safe Return to Operations Plan” are also being made. We anticipate that as vaccine rates increase locations will be able to start progressing to new phases which will ease some COVID guidelines.
While COVID cases are reducing at most of our locations, we are reminded that some countries are still experiencing higher counts. It is with great sympathy that I share the passing of an employee from our Varginha, Brazil facility. We extend our condolences to the family, friends and colleagues of Clezio Oliveira. As of May 7th, the Company had a total of 47 employees with an active case of COVID-19.
Thank you for your efforts throughout the pandemic to deliver results and keep yourself and one another safe.
Preparing for a Stronger Second Half of 2021
The automotive industry continues to be impacted by many of the challenges I mentioned in my last letter, including the global microchip shortage which is impacting several industries. As a result, many of our customers have slowed production, with some even pausing production for a couple of weeks to allow the supply chain to recover. Despite these challenges, we continue to have strong operating performance throughout the unpredictable quarter with the areas of our business that we can control.
While production has been slower than anticipated, consumer demand for vehicles is still high, and our customers are indicating that they are anticipating high production levels for the second half of the year. In fact, one customer has already cancelled their typical summer shutdown to try to help make up for slow production in the first half. Cooper Standard is also anticipating that the second half of the year will be very busy for our manufacturing facilities. As we prepare for a busier second half, it is important that we remain focused on what we can control to manage cost, maintain our safety commitment, work to mitigate risks and prepare for production demand to increase.
I especially want to thank those in the plants for your support and ongoing commitment to excellence. I am pleased to share that 14 plants have achieved Diamond Status in the first quarter 2021. We look forward to many others joining these ranks throughout the year! We also have new business launching at several plants who are working hard to provide smooth launches for our customers.
As the world continues to battle COVID-19, it is encouraging to see that vaccination rates are increasing across the globe. The Global Leadership Team strongly encourages employees to consider receiving the Coronavirus vaccine when available in your area. The Company has been exploring options to provide vaccines for employees who may be interested. So far there have been limited options, but our teams will continue to work on this. We again remind you to continue practicing the needed safety measures in and outside of our facilities to reduce exposure and the spread of the virus. As of April 10th, the Company had a total of 86 employees with an active case of COVID-19.
I am confident that with our focus on safety and driving sustained value for all our stakeholders we will be able to overcome these challenges for an even brighter future.
Setting the Stage for a Strong Second Half
I am proud of our team’s hard work and proactive measures to address recent external interruptions impacting our business including severe weather and supply chain shortages. Despite these challenges, our team is delivering solid financial, quality and safety performance.
Cooper Standard’s business continues to rebound with the automotive industry. While production volumes were negatively impacted by challenges noted above, we expect product demand will increase in the second half of the year. We have more than 150 launches planned for 2021 alone. To prepare for this anticipated growth, it’s important that we continue to maintain stability across our global operations and quickly identify challenges and seek help early when needed.
In addition to COVID-19, the automotive industry is constantly being transformed. The trend I’m asked about most often is electric vehicles (EV) and how this shift in the market will impact our business. While there may be less demand for fuel products over time, the EV market provides many opportunities for Cooper Standard. Our teams are applying expertise from our Fuel and Brake Delivery and Fluid Transfer product lines to address EV needs such as heating and cooling batteries. In fact, 25 of the 150 planned launches are on electric vehicles and Cooper Standard is a supplier on 16 of the top 25 EV platforms globally.
While we continue to demonstrate our resilience in many areas, it is imperative that we don’t overlook risk and do our best to identify and mitigate it early. This is especially true of safety. Our Total Safety Culture expects all employees to play an active role in your safety and the safety of others. Please take time to be aware of your surroundings to avoid potential hazards and help prevent safety incidents from occurring, including everything from minor slips to more serious injuries. This also holds true for our COVID safety guidelines, please continue to practice safe behavior in and outside of our facilities. As of March 12th, the Company had a total of 53 employees with an active case of COVID-19.
Thank you for your continued commitment to driving sustained value for all our stakeholders. I am confident that by maintaining focus on the safety of our people, delivering quality products to our customers and positively impacting our communities, we will be ready for any challenges the year presents.
Recognizing Team Contributions
The new year is off to an exciting start – recently the GLT announced Performance Awards recognizing top performing teams in 2020. The GLT awards were established to recognize teams who have gone above and beyond to satisfy the needs all of our stakeholders. Please join us in congratulating the following teams:
I’m also excited to share that Cooper Standard was recognized as One of the World’s Most Ethical Companies by Ethisphere® - for the second consecutive year! Our positive work environment and culture provides Cooper Standard the needed foundation to maintain our steadfast commitment to being a trustworthy business. We were one of only four honorees in the automotive industry to receive this honor. I want to thank each and every employee for your dedication to conducting your work in an ethical, honest and responsible way and for speaking up for integrity to report when things aren’t right. Full details about the recognition can be found under Press Releases on the cooperstandard.com site.
As reported in our fourth quarter and full year 2020 earnings call, execution of our operating plans and longer-term strategic initiatives continue to drive improved results. If we continue on the current trajectory, it’s expected that these initiatives will allow us to achieve and sustain 10%+ for return on invested capital within the next two to three years. Achieving this target will significantly enhance the value we create for all five of our stakeholder groups; employees, communities, customers, suppliers and investors.
As you know, we continue to manage the impact of COVID-19 on our business. I am thankful to see that the number of active cases is reducing. As of February 12, the Company had a total of 63 employees with an active case of COVID-19. However, I’m saddened to share the passing of Antolin Segundo Sanchez from Atlacomulco, Mexico. We extend our deepest sympathy to his family, friends and colleagues.
Thank you again for your contributions to helping start the year strong. As we await expanding vaccine opportunities, please continue to practice safe behaviors both in and outside of our facilities. This remains our greatest strength in COVID-19 mitigation.
Starting Strong in 2021
Happy New Year! As some colleagues wrap up the holiday season and some are just beginning, I hope you had (or in some regions will have) a safe and relaxing time with your loved ones. I am proud of how our global team came together in 2020 to overcome challenges while upholding our values and achieving outstanding performance in many areas of our business.
Specifically, I would like to congratulate the 29 plants that achieved zero safety incidents in 2020. Also, 13 plants were recognized as a Cooper Standard Diamond plant, many also achieving zero incidents. This is very impressive! I’m pleased that 67.2% of our global plants are on the path to Diamond, achieving platinum, gold or silver status. The complete list is noted below.
In December, Cooper Standard was included on Newsweek’s list of America’s Most Responsible Companies for the second consecutive year. This list represents top performing companies in corporate social responsibility for environmental, social and corporate governance. It takes the combined efforts of all employees to achieve the results necessary to make this list. Thank you for your continued focus on driving value for all of our stakeholders (customers, shareholders, suppliers, employees and the community).
As we look forward to potential vaccine opportunities and a brighter 2021, I am saddened to share the passing of five employees since my last letter in November. We extend our deepest sympathy to the family, friends and colleagues of Carlos Cosme Jimenez, Gloria de Jesus Jimenez and Miguel Martinez Flores (Atlacomulco, Mexico), William Szabo (Fairview, Michigan) and Nathan Tidrick (New Philadelphia, Ohio). As of January 8th, the Company had a total of 100 employees with an active case of COVID-19. Our contact tracing confirms that employees’ greatest risk is outside of work. Please continue to practice safe behaviors both in and outside of our facilities and consider vaccination when available in your region.
The momentum we had at the end of the year continues into 2021 and I am looking forward to the opportunities the new year brings.
Finishing the Year Strong
Cooper Standard continuously demonstrates resilience throughout the COVID-19 pandemic and I am pleased to share some of the great accomplishment we’ve made over the last few weeks. As reported in our third quarter earnings call, our progress on our Driving Value plan and steps to optimize our cost structure have led to improved results. In fact, our strong performance has gained attention not only across our stakeholders but also with popular media outlets including the Wall Street Journal and CNBC.
Our global team also continues to progress on initiatives aimed at achieving / sustaining world-class operations. In October, the seventh annual Global Kaizen Competition winners were announced. These projects represent in-plant savings totaling $2.4 Million and reduced / freed-up capital valued at over $4.1M. Congratulations to the winning locations in each region:
- Global winner and Europe: Zdar, Czech Republic
- Asia Pacific: Kunshan 1, China
- Latin America: Torreón II, Mexico
- US / Canada: Surgoinsville, Tennessee, U.S
In addition to our strong results, I am pleased to share an important development with one of our core values - Diverse Talent. To further define and affirm our commitment to this important value, Cooper Standard is introducing a new Diversity, Inclusion and Belonging (DIB) policy and a DIB statement, “Valuing the Perspectives and Leveraging the Strengths of All Employees”. This policy outlines our focus through the following:
- Creating a recruiting culture that attracts a diverse talent pool and hires the right person for the right job no matter their diversity;
- Investing in programs to develop and retain a diverse workforce;
- Creating forums for all voices to be heard;
- Auditing for exclusionary norms, processes, policies and inequities;
- Providing opportunities for employees to be aware of their unconscious biases and learn about and celebrate others’ differences;
- Helping all employees feel physically and psychologically safe; and
- Improving and supporting the communities where we work and live.
With 2020 coming to an end, many challenges remain. As of November 23, the Company had a total of 137 employees with an active case of COVID-19. I’m deeply saddened to share that an employee from a facility in Mexico has passed away. We extend our deepest sympathy and condolences to the family, friends and colleagues of Lino Cabrera. Outside exposure continues to be our main area of risk. Please continue to practice safe behaviors both in and outside of our facilities.
I want to thank each employee for your contributions to our Company’s performance. I am proud of our team and I am confident that with our ongoing focus and commitment, we will continue our momentum through the end of the year and into 2021.
Sustaining Our Unwavering Commitment to World-Class
At Cooper Standard, we are focused on satisfying the needs and continuously driving value for our five stakeholder groups (customers, shareholders, suppliers, employees and the community). Each quarter, I along with Jon Banas, our Chief Financial Officer and Roger Hendriksen, our Director of Investor Relations, host a call to discuss financial results and provide an update on the business. The third quarter earnings call will be held on Friday, November 6th at 9:00 a.m. ET. As key stakeholders, I encourage all employees to listen to the call which will be available live and recorded on cooperstandard.com.
Throughout the pandemic, our teams have worked hard to overcome challenges and navigate new procedures, while achieving impressive safety performance. In fact, I’m pleased to share that our global Total Incident Rate year-to-date is 0.36 which exceeds our world-class benchmark. Our Total Safety Culture goal continues to be zero incidents and so far, 32 facilities are on track to achieving this impressive goal.
As of October 19th, our confirmed COVID-19 cases are 264 employees with 144 who have already recovered and returned to work. Outside exposure continues to be our main area of risk so please do your part in ensuring you take the proper precautions and utilize best practices both in and outside of your facility.
We are continuously monitoring global health organizations to ensure our health and safety measures stay current to mitigate risks of COVID-19. Our efforts and commitment to these procedures have helped us prevent the virus from entering our facilities and reduce the spread where it has. Soon, our Health and Safety Teams will be launching a multi-lingual online health survey to replace the printed health surveys that employees are using today. Additional details on the survey will be announced soon at your facility.
Strengthening our unwavering commitment to world-class operations, I am pleased to share that new/updated Quality and Health, Safety and Environmental policies are being circulated and will be displayed in every facility globally over the next few weeks. I am also pleased to share that a new global Diversity, Inclusion and Belonging Policy will be introduced in Q4 2020 and will be displayed next to other global policies – reaffirming and enhancing our commitment to these important areas.
As we begin preparing for the end of the year and looking ahead to 2021, I would like to thank everyone for their hard work and encourage you to continue identifying opportunities to meet the needs of each of our stakeholder groups and achieve our goals.
Commitment to Safe Operations and Our Communities
As we enter a new season, I am pleased to share an update on our operations and continued commitment to the communities where we work and live.
Overcoming challenges of COVID-19 has not been easy but our team’s commitment to our Total Safety Culture has continued to shine. To date, 33 manufacturing facilities have achieved zero incidents for 2020! Operations have ramped-up to 90+% of expected pre-COVID volumes, and we anticipate these volumes will continue at this level through the end of the year.
As of September 21st, our confirmed COVID-19 cases are 192 employees with 109 who have recovered. It is imperative that we continue our focus on safety in and outside of work. Outside exposure continues to be our main area of risk.
Cooper Standard is currently undergoing our budgeting process and will be presenting 2021 budgets to the Board of Directors for approval in December. As mentioned in my past letter, we must continue executing on our Driving Value plans and be operating optimally by the end of 2021 to return the business to 10% (or greater) ROIC.
Another contributor to our success is focused on continuous improvement within our manufacturing processes. Next month, our Global Kaizen competition will be held during the Global Manufacturing Summit, and we look forward to recognizing the winners for their hard work to implement best practices and cost saving measures.
Despite the challenges we’ve faced in 2020, our global team has sustained our commitment to the communities where we work and live. Our employees are engaged in many activities throughout our global facilities including food donations in Brazil, volunteering with special needs adults in China, helping expecting mothers in Mexico, supporting cancer causes in Michigan and much more. I am amazed at and proud of the spirit and effort Cooper Standard volunteers have put forth to making our communities better.
Finally, I would like to note the importance of staying safe and healthy as we enter flu season for many regions. As a reminder, local health agencies recommend flu shots, which are often available at little to no cost to you, depending on the country where you reside. With the added challenge of the global pandemic, it is important now more than ever that we stay up to date on our wellness visits and vaccinations.
Adjusting the Business for Enhanced Results
As you may recall, my update letters have transitioned to a monthly cadence (or more frequent as needed) to continue our alignment and provide business updates. As of August 24th, our current confirmed COVID-19 cases are 123 people with 75 who have recovered. Our manufacturing operations continue to rebound and I’m pleased to share that we are currently operating at 90+% of expected pre-COVID volumes. This is very positive and provides a sense of assurance that the business is recovering as anticipated.
Additionally, Cooper Standard is currently undergoing our budgeting and planning cycle to prepare for 2021-2023. These efforts along with the Driving Value ROIC plan that is underway, are helping ensure a bright future for Cooper Standard. The Driving Value plan has seven defined workstreams to address problem areas in the business and help establish stronger business practices going forward.
- Commercial - improve sales growth and overall margins
- Indexing - tightly manage raw material pricing
- Program Margin Improvement - protect program margins throughout the program lifecycle
- PLUM - purchasing and supply chain optimization
- Manufacturing Continuous Improvement - enhance processes for improved efficiencies
- Cost Management - optimize business cost structure
- Strategic Actions and Restructuring - actively addressing challenges / opportunities
The improvements executed in these workstreams will help Cooper Standard significantly improve our overall financial performance and return the business to 10% (or greater) ROIC and EBITDA by 2022. Achieving this goal will require the business to make significant progress throughout the coming months to be operating optimally by the end of 2021. In addition to these initiatives, I would like to reiterate the importance of delivering sustained value for our all our stakeholders (employees, customers, suppliers, investors and our communities). Not only through goals, but our daily tasks should be focused on elevating our products and services for these groups as well.
Our global team has continued to demonstrate high performance and engagement levels. This performance was recently recognized through Cooper Standard's 2019 Plant awards announced during the monthly World-Class Operations meeting. Congratulations and thank you to the following teams for your hard work.
Best Safety Performance and Plant of the Year – Juarez, Mexico Sealing
Best Quality Performance – Chongqing Sealing, China
Best Launch Performance – Bielsko-Biala, Poland
Best Inventory Management Performance – Gaylord, U.S.
Best Employee Engagement – Aguascalientes Sealing, Mexico
As summer starts to wind down and we continue to navigate the phases of the COVID-19 recovery, let’s all remain safe and healthy at work and home.