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PLASTICS NEWS STAFF
By Joseph Pryweller
LOS ANGELES (April 17, 2001) -- Microsoft
Corp., the world´s most recognized name in computer operating systems,
never was sold on the idea of a new economy.
Instead, the company -- and others attempting to tie technology
to the manufacturing floor -- has kept grounded in harder-core realities,
said Chris Colyer, Microsoft industry marketing manager for manufacturing.
That lesson was lost on some early Internet pioneers whose models
have not succeeded as well, he said.
"The main dynamic was developing an economy of the Internet, where
it was about working on Internet time and undergoing radical change,"
said Colyer, who is based at Microsoft´s Redmond, Wash., headquarters.
"We take a more realistic approach by offering ways to add efficiency
to businesses."
Don´t look now, but the Internet is invading the plastics-processing
world in ways unimagined a few years ago. Where companies once talked
of trading resin and products over a neutral site, using the Web
today means something much broader.
Call it supply-chain management. Or parse it down into its elements,
which include using the power of the Web for such areas as product
development, inventory management, order processing and product
fulfillment.
A mix of manufacturers and high-technology companies explained
how the Internet will affect the plastics industry during two April
12 panel discussions at Plastics Encounter, a Plastics News-sponsored
trade show and conference in Los Angeles.
The Internet already has made that anticipated leap with some
companies. Scottsdale, Ariz.-based Tech Group Inc. has used the
Web to work on projects involving more than 60 molds and for plants
spread across four countries.
The company has joined with Waltham, Mass.-based Conferos Inc.,
an Internet company specializing in product development, to manage
projects, said David Roe, Tech Group director of developmental engineering.
The company now gets involved upfront with its OEM customers to
view computer-aided-design drawings, perform engineering tests and
come up with the correct tool design for a product, Roe said.
"It´s been a good fit," he said. "We can reduce time spent making
engineering changes and reduce time to market. It´s been a huge
benefit for us."
Conferos -- formerly known as BuyPlastics.com -- launched commercially
in November using Windchill software provided by Parametric Technology
Corp. The software allows companies in disparate locations to perform
product development work jointly on the Web.
The company´s ProductSync software allows engineers globally to
link in one virtual room, said Conferos Vice President Tom Podesta.
"Communication is the backbone of success," Podesta said. "Sometimes,
three to seven departments are involved in the (product life cycle)
management process."
Some companies are taking product development to new extremes.
Schick Wilkinson Sword Division, a unit of Pfizer Inc., has used
Conferos software to start a "design red book" detailing the design
history of its consumer products, said Richard Stadterman, Schick´s
director of global engineering.
The company also uses online CAD drawings to give suppliers a
taste of what a product will look like, before they bid on a new
job, Stadterman said. That way, suppliers more accurately understand
the costs and work involved, said Stadterman, who is based in Milford,
Conn.
The shift at Schick is a radical departure from the company´s
former data-transmission methods, Stadterman said.
"E-mail could not do the work," he said. "Drawings weren´t quite
complete."
The Web is becoming more than a product-development hotel room.
It also will play a key role in order and inventory management,
the so-called back end of purchasing.
But processors still need to buy into that idea, said Jay Gardiner,
director of business development with Houston-based ECOutlook.com
and a former president of the Society of Plastics Engineers.
Some companies, such as resin suppliers GE Plastics and Eastman
Chemical Co., have been early users of Web buying, Gardiner said.
But most parts producers still are waiting to be shown more proof
that the Web will work for them, Gardiner said.
It will take a greater commitment by a company´s top executives
to move to the Web, Gardiner said. And they will make that executive
decision soon if they want to stay competitive, he warned.
"By working early with your supply chain, you can have a strong
advantage," Gardiner said. "Using the Web is probably the only way
to get that."
Online methods can automate many of the low-end but laborious
functions that companies use to process orders and make purchases,
Gardiner said. Those include keying in an order, communicating it
to others and shipping out a part.
Companies can see an immediate spike in profitability by moving
to computer models, he said. Many of those savings come from avoiding
data-entry errors.
ECOutlook specializes in that approach, working with large processors
and resin suppliers. Companies pay a subscription fee to automate
those processes by using a private link to ECOutlook´s Web site.
Microsoft takes a different approach, offering companies software
to build their own internal network by using the company´s BizTalk
Server 2000, launched in December. Companies such as Troy, Mich.-based
Delphi Automotive Systems are adopting that system to connect with
supplies, Colyer said.
"We give you the ability to orchestrate internal processes and
adapt those processes as you change," Colyer said.
Either way, the cost can be lower than what users might think.
The Biztalk server costs about $50,000, Colyer said. Using ECOutlook´s
Web-hosting service varies in price, depending on usage, but will
not break a company´s budget, Gardiner said.
The industry also is driving to adopt a common computer language,
called XML, that will avoid difficulties in translating data from
one software package to the next. That will give processors fewer
excuses to avoid online supply-chain tools, Gardiner said.
"Current methods are not efficient," he said. "You have to decide
if you´re going to do what other parts processors are doing or if
you are going to lag behind."
PLASTICS NEWS STAFF
By Joseph Pryweller
LOS ANGELES (April 18, 2001) -- The
glittering commercial hub of Los Angeles might be flickering on
low flame for awhile.
And that has nothing to do with the electricity crisis now spreading
across the state of California.
Los Angeles, the nation´s second-largest city, faces an economic
slump after nearly a decade of relatively rapid growth, said Jack
Kyser, chief economist with the Los Angeles County Economic Development
Corp.
A number of factors are aligning to bring down the economy, said
Kyser, an April 11 luncheon speaker at Plastics Encounter, a Plastics
News-sponsored trade show and conference in Los Angeles.
Not the least of those concerns is the burst of the Internet bubble
and layoffs by many of the area´s top companies.
"We´re going to suffer a velocity shock," Kyser said. "I expect
little or no growth in the economy, after it has climbed upward
before. The year 2000 was supposed to have the Y2K problem, but
for Southern California, the economic downturn could be the real
Y2K for us."
That does not bode well for the plastics industry. Los Angeles
County has the most plastics processing employees in the United
States, and about 500 processing establishments, according to figures
from the Washington-based Society of the Plastics Industry Inc.´s
2000 Economic Report.
In addition to problems in the technology sector, old-line companies
including Lockheed Martin Corp., Southern Pacific Rail Corp. and
Times Mirror Co. have announced layoffs, creating a recipe for slower
growth, Kyser said.
The region typically has enjoyed low nonfarm unemployment, currently
running at 2.6 percent this year, Kyser said. But the recently announced
layoffs should mean a huge spike to those figures, he added.
The ongoing power crisis -- with rolling blackouts expected this
summer -- does not add to the region´s luster or help to attract
new employers, Kyser said.
Still, while an expected strike in the entertainment industry
this summer could cripple Hollywood production and add to the unemployment
rolls, it also would help ease the energy crunch, he said.
"We have enough bad movies to last the rest of the year, even
with a strike," Kyser said.
While the economy will slow, the news should not be disastrous
for the region. The recession should be mild and might last only
this year before a slight rebound comes, he said.
"You have to plan ahead," Kyser said. "The economy might be in
for moderate pain this year. You´ll have to stack up on your painkiller
of choice."
PLASTICS NEWS STAFF
By Bill Bregar
LOS ANGELES (April 18, 2001) -- California´s
electric crisis has focused plastics industry attention in the Golden
State on ways to save energy -- from all-electric injection presses
to insulating blankets wrapped around injection barrels to keep
heat in, like carriers use to deliver a pizza.
Several exhibitors displayed products aimed at cutting energy
use during the Plastics Encounter show, held April 10-12 in Los
Angeles.
Skyrocketing electric prices and rolling blackouts have caused
headaches for businesses and consumers throughout much of California.
"The big fear with our customers are the rolling blackouts, and
the disruptions they cause," said Scott Merrill, regional sales
manager for Milacron Inc.´s injection machinery business. At
Plastics Encounter, Milacron touted its Powerline all-electric injection
press, which the company claims consumes 50-90 percent less electricity
than hydraulic machines.
In California, several factors contributed to a botched deregulation
process: a shortage of power plants, strong economic growth and
a regulatory system that capped the prices electric companies could
charge for power -- while the unregulated wholesale price they must
pay for that power has leaped.
Just a few days before the trade show, Pacific Gas & Electric
filed for Chapter 11 bankruptcy protection. Southern California
Edison also is facing financial trouble. According to the Los
Angeles Business Journal, the two utilities face debts totaling
$14 billion.
The city of Los Angeles has been spared the chaos, since its municipal
electric system was not included in the deregulation. So the lights
stayed on during the trade show, held at the downtown Los Angeles
Convention Center.
Merrill, who is based in Anaheim, has sold Milacron machines in
California for 20 years. He said San Diego was the first part of
the state to deregulate its electricity, about five years ago. There
were problems.
"That was the harbinger of things to come, but the rest of the
state just missed it," he said.
The Cincinnati-based machinery maker claims that three all-electric
presses can run on the same power consumed by one similar-size hydraulic
machine. It´s a good selling point these days in California,
even with a slow economy, Merrill said at Milacron´s booth.
"The machines we are selling right now are electric machines,"
he said. "When you´re going in and talking to the customers
now, the first thing they talk about is electric machines."
On April 11, California Gov. Gray Davis approved $850 million
to finance a statewide energy conservation package. Davis wants
to avoid more rolling blackouts this summer. Part of the plan includes
incentives to help businesses reduce energy use.
Milacron is hoping some of the money will bring back programs
that encourage molders, through credits or rebates, to buy all-electric
presses and scrap machines that use hydraulic power.
Van Dorn Demag Corp. does not offer an all-electric press yet,
but the Strongsville, Ohio, company did roll out something called
the Power Miser. The variable-speed drive system, hooked up to a
traditional press, can save 30-50 percent in energy costs, according
to Van Dorn.
Power Miser controls alternating-current motors that run the hydraulic
pumps, turning on the power only as needed to perform a function
on the machine. Van Dorn Demag sent out a direct-mail promotion
the week before the show.
"We´ve had several customers contact us back already. They´re
very interested," said Alfred D. Tolliver, director of parts and
service support.
Power Miser works both on Van Dorn presses equipped with the company´s
Pathfinder controller, and on other brands of machines, he said.
Magnum LLC of Garden Grove, Calif., did not exhibit at Plastics
Encounter, but one of its owners, Pat Mulligan, attended the show
and conference. Magnum offers variable-speed drives for injection
presses, to reduce energy use when the motor does not need to run.
In California, customers "are knocking the doors off" to find
energy-saving products, Mulligan said.
Also at the show, competitors Insul-Vest Inc. of Mulvane, Kan.,
and Uni-Therm Insulating Systems of Lewisville, Texas, touted their
insulating vests that slip over the barrels of injection presses,
extruders or blow molding machines.
At Uni-Therm´s booth, President Dan Sherrill directed a visitor
to place his hand on a barrel section heated to 400° F, and
covered by one of the blankets. It felt slightly warm.
"What these people are paying right now in energy costs is astronomical,"
Sherrill said. "They can buy an insulating system for a nominal
amount and it saves big money."
Sherrill and John Pendergraft, vice president of Insul-Vest, said
sales have taken off in California. Their products are simple to
explain and promise a quick payback, they said. A cover for a typical
injection molding machine sells for around $500. The blanket also
keeps workers from getting burned.
"The return on investment is phenomenal," Pendergraft said. "With
the incentive programs that a lot of the power companies are offering
now, there´s a lot of interest."
Sherrill said processors in Southern California are paying about
12 cents a kilowatt hour for electricity. But some companies that
signed up for deals to get discounts now face being shut off in
times of very high demand, or keep running at hugely inflated rates.
"What´s happening is, when they go into peak demand, they´re
paying $9 (per kwh)," he said.
Magnum´s Mulligan said some plastics companies are moving
out of the state. That is bad news in California, which had 137,000
plastics jobs in 1999, making it the top state for plastics-related
employment, according to the Society of the Plastics Industry Inc.
in Washington.
"It shouldn´t have gotten this far," Mulligan said.
By Bill Bregar
PLASTICS NEWS STAFF
LOS ANGELES (April 18, 2001) -- Speakers
at Plastics Encounter used two words to sum up the future of machine
controls and production monitoring: open architecture.
"We feel very strongly that the industry needs open architecture"
linking all devices in a factory, said G. Frederick Humbert III,
executive vice president of sales and marketing at American MSI
Corp.
American MSI makes hot-runner controllers in Moorpark, Calif.
In the early 1980s, the company incorporated a personal computer
into its controls. Last summer, American MSI expanded into plantwide
monitoring and networking business by introducing the Cell-Net System,
which provides a central access point for monitoring all types of
machinery, including auxiliary machines, in an injection molding
plant.
Today, it´s a PC world.
"You have this ubiquitous landscape, where everywhere you go,
you see the influence of PCs," Humbert said. But factories still
lag behind. "Why can´t we experience the same level of connectivity?
... Most of the equipment on the factory floor really can´t communicate
at all."
One result, Humbert said, is that molders have "an untapped wealth
of information" from machines they can´t access.
Ron Sparer, the top controls official at Milacron Inc., agreed.
Running on Windows NT, Milacron´s Xtreem system allows technicians
in a remote location to diagnose molding problems and change machine
settings.
"If any of you have ever struggled to get this information out
of a non-PC-based machine, you know this is unbelievable," he said.
But the flow of information is either feast or famine. When open-architecture
systems become the norm, sorting through the data will be the biggest
challenge, he said.
"Now everybody´s complaining that they´re drowning in e-mails,
or they´re drowning in documents."
Sparer said molders will have to able to connect data systems.
"Being able to communicate information quickly and seamlessly
is the key to staying competitive," he said.
Milacron´s Plastics Technologies Group is based in Batavia, Ohio.
Other speakers at the technology session discussed IntelliMold
and MuCell technologies.
Last year, Textron Automotive Co. Inc. began to license IntelliMold
for injection molding. Developed by Milko Guergov, the process uses
transducers to monitor and control melt pressure and temperature
inside the mold, and adjusts the injection press in a closed-loop
process.
But at first, Textron officials were skeptical of Guergov´s claims,
according to Jerry Mosingo, executive vice president of manufacturing
at Textron Automotive Trim. After an automaker told Textron about
IntelliMold, Mosingo assembled top molding experts from his company.
They visited Guergov´s firm M&C Technologies in Ann Arbor, Mich.
What got their attention was seeing a perfectly molded part that
Textron had experience trouble molding.
Troy, Mich.-based Textron ended up buying M&C.
"IntelliMold is the only technology that actually monitors and
adjusts the melt inside the mold, in real time, every cycle," Mosingo
said.
Robert Alvarez of custom molder United Plastics Group Inc. in
Westmont, Ill., praised the MuCell microcellular-molding process
from Trexel Inc.
MuCell´s tiny bubbles mean the plastic flows into the mold, with
lower molding pressure than traditional molding, and reduced part
warpage.
"In the three years that I´ve worked with this, I´ve been able
to mold parts that were not moldable," he said.
Michael Wolcott, a Washington State University official, outlined
the booming market for wood/plastic composites, used now mainly
in decking for construction.
New players are coming into the market. Ten new factories started
operating in 2000 to make wood/plastic composites, said Wolcott,
research director of the Wood Materials and Engineering Laboratory
at the school in Pullman, Wash.
The material, which combines plastic and waste wood, is moving
into several new markets, such as windows, doors and exterior siding.
By Bill Bregar
PLASTICS NEWS STAFF
LOS ANGELES (April 16, 2001) -- Macchi
srl, an Italian company producing machines for making blown and
cast film, has opened its first North American sales office.
Macchi North America opened last fall in Burlington, Ontario.
The company also has a U.S. office in Middle Village, N.Y.
Paul Conley, North American sales manager, said the company is
well-known in Europe. Macchi also sells machines in South America,
Asia and Africa.
"As far as North America goes, no. The typical reaction is `What´s
a Macchi?´" Conley said in an interview at the company´s booth during
the Plastics Encounter show, held April 10-12 in Los Angeles.
The company is based in Varese, Italy, employs about 110 and generates
annual sales of $35 million a year, Conley said.
Founder Luigi Macchi received an early patent on coextrusion of
blown film, in 1966. The company has sold more than 800 lines.
Macchi concentrated on blown film for more than three decades.
Today, the company makes machines that can produce film with up
to seven layers, according to company literature.
Conley said Macchi expanded into cast film machinery about three
years ago.
By Roger Renstrom
PLASTICS NEWS CORRESPONDENT
LOS ANGELES (April 16, 2001) -- Software
developer IQMS of Paso Robles, Calif., has broadened its product
line, expanded into Europe and added personnel.
The firm has adopted EnterpriseIQ as a broader identity for the
software formerly called IQWin32. Its enhanced WebDirect add-on
module allows manufacturers to use the Internet to connect with
suppliers, customers and employees for a variety of new functions.
IQMS said it implemented a beta-test system at Mikron Holding
AG plastics division´s plant in Vianen, the Netherlands, within
budget and a time window of 2˝ months. Biel, Switzerland-based Mikron
obtained the plant as part of its Jan. 1 acquisition of Axxicon
Group NV. Two other Axxicon plants in the United States already
use IQMS systems.
IQMS exhibited at Plastics Encounter Los Angeles, held April 10-12.
The firm is expanding beyond plastics processing and will provide
software for other repetitive manufacturing such as die casting,
metal stamping, decorating and assembly, said sales director Liz
Alflen.
The company employs about 45, up from 35 at the same time last
year, and is "hiring across the board," said Mark Bosse, marketing
manager since March.
By Roger Renstrom
PLASTICS NEWS CORRESPONDENT
LOS ANGELES (April 16, 2001) -- Custom
injection molder Multi-Plastics of New Mexico Inc. has extended
its lease in Las Cruces, N.M., and is considering its future plans.
Multi-Plastics Inc. of Saegertown, Pa., established the division
in 1998 to shorten the distance to customers doing business in Mexico,
particularly in Hermosillo and Ciudad Juárez. The division
employs 14, operates 10 presses of 28-150 tons and has broadened
its clientele.
"We extended the lease for two years while we determine what we
want for our permanent operation," Bryn Davis, division general
manager, said in an interview at the Mesilla Valley Economic Development
Alliance booth at Plastics Encounter/Los Angeles, held April 10-12.
"We received a lot of encouragement to bring our level of molding
and expertise to the border area."
Multi-Plastics of New Mexico focuses on automotive and electronic
parts and is venturing into medical work: "Medical tends to be more
stable in a tumultuous market," Davis said.
Molding, tooling and metrology operations in Pennsylvania have
annual sales exceeding $16 million, and the fast-growing New Mexico
division adds another $1 million now.
"That (figure) is growing as we speak," said sales manager Peter
Kraus.
Currently, six other firms, including plastics processors, are
evaluating the Mesilla Valley for relocation, said Capri Chapman,
the alliance´s marketing director. Several industrial areas
are located in the 45-mile corridor from Las Cruces to Ciudad Juárez.
Relocation incentives include tax breaks, available labor, utilities
and a university-town quality of life, she said.
By Joseph Pryweller
PLASTICS NEWS STAFF
LOS ANGELES (April 12, 2001) -- If Californians don´t recycle
50 percent of their rigid plastic containers by 2005 manufacturers
would have to pay a penalty, under legislation scheduled for a hearing
on April 16.
The state Senate bill represents a new strategy for California
environmentalists. Instead of traditional demands for more bottle
deposits or recycled content in packaging, they´re simply setting
a recycling rate and leaving it to industry to come up with a plan
to achieve the goal.
Mark Murray, executive director of Californians Against Waste,
unveiled the plan April 11 at the Plastics Encounter conference
in Los Angeles.
The bill is sponsored by state Sen. Wesley Chesbro, D-Arcata.
It will come up for a vote before the state Senate´s Environmental
Quality Committee.
If approved, the bill will then be sent before the state Senate,
where it must be ratified before going to the Assembly.
A proposed California law to expand the state´s recycled-content
requirements to include food and cosmetic packaging failed last
year. This new bill differs in its direct approach to manufacturers,
Murray said.
"We´re using this as a starting point to get them more involved,"
said Murray, who is based in Sacramento, Calif. "We need critical
incentives to make that possible."
Tim Shestek, western region manager for state and local public
affairs with the American Plastics Council, was on the same panel
with Murray. He did not have a comment on the new legislation, but
said that increased consumer awareness about recycling was a priority
for APC.
"Consumers don´t always look beyond soft-drink returns for curbside
recycling," Shestek said. "They´re not looking in the bathroom for
bottles, or at laundry detergent containers. Plastics could play
a bigger part in the recycling stream."
APC plans to spend $40,000 in Los Angeles County during 2001 for
an awareness campaign, launched by June at area Albertson´s supermarkets.
The state of California, meanwhile, is spending $10 million over
the next 18 months for recycling awareness, Shestek said.
Increased demand for recycled content in such products as plastic
lumber will help maintain recycling demand without adding financial
burdens to processors or taxpayers, Shestek said.
He said could not say with certainty that Arlington, Va.-based
APC would fight Chesbro´s legislation.
A 50 percent recycling rate would require a big jump from the
current level. Recycling rates for rigid plastic containers have
dropped in California from close to 25 percent in 1995 to 17.9 percent
in 1999, according to figures from the California Integrated Waste
Management Board.
Meanwhile, more than 2 million tons of plastic packaging were
disposed of in 1999 at a $340 million cost to taxpayers, according
to the legislation.
Still, the state already has a bottle deposit law, expanded two
years ago to include more varieties of containers.
Under the new legislation, manufacturers must ensure that at least
50 percent of plastic containers are recycled. The recycling rate
for each resin type would be calculated separately. If they do not
comply, packagers that use those materials would have to pay to
offset the costs associated with the recycling of those containers.
Those costs typically would run 1-2 cents per bottle, Murray said.
He added that he expected the bill to be passed by the seven-member
committee but face more serious opposition by the full Senate. The
bill could be altered before final passage, if it passes at all,
he said.
By Steve Toloken
PLASTICS NEWS STAFF
LOS ANGELES (April 11, 2001) -- It was before his time in
plastics, but Trend Technologies Inc.´s Bill Hobbs said an
experience trying to merge operations at steel factories has stayed
with him, even as he now tries to meld new operations into fast-growing
Trend.
Hobbs was running two companies for Britain´s Bridon plc,
in charge of more than 150 steel-related factories and distribution
centers, when the company needed to turn around a German steel wire
plant it had bought.
The German company was not profitable, so Hobbs´ company
began sending over managers from the United Kingdom who made detailed
suggestions to the Germans. Six months later, it was still "losing
all kinds of money," Hobbs said.
So Hobbs halted the advice trips. Instead, he simply told the
German managers what he wanted, gave them resources and a deadline.
Nine months later, the German operation was profitable.
His lesson: be wary of imposing your own "best practices" on someone
else.
Hobbs, now Trend president and chief executive officer, addressed
a wide-ranging panel discussion on managing mergers and acquisitions
at Plastics Encounter, a Plastics News-sponsored trade show
and conference held April 10-12 in Los Angeles.
John Mack, CEO of U.S. Business Exchange, a mergers and acquisitions
service in Santa Monica, Calif., said the slowing economy is not
likely to slow M&A activity all that much.
Across all industries and sizes of companies, mergers and acquisitions
are down from a white-hot 2000, but the levels still are well above
even those of the mid-1990s.
"We are seeing a downturn, but we are not back to sea level yet,"
he said.
In the plastics industry, M&A activity is even less likely to
slow, he said. That´s because the industry is still very fragmented
-- the largest processors account for only 15 percent of the market
-- and because original equipment manufacturers continue to boost
outsourcing and reduce suppliers, he said.
"That will drive consolidation for years to come," he said.
James Swartwout, chairman and chief executive officer of Summa
Industries in Torrance, Calif., said it´s important to trust
your judgment -- not just the financial statements -- and to understand
the motivation of the person selling the company you want.
Summa has grown in the past 12 years from $3 million in sales
to $150 million, and has acquired 11 plastics processors since 1993.
Drawing on that experience, Swarthout also recommended hiring a
lawyer skilled in M&A. And, he said, you need to be prepared to
walk away from the deal at any time.
Both Hobbs and Swartwout said the Internet plays a surprisingly
strong but low-key role in M&A. Hobbs said a Web site says a lot
about how a company views itself. Swartwout said a small company
he is interested in buying responded to his inquiries -- after ignoring
many others -- because Summa´s Web site intrigued the would-be
target.
By Steve Toloken
PLASTICS NEWS STAFF
LOS ANGELES (April 11, 2001) -- Consider
it a shot across the bow of the injection molding industry: One
of the giants of the world of contract manufacturing is telling
molders that his industry is going to powerfully reshape theirs.
Pushed by original equipment manufacturers in electronics looking
for the lowest manufacturing cost around the globe, more and more
production is going to head toward contract manufacturers with a
worldwide presence -- like Flextronics International Ltd. -- and
away from traditional molders.
At least that´s the message from Flextronics, the would-be beneficiary
of all those changes.
"We think the contract manufacturing industry will have the greatest
impact on the plastic molding industry -- more so than anything
in the past 20 years," said Paul Santina, vice president of business
development and global plastics for Flextronics. Santina spoke April
10 at Plastics Encounter, a Plastics News-sponsored trade
show and conference in Los Angeles.
"I think it will be harder and harder for injection molders to
be located in the United States," Santina said. "If you want to
be a plastic partner to us, you need to be able to deliver parts"
around the world, he added.
Flextronics already has a large presence: The company has nearly
750 675 injection presses in 17 plants on four continents, and plans
to grow to 1,000 presses in the next 12-18 months, he said. That
growth will come in Asia, Mexico, Brazil, and Eastern Europe, he
said.
The company does more than $400 million in molding on its own,
and subcontracts for another $200 million, he said.
Santina said the contract manufacturing industry will continue
to grow. The company had revenues of $11.2 billion in 2000, and
expects to be one of a handful of contract manufacturers with $20
billion to $40 billion in sales.
That growth will come from more OEM outsourcing: The electronics
manufacturing services industry, jargon for Flextronics and competitors
like Solectron Corp., currently make up only about 20 percent of
the total electronics industry manufacturing.
But some of the EMS industry has been taking it on the chin lately,
seeing scaled-back orders as the electronics and telecommunications
industry has slowed dramatically. Santina said he thinks Flextronics
will weather that because OEMs increase outsourcing in a slowdown,
and he noted that the company recently raised $1 billion of new
financing that will come in handy when bargain hunting for acquisitions.
Some plastics processors, like United Plastics Group Inc., say
niches remain for molders because Flextronics will not go after
work of less than $50 million.
"We have to follow behind them and pick up the dregs," said Robert
Alvarez, vice president of technology for Westmont, Ill.-based UPG.
Santina said Flextronics is interested in the automotive and medical
markets, although he said the auto industry has some "very punitive
ways of doing business."
Alvarez, a former Johnson and Johnson executive, said the medical
industry remains undecided about outsourcing.
However, he added, the medical-device industry is primed for outsourcing
because contract manufacturers are much more sophisticated in their
technology than they used to be, and because drug therapy increasingly
is turning devices into something more akin to commodity products.
That could push medical manufacturers to want to use their capital
on research, not on manufacturing, he said.
Increasingly, the electronics business will migrate to Asia, Santina
said.
Flextronics recently took over most of the cell-phone work for
Telefon AB LM Ericsson and plans to move that to China. Ericsson´s
cost of labor doubled in the past two years in Mexico, to $3.50
an hour, and Flextronics suggested moving most of the work to China.
"We keep building plant after plant (in China) and we keep seeing
no pressure whatsoever on wages," Santina said.
About 525 of the company´s injection presses are in Asia, he said.
PLASTICS NEWS REPORT
LOS ANGELES (Jan. 18, 2001) -- Attendees
of the conference accompanying Plastics News´ upcoming trade show
in Los Angeles will encounter a different kind of business-oriented
program that addresses some of California´s hottest managerial and
legislative topics. Plastics Encounter Los Angeles, to be held April
10-12 at the L.A. Convention Center, will include panels debating
California´s energy crisis, merger and acquisition trends, Internet-leveraged
collaborative design and supply-chain management issues, and key
resin market prospects.
Other topics will examine likely recycling legislation, machinery
safety and ergonomics regulations, an assessment of the regional
plastics economy, and advances in controls and processing technologies
such as plastic/wood-flour composite extrusion. Paul Santina, vice
president of business development and global plastics for Flextronics
International Ltd., will deliver the keynote luncheon speech April
10 on the impact of contract manufacturing on the global plastics
industry.
"Our mission is to provide a forum that will attract senior managers
from across the plastics industry spectrum by addressing timely,
topical issues that affect both their day-to-day and longer-term
strategic planning," said Robert Grace, Plastics News editor and
associate publisher. Grace also is conference director of Crain
Communications Inc.´s recently acquired Plastics Encounters events.
Plastics Encounter Los Angeles formerly was known as the Western
Plastics Expo, under previous owner Advanstar Communications.
Confirmed speakers and their topics include:
* Jim Swartwout, chairman, president and chief financial officer
of Torrance, Calif.-based injection molder and extruder Summa Industries;
mergers and acquisitions panel.
* John E. Mack III, CEO of U.S. Business Exchange, a Santa Monica,
Calif., online listing service and consultancy for the purchase
and sale of small and medium-size businesses; M&A panel.
* Mike Noggle, the former SPM Inc. president who now heads his own
Anaheim, Calif., consulting firm, Engineered Services; the value
of strategic planning.
* Milko Guergov, vice president of technology for the IntelliMold
Systems unit of Textron Automotive Co. in Troy, Mich.; Textron´s
new IntelliMold closed-loop process control system.
* Fred Humbert, vice president of sales and marketing for American
MSI Corp. of Moorpark, Calif.; Cell-Net Internet-based, remote press-control
technology.
* Ron Sparer, manager of controls and automation development for
Batavia, Ohio-based Milacron Inc.; Xtreem controls, which bring
the Internet to each shop-floor press operator.
* Bob Alvarez, vice president of technology for United Plastics
Group Inc. of Westmont, Ill.; MuCell microcellular molding.
* Lori Anderson, director of economic and international trade affairs
for the Society of the Plastics Industry Inc.; the impact of plastics
on California´s and the western region´s economies.
* Tom Podesta, vice president of Waltham, Mass.-based Conferos Inc.;
online collaborative design and knowledge management.
* A senior official from Newport Beach, Calif.-based energy consultants
Utility Management Resource Group; energy-crisis panel. A frequently
updated agenda, including any new speakers, can be accessed by clicking
the "Conference Agenda" link in the L.A. section of the www.plasticsencounter.com
Web site. Conference registration costs $195 per day, or $395 for
all three days, and includes access to the show.
Separately, all-day injection molding and extrusion training seminars
will be offered April 11-12. Cost of the seminars also is $395,
and includes access to the show and to the April 10 Encounter conference
program at no extra cost.
* Paulson Training Programs Inc. of Chester, Conn., will use its
process-simulation software in a hands-on course on advanced injection
molding setup and troubleshooting. Instructor Torsten Kruse, Paulson
vice president and general manager, estimates that every hour of
simulator time equals more than five hours of actual molding practice.
* Compuplast International of Mississauga, Ontario, will offer two
full days of instruction about extrusion analysis, design and troubleshooting,
also using its simulation software. Compuplast Vice President John
Perdikoulias will teach the course, which is applicable to film,
sheet and profile extruders. Participants will qualify for a special
trial version of Compuplast´s new software.
PLASTICS NEWS REPORT
SAN DIEGO (Jan. 18, 2001) -- Contract
manufacturers are beginning to reshape the global plastics industry,
according to a senior official with Flextronics International Ltd.
Paul Santina, vice president of business development and global
plastics for the Singapore firm, is speaking from experience. Flextronics
has grown at bullet-train speed, from sales of $200 million in 1996
to $4.31 billion in the fiscal year ended March 31. Santina, in
a Jan. 16 telephone interview from his San Diego office, said his
firm currently is on a $13 billion-per-year pace.
"We´re not going to buy plastics parts from you," he said. "There´s
a good chance we´ll do it all ourselves."
He suggests that approach will be more cost effective. The contract
manufacturer specializes in the electronics, computer and medical
fields. Flextronics has built huge, vertically integrated supplier
campuses in low-cost areas of the world, and has been on a recent
acquisition spree.
Its assets today include 675 injection molding presses, with Santina
predicting that will rise to about 1,000 in the foreseeable future.
The firm employs nearly 500 mold makers, and has 17 plastics processing
and design facilities worldwide. Santina said Flextronics plans
to add plastics facilities soon in China (its eighth in that country),
Brazil, Hungary and the Czech Republic. The firm also operates a
plant in New Braunfels, Texas. It is adding 80 acres and a 1.5 million-square-foot
facility in Guadalajara, Mexico, where it already has a 50-acre
supplier campus with a 1 million-square-foot facility.
Santina, a former Borg-Warner Chemicals resin salesman, said, "We´ve
differentiated ourselves by vertically integrating. ... We´re more
interested in doing strategic (supply) deals with big companies."
For example, Flextronics is in the first year of a five-year contract
that calls for it to supply Motorola Inc. with products and services
worth $30 billion.
"Having a global plastics capacity was important to us," said Santina,
who added "global plastics" responsibilities to his title and portfolio
about six months ago.
Santina will talk about how contract manufacturing will affect the
global plastics industry when he delivers the Plastics Encounter
Los Angeles keynote luncheon speech April 10 at the L.A. Convention
Center. For details, visit www.plasticsencounter.com online.
Kyser, left, and Kebler |
PLASTICS NEWS REPORT
LOS ANGELES (March 21, 2001) -- With
rolling energy blackouts again disrupting life in California, plastics
business managers are among those looking for answers, options and
alternatives. That´s the topic of an energy-crisis panel discussion
April 11 at Plastics Encounter Los Angeles.
The session will run from 10:45 a.m.-12:30 p.m. at the L.A. Convention
Center, as part of a broader, three-morning business conference
accompanying Plastics News´ April 10-12 Plastics Encounter trade
show.
Los Angeles Business Journal reporter Howard Fine will moderate
the session, which will feature the following panelists:
* Jack Kyser, Los Angeles County Economic Development Corp.´s economic
research director and chief economist.
* Curtis L. Kebler, Western region director of asset commercialization
for power provider Reliant Energy Inc., and a member of the governing
board of the California Power Exchange.
* Arnold Rosenthal, executive vice president of cost-containment
consultants Utility Resource Management Group Inc.
* Randall Phillips, a project engineer with Republic Tool & Manufacturing
Corp., a Carlsbad, Calif., molding unit of lawn care giant Scotts
Co., that has coped with soaring energy costs.
Kyser -- who serves on the Economic Policy Council of the California
Institute, the research and policy arm of the California congressional
delegation -- will stay on after the panel to deliver the keynote
luncheon address. He also is on the economic advisory panels of
both the state controller and the California Chamber of Commerce.
A one-day conference pass costs $195 and a three-day pass $395.
Interested parties can register online in the L.A. section at www.plasticsencounter.com,
or by calling 1-888-368-7229.
Braga |
By Joseph Pryweller
PLASTICS NEWS STAFF
TORRANCE, CALIF. (Feb. 13, 2001) -- For years, Toyota Motor
Sales U.S.A. Inc. has worked inside what it calls a monolith that
impedes its aftermarket parts deliveries.
Products arrive late to parts and service centers. Inventory moves
sluggishly, sitting on shelves in a region where it is not needed
and turning up scarce in areas of high demand.
The world´s No. 3 automaker now wants to tear apart its old, monolithic
ways. It has put its trust in electronic business to shore up an
inefficient operation. Toyota´s Torrance-based U.S. subsidiary is
spending about $60 million to transform its work with parts suppliers.
"We all came to the same conclusion. The (existing) system was not
going to take us into the 21st century," Gerald Braga, Toyota´s
corporate manager of procurement for its North American parts operation,
said in a recent telephone interview.
The 22-month program, started in January, has broad implications
for plastics suppliers. They will be expected to meet Toyota´s yearly
demand forecasts, re-evaluated every fiscal quarter, and provide
product when it is needed by Toyota´s 1,500 U.S.-based dealers.
Actual delivery dates and lead times will be tracked online and
production bottlenecks identified. Suppliers negotiate on parts
shipments through e-mail, before settling on a manufacturing and
sales plan they can live with, Braga said.
Toyota´s project is one of the few among automakers that will remake
its aftermarket supply chain, instead of layering an information
system over an existing business, said Kevin Prouty, research director
for automotive strategy with Boston-based AMR Research Inc.
"It might take longer than they expect, but it probably will work,"
Prouty said. "You might not see the benefits for one or two years.
But they are really taking a hard look at where they want to go."
Dallas-based software provider i2 Technologies Inc. will help Toyota
take its concept through to fruition. Toyota will use i2´s TradeMatrix
software to tear down the walls separating automaker, dealer and
supplier, said Don Filipovich, i2´s Southern California regional
director.
"Every node of the supply chain can be extremely inefficient," said
Filipovich, based in Irvine, Calif. "Companies operate within silos
of their own information. They don´t have visibility outside their
own walls."
The e-business process with Toyota extends beyond Toyota´s aftermarket
system. The two companies are partners in another Irvine-based venture
called iStarXchange that should launch by year´s end. That company,
majority owned by Toyota, will connect independent parts dealers,
such as NAPA or Carquest, with suppliers.
Other automakers, including General Motors Corp. and Ford Motor
Co., are working hard to build similar, in-house aftermarket projects,
Prouty said. But most of the others are embryonic or are not as
complete as Toyota´s, he added.
Toyota believes it can save $100 million over three years by increasing
the level of accurate ordering and inventory management, Braga said.
Toyota buys more than $1 billion a year in service parts. Its top
25-30 suppliers represent about 80 percent of that product flow.
"Along with this goes a sizable change in culture," Braga said.
"No longer will we just essentially be order takers and order placers.
Now, we can do business inventory analysis and understand how much
money we´re allocating."
The Japanese carmaker eventually plans to use that e-business system
globally, Braga said.
And i2 eventually wants to use its software within dealer showrooms:
Customers would order a vehicle online, and the carmaker then would
build it to order, Filipovich said.
While the technology for that is available today, the aftermarket
presents the first challenge, he said.
"It´s unbelievable the number of (aftermarket) parts that are literally
thrown away each year," Filipovich said. "The aftermarket is so
dysfunctional."
Braga will discuss Toyota´s enterprising project, called Monarch,
April 12 during a keynote speech at Plastics News´ Plastics Encounter
conference in Los Angeles.
PLASTICS NEWS REPORT
LOS ANGELES (Jan. 31, 2001) -- Sparks
are likely to fly when a panel convenes April 11 at the Los Angeles
Convention Center to debate California´s energy crisis and its plastics
industry repercussions and remedies.
Scheduled for 10:45 a.m.-12:45 p.m. on April 11 at the Plastics
Encounter Los Angeles trade show and conference, the session is
titled "Managing Through California´s Energy Crisis," and will feature
a diversity of perspectives.
Randy Phillips, project manager of Scotts Co.´s Durables Division,
will share the pain and lessons learned by that large captive molder
as it got hammered by soaring energy prices in the San Diego area.
Arnold Rosenthal, executive vice president of Newport Beach, Calif.-based
Utility Resource Management Group Inc., also will serve as a panelist.
URM, a utility cost-containment consulting firm, counts several
plastics companies among its clients, including Scotts and injection
molder Cambro Manufacturing Co. in Huntington Beach, Calif.
Two more speakers and a moderator will round out the panel, which
will be followed by a keynote luncheon address -- likely on the
same subject.
Interested parties can track the developing conference program by
clicking on the Los Angeles conference agenda link at www.plasticsencounter.com.
Single-day conference registration cost $195, while three-day passes
cost $395. Admission to the accompanying April 10-12 Plastics Encounter
trade show is free. Plastics News is organizing both events.
To register, or for more details contact Nancy Parks in Akron, Ohio,
at (888) 368-7229 or e-mail info@plasticsencounter.com.
PLASTICS NEWS REPORT
LOS ANGELES (Jan. 18, 2001) -- Attendees
of the conference accompanying Plastics News´ upcoming trade show
in Los Angeles will encounter a different kind of business-oriented
program that addresses some of California´s hottest managerial and
legislative topics.
Plastics Encounter Los Angeles, to be held April 10-12 at the L.A.
Convention Center, will include panels debating California´s energy
crisis, merger and acquisition trends, Internet-leveraged collaborative
design and supply-chain management issues, and key resin market
prospects.
Other topics will examine likely recycling legislation, machinery
safety and ergonomics regulations, an assessment of the regional
plastics economy, and advances in controls and processing technologies
such as plastic/wood-flour composite extrusion.
Paul Santina, vice president of business development and global
plastics for Flextronics International Ltd., will deliver the keynote
luncheon speech April 10 on the impact of contract manufacturing
on the global plastics industry.
"Our mission is to provide a forum that will attract senior managers
from across the plastics industry spectrum by addressing timely,
topical issues that affect both their day-to-day and longer-term
strategic planning," said Robert Grace, Plastics News editor and
associate publisher.
Grace also is conference director of Crain Communications Inc.´s
recently acquired Plastics Encounters events. Plastics Encounter
Los Angeles formerly was known as the Western Plastics Expo, under
previous owner Advanstar Communications.
Confirmed speakers and their topics include:
* Jim Swartwout, chairman, president and chief financial officer
of Torrance, Calif.-based injection molder and extruder Summa Industries;
mergers and acquisitions panel.
* John E. Mack III, CEO of U.S. Business Exchange, a Santa Monica,
Calif., online listing service and consultancy for the purchase
and sale of small and medium-size businesses; M&A panel.
* Mike Noggle, the former SPM Inc. president who now heads his own
Anaheim, Calif., consulting firm, Engineered Services; the value
of strategic planning.
* Milko Guergov, vice president of technology for the IntelliMold
Systems unit of Textron Automotive Co. in Troy, Mich.; Textron´s
new IntelliMold closed-loop process control system.
* Fred Humbert, vice president of sales and marketing for American
MSI Corp. of Moorpark, Calif.; Cell-Net Internet-based, remote press-control
technology.
* Ron Sparer, manager of controls and automation development for
Batavia, Ohio-based Milacron Inc.; Xtreem controls, which bring
the Internet to each shop-floor press operator.
* Bob Alvarez, vice president of technology for United Plastics
Group Inc. of Westmont, Ill.; MuCell microcellular molding.
* Lori Anderson, director of economic and international trade affairs
for the Society of the Plastics Industry Inc.; the impact of plastics
on California´s and the western region´s economies.
* Tom Podesta, vice president of Waltham, Mass.-based Conferos Inc.;
online collaborative design and knowledge management.
* A senior official from Newport Beach, Calif.-based energy consultants
Utility Management Resource Group; energy-crisis panel.
A frequently updated agenda, including any new speakers, can be
accessed by clicking the "Conference Agenda" link in the L.A. section
of the www.plasticsencounter.com Web site. Conference registration
costs $195 per day, or $395 for all three days, and includes access
to the show.
Separately, all-day injection molding and extrusion training seminars
will be offered April 11-12. Cost of the seminars also is $395,
and includes access to the show and to the April 10 Encounter conference
program at no extra cost.
* Paulson Training Programs Inc. of Chester, Conn., will use its
process-simulation software in a hands-on course on advanced injection
molding setup and troubleshooting. Instructor Torsten Kruse, Paulson
vice president and general manager, estimates that every hour of
simulator time equals more than five hours of actual molding practice.
* Compuplast International of Mississauga, Ontario, will offer two
full days of instruction about extrusion analysis, design and troubleshooting,
also using its simulation software. Compuplast Vice President John
Perdikoulias will teach the course, which is applicable to film,
sheet and profile extruders. Participants will qualify for a special
trial version of Compuplast´s new software.
|
