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TRADE SHOW COVERAGE
PREVIEW
COVERAGE
2001
shift could give mold makers whiplash
Jeffrey
Mengel |
By
Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 29, 10:05 a.m. EDT) -
The average-size toolmaker appears to be at a crossroads
as it decides whether it can continue to operate, according
to a preliminary report from accounting firm Plante
& Moran LLP.
For some small companies, the decision is much easier,
said Jeffrey Mengel, partner and plastics industry team
leader.
"It might be cheaper for them to liquidate than
continue to operate," said Mengel, speaking June
21 at Plastics Encounter Cleveland. "They have
to ask how they are going to make money, and if they
can't, what are they going to do about it."
The firm, conducting the survey every two years, found
that those mold-making companies in the lowest quartile
had reason to question continuing operations. Those
companies, with average sales of $1.4 million a year,
recorded profit of $135,000 annually before subtracting
interest, taxes and owners' compensation.
But after deducting bank debt, those same companies
only had a slim market value of about $80,000.
Meanwhile, large companies - with average sales of $8
million a year or more - recorded profit of $1.2 million.
Those companies had a much higher market value of $7.35
million.
Preliminary survey results for 2000 came from 51 North
American mold makers that were asked a series of financial
questions. Plante & Moran would like to interview
at least 25 more companies before releasing final results
later this year.
For many companies, 2000 was a good year, said Mengel,
based in Auburn Hills, Mich. Sales per employee increased
sharply from 1998 results, with a median of $122,308
per employee. In a five-year period, company sales grew,
on average, by 11 percent.
And the number of employees at each mold shop dropped,
suggesting that many toolmakers added equipment to replace
labor. About two weeks were cut from mold delivery times
in the process, with the median shop building a mold
in 56 days.
Yet profit remained an issue for small and midsize shops.
And bank debt could be a problem for larger mold makers
in 2001, with many indications pointing to a decline
in tooling business.
"After a good year in 2000, they could be suffering
a whiplash effect," Mengel said. "In good
times, new sales volumes pay for debt. But in bad times,
tool shops might find they still have an animal to feed
[in bank debt from equipment purchases]. All in all,
it probably will be a tough 2001."
The average-size tooling company recorded sales of $2.56
million and had about 24 employees in 2000, according
to the results.
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OF PAGE
Toolmakers
share notes on ruthless market
Pete
Mozer |
By
Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 29, 9:35 a.m. EDT)
- Pete Mozer, president of Delta Tooling Co., does not
even drink.
But, rhetorically speaking, he offered this advice to
automotive mold makers beset right now by arid business
conditions and disappearing profit margins: Just sit
in the bar and wait for the traffic to clear.
"We have no control over the auto industry,"
said Mozer, speaking June 21 at Plastics Encounter Cleveland,
a conference and trade show sponsored by Plastics News.
"We don't have that much control over our customers.
In the best of worlds, we love the industry. In other
times, we learn how to deal with it."
A tooling panel at Plastics Encounter at times resembled
a group therapy session or a special episode of Oprah.
Mold makers from a garden variety of industries shared
similar experiences, as they confront increasingly cold-blooded
market conditions that do not always value the worth
of a tool shop.
The panel responded to what is becoming a tough year
for mold makers. Several entrenched U.S. shops already
have closed their doors, and others are swimming upstream
to gain back the work they had last year.
Some have made major adjustments. For instance, Dynamic
Tool & Design Inc., a mold maker based in Menomonee
Falls, Wis., shifted from its base electronics and telecommunications
work - some of which has moved offshore or been sliced
away - to new opportunities in medical and consumer
products, said sales manager Matt Hagerman. Hagerman
exhibited at the show.
"It was slow for awhile," Hagerman said. "We
had to make an extra marketing effort this year. But
we couldn't afford to sit still, either."
Compounding the problems, there might be too many North
American tool shops chasing too few dollars.
That should lead to a massive industry consolidation
during this decade, where as many as half the estimated
2,000-2,500 mold making companies in the United States
are sold off or closed, said panelist Mark Teague, executive
vice president of Midwest Tooling Group.
Midwest Tooling, an investment firm that owns four tooling-related
companies, is searching for some of those experience-ripened
candidates to buy. About half of U.S. toolmakers are
what Teague termed "laggards," or those that
have not kept up with technology or changing markets.
"Laggards usually have too few profits, too much
debt or both," said Teague, based in Chagrin Falls,
Ohio. "Business for them will continue to decrease.
I'd define that segment as 'toast' right now."
But for other, more-prominent shops such as Auburn Hills,
Mich.-based Delta Tooling, the addition of technology
or new customers has not stemmed a sinking tide for
automotive work. Delta - one of the largest mold companies
in North America with 275 employees - has invested in
such technology as in-mold lamination, formed partnerships
in Germany and Switzerland, and opened a joint-venture
facility in Mexico.
But for all its capital outlay, the market has not rewarded
them, Mozer said. Customers demand price rebates of
between 2-7 percent for tooling projects and do not
pay toolmakers until about 270 days after mold delivery,
on average, he said.
Meanwhile, virtually every project awarded is based
on price, not quality or delivery, he said. And while
tool shops undercut each other, they also are expected
to shave off a quarter of the program price from the
last time they were awarded the job, he said.
"And just when you're ready to start cutting steel,
the job has been delayed, canceled or gone off for open
bidding again," Mozer said.
That ruthless market spin led Delta to start a new strategic
planning process last year. The company has reduced
overhead costs and cut expenses as much as possible,
while looking for new tooling opportunities in interior
auto parts and other areas.
But the rebates must end for mold makers to remain profitable,
Mozer said. To do that, all the major tool shops must
together say no to large parts suppliers when they ask
for price breaks, he said.
As chilling as Mozer's comments were, toolmakers in
other end markets are stepping in the same quicksand.
"The auto industry can be especially vicious, but
a lot of toolmakers seem to be struggling with the same
issues," said panel moderator Jeffrey Mengel, partner
and plastics industry team leader with accounting firm
Plante & Moran LLP. "Some of the same rebate
issues are starting to crop up elsewhere."
But mold shops can find the means to roll with the punches
and survive a more-cutthroat industry, according to
several panelists. One of those ways is to act globally
and avoid a deeper rut of working with a few, local
customers, said David Brown, president and chief executive
officer of Brampton, Ontario-based StackTeck Systems
Inc.
Brown's company operates three shops in Canada and the
United States, all of which specialize in unique product
areas. That helps the company avoid being trapped by
a downturn in one market, he said.
But beyond StackTeck's diversification, a deeper change
is facing toolmakers, he said. They must think big when
it comes to customers but act like a small shop in efficiency,
he said.
"You can't wait for the phone to ring," Brown
said. "We work at a high level of artisanship and
craftsmanship, but we can't move ahead and do what we
need to do by relying on our reputations. You have to
act now to take the next step."
The need to look globally for work is especially true
in Canada, a nation of only about 28 million people.
"We have to export or die," Brown said. "We
don't have a big market to sell into."
Many Canadian shops have taken a large swatch of U.S.
business. Even so, that is made more difficult by the
need to invest in new equipment while keeping costs
down, Brown said. "It's a very lumpy business,
where you don't know when the next job is coming,"
he said.
The leaders find a way to confront global competition,
said Teague, who estimated that only about 15 percent
of North American tool shops fit that 'leader' category.
Those companies have growing sales and profits, a diverse
customer base, new technologies and high productivity
levels.
And while low prices drive many sales, leading companies
can gain business through improved quality or delivery,
Teague said. Those companies can pick and choose their
customers, too, and deselect those that cut margins
to the bone, he said.
"You have to manage your customer base," Teague
said. "Leaders create their own markets. They deliver
to those companies that do not greatly lower their prosperity."
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Smart Bob II orders resin automatically
By Angie DeRosa
CLEVELAND (June 28, 10:35 a.m. EDT)
- A new player is entering the market for vendor-managed
inventory for plastics processors.
Lincoln, Neb.-based BinMaster Level Controls introduced
Smart Bob II, a personal-computer-controlled system
that will allow processors to increase automated resin
buying. The system uses electromechanical sensors that
detect when a silo is getting low on resin. The sensors
are hooked to a PC with a dialup modem that can contact
a predetermined resin supplier to order more material.
"Six months ago, this was unheard of," said
Rich Tavis, product manager with the division of Garner
Industries.
The unit lowers a weighted bob, or anchor, into the
vessel until it contacts the material. Tavis touted
the electromechanical system as being superior to ultrasonic
sensors, because some plastics absorb ultrasonic signals,
he said.
"Plastics in general are very difficult for ultrasonic
sensors," he said in an interview at Plastics Encounter
Cleveland.
Tavis said BinMaster is working with a major plastics
supplier on an exclusive deal to use the system with
its customers.
The Smart Bob II uses inventory-management software
that can be networked so that everyone from operators
to management has access to up-to-date inventory levels
in graphic and file formats.
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Litzler
absorbs Molding & Coating Technologies
By Angie DeRosa
PLASTICS NEWS STAFF
CLEVELAND (June 28, 9:30 a.m. EDT) - Dip molding
machinery supplier Molding & Coating Technologies
is now a brand name of Cleveland-based C.A. Litzler
Co.
Litzler, a Cleveland-based manufacturer of continuous
processing ovens and machinery, disclosed the acquisition
June 19 at Plastics Encounter Cleveland. Terms were
not revealed.
MC&T was owned by George Heath Sr., who died in
August, said Susan Kauchak, marketing coordinator.
"It was family-owned and they thought it was appropriate
if someone else took over," Kauchak said in a June
27 telephone interview.
MC&T will remain in Cleveland with about 12 employees,
officials said. General Manager Bill Urban said the
product line fits well with Litzler's continuous processing
technology. Litzler has no plans to acquire other plastics
companies, he said.
The company is seeking to become more involved in trade
shows and branch out by targeting smaller companies.
MC&T had 2000 sales of $3 million, according to
company officials. They would not disclose Litzler's
total sales.
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Mold-Masters
expands offerings online
By Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 27, 4:15 p.m. EDT)
- Mold-Masters Ltd. has filled in the blanks for its
online hot-runner ordering system by offering more design
tools over the Internet.
The company, based in Georgetown, Ontario, has upgraded
its design option on its Web site, ww.moldmasters.com,
to include complete hot-half sections for hot-runner
systems. Tools on the site allow customers to position
hot runners, resist injection pressures and provide
better thermal management.
Mold-Masters first introduced its pioneering ordering
and design Web site, called Merlin, at NPE 2000. While
online ordering activity has been slow to date, many
customers of the mold supplier have used the site to
check system requirements and help with design, said
Wayne Stoddard, manager of Mold-Masters' marketing services
group.
The program configures the right system for a given
application.
"We do see a lot of activity, from qualifying and
checking systems to speeding program development,"
Stoddar said June 19 at Plastics Encounter Cleveland.
"It's been an invaluable resource for that. And
we expect ordering activity to pick up as more customers
get used to the system."
The company also plans to complete work on its new Sumare,
Brazil, plant by January, Stoddard said. Mold-Masters
has invested $4 million to build the manufacturing plant
and equipment already is in place.
The company also is developing plans to expand both
its Singapore plant, which opened in 2000, and its facility
in Baden Baden, Germany, he said.
The Brazil plant will start making manifolds, hot-half
plates and other components and eventually could product
complete hot-runner systems.
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Panel
shows how staff development can reduce turnover
Wayne
Wilson |
By
Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 27, 3:25 p.m. EDT)
-- United Southern Industries Inc. used to have a pretty
serious employee turnover problem.
Indeed, the large injection molder - with three plants
and 325 employees - had seen the door spin like a carnival
Tilt-A-Whirl since 1997. Annual turnover rates climbed
from 253 people that year to 471 workers leaving the
company in 2000.
"Our turnover figures have been pretty atrocious,"
said Wayne Wilson, corporate director of safety and
training for the Forest City, N.C.-based company. "It
had gotten out of control. We had to ensure that we
turned out good-quality products, and our turnover was
not acceptable."
So the company spent $2.3 million last year to develop
a worker training program and give them a more regimented
career path, Wilson said. Combined with monetary and
other incentives, the program has helped employees foster
a better attitude about work, he said.
This year, only 52 people have left United Southern.
And the company expects to shrink that number even more
through its certification program from the Society of
the Plastics Industry Inc., plus new mentoring opportunities.
"You can't gamble with resources, and people are
your best resources," Wilson said. "We've
given them more active participation in the company
and helped increase their self-satisfaction."
Even with the economy dipping this year, work-force
development remains a major issue - and a key source
of headaches - for many molders and toolmakers. Several
of them discussed their coping strategies June 21 during
a work-force development panel at Plastics Encounter
Cleveland.
"It always affects productivity, no matter what
the economy is like," said William Saborsky, vice
president of corporate human resources for Corry, Pa.-based
Erie Plastics Corp. "We'd still like to add good
people."
Saborsky's injection molding company, which has more
than 450 workers at two plants, also has a singular
problem. Its main location in Pennsylvania sits about
55 miles from a major city, making it difficult to recruit
workers.
"You have to go over the mountains and through
the woods to reach us," he said.
Like Wilson, Saborsky stressed career development for
the diverse work force. The molder tapped state and
local grant funds to help pay the costs of training,
working through local skills centers to develop engineers.
Curriculum at area colleges was developed around the
needs of Erie's work force.
And the company started a leadership development program
to allow senior workers to mentor others in how to manage
a business, Saborsky said. Twenty-six people have gone
through that process.
"When we tell recruits how we develop people, we
have the wherewithal to back it up," Saborsky said.
"It makes recruiting a lot easier."
Mold maker and molder Tech Mold Inc. of Tempe, Ariz.,
has gone down another path, starting a four-year apprenticeship
program for its rawer recruits. Classroom work at area
technical and community colleges is balanced by time
spent on the shop floor with a mentor, said Karl Szanto,
Tech Mold vice president of operations, at the show.
More than 60 experienced employees currently work with
11 apprentices, Szanto said. The result has been more
efficient and punctual workers and wage increases for
employees who prove their benefit to the company through
training.
"Of course, after the apprenticeship is over, they
are free to work someplace else," Szanto said.
" But most good apprentices stay. The investment
we make with our employees provides the future workers
for us."
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OF PAGE
Step2 stepping
up to challenge of economy
Tom Murdough speaking
at Plastics Encounter. |
By
Angie DeRosa
PLASTICS NEWS STAFF
CLEVELAND (June 27, 12:25 p.m. EDT)
- In an uncertain economic environment, Step2 Co. Chairman
and Chief Executive Officer Tom Murdough didn't sugarcoat
his message to machinery manufacturers, processors and
compounders in his keynote address at Plastics Encounter
Cleveland: It's time to fight back.
Step2's strategy? Focus on international sales, product
innovation and developing alternative methods of distribution.
Although he would not elaborate, Murdough said distribution
options will be a "major thrust" for the company,
whose sales stagnated at $100 million last year. And
don't rule out recycled materials for the manufacturer,
whose primary material is linear low density polyethylene.
"It's possible," he said as he addressed the
question from an audience member. "At this day
and time, we're very slow to rule anything out."
Murdough encouraged the audience to consider the growing
sector of international sales, which represents more
than 20 percent of his firm's business today.
New President John Sinchok disclosed in a May 11 interview
that the company is eyeing expansion in South America,
but Murdough did not give further details. The deal
would be similar to the company's license agreements
in Asia, Sinchok said. Step2 also has a rotomolding
plant in Coleraine, Northern Ireland.
"We're in it together," Murdough told the
crowd of 85. "We've all got tremendous challenges
in responding to the changing market. Our challenge
is to make you aware and encourage cost effectiveness
in all you do without losing a position of integrity."
The retail environment has been Murdough's nemesis,
as accounts from the top six retailers represent 70
percent of Step2's business.
"You've got to have the volume of these people
to make it a go," he said.
Facing the challenges of just-in-time shipping and demands
for price reductions, Murdough admitted his company
was slow in responding to retail market changes.
"The buyer doesn't care about quality," he
said. "We're now reducing weight of some products,
bringing that down to an acceptable level that allows
us to come in at a competitive price. That's something
that's difficult to admit."
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Australia's
Profile Automation plans U.S. site
By Angie DeRosa
CLEVELAND (June 27, 11:45 a.m. EDT)
- Dural, Australia-based Profile Automation is moving
into North America with a Los Angeles distribution and
training facility scheduled to open within three months.
The maker of leak-detection machines is starting small
for its North American expansion, said co-owner Thomas
Mitchell. The location will be a shared facility with
an Australian company not affiliated with the plastics
industry. Mitchell would not disclose his company's
investment in the facility, where it also will conduct
research and development for its newest foray into sprue-picking
robots.
"Injection molding is a much bigger market, and
getting into sprue pickers will help our bottom-line
growth," Mitchell said during a June 21 interview
at Plastics Encounter Cleveland. "I think there's
an increasing market for sprue pickers."
The company will release its first model in August.
According to company literature, it is finishing a high-speed,
20-inch sprue picker with a 0.3-second take-out time
for low payloads up to 8 ounces. The company also is
building a standard sprue picker for payloads up to
4.4 pounds.
The units will be equipped with new software that allows
an operator to program a simple routine and save them
with a product range, Mitchell said.
The company also displayed a leak technology machine
with auto tuning for the detection of small holes. The
method allows an operator with very little skill to
set up a machine and test at quick rates, Mitchell said.
The unit can be adjusted to test bottles from 2 ounces
to 1½ gallons and can test up to 6,900 containers
per hour on a single head for smaller bottles.
Profile Automation has been producing leak-detection
machines since 1993. Currently, the company has four
employees.
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Z
Corp. to widen market for printers
By
Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 27, 10:30 a.m. EDT)
- Z
Corp., a maker of rapid-prototyping equipment for plastic
parts, is entering the world of commercial color printers.
The Burlington, Mass., company is testing a line of
its prototyping printers with Xerox Corp. for possible
mass distribution, said sales manager Tim McGrath. Testing
is taking place in Chicago but no decisions have made
on whether the companies will work together in the future.
A Xerox collaboration could build traction for the rapidly
growing company. Z Corp, which expanded its manufacturing
facility in 2000, calls itself the developer of the
world's fastest three-dimensional printer. The device
makes powder-based parts in full color, from computer-aided-design
formats and by using digital data in other media.
"The time is here when you can use a personal computer
or laptop to make a part," McGrath said. "The
3D printer market is staring to explode."
Rapid-prototyping experts, including Terry Wohlers of
Wohlers Associates Inc. in Fort Collins, Colo., have
said they expected larger companies to enter the field
and bring prototype printing to a larger audience. Z
Corp. introduced 3D color printing in March 2000.
The company's new Z406 color printer - printing as much
as 160 cubic inches of finished part per hour - uses
print heads from Hewlett-Packard Co. that can be purchased
at office supply stores. Other Z Corp. printers use
a bubble-jet print head from Canon Inc.
Z Corp. exhibited its new printer at Plastics Encounter
Cleveland.
"It eliminates a lot of the upfront costs of prototyping,"
said marketing associate Jenna Dziedzic. "Most
customers operate the printer during work and make the
actual part much later."
The printers, costing $45,000-$70,000, are used by many
major U.S. corporations, including several automakers,
and consumer product companies such as Nike Inc. and
Kimberly-Clark Corp.
Z Corp. recorded sales of $10.5 million last year, growing
more than 60 percent from 1999.
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Korea's KTech
opens U.S. office
By Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 26, 4:45 p.m. EDT)
- The Mold Doctor is in.
KTech Industry Inc., a maker of mold-repair equipment
based in Seoul, South Korea, has opened its first North
American office, in East Brunswick, N.J. The company
will sell its patented Mold Doctor applicator gun and
related hardening equipment to North American molders
from the new office, said Steve Park, KTech vice president
of sales.
The equipment allows injection molders to make minor
tool repairs while the mold is inside an injection press,
said Park, interviewed June 19 at Plastics Encounter
Cleveland. The system uses electrical sparks instead
of heat to repair steel and aluminum molds and dies.
"We can repair molds with no heat stress on parting
lines," Park said. "It is used quite a bit
in Europe and Asia, but we need to build more interest
here."
The company employs six at its New Jersey office and
has 11 field representatives. The equipment will continue
to be made in South Korea while KTech builds market
awareness here, Park said.
The equipment includes an electro-spark metal surface
deposition and hardening machine that transfers pulses
from electrodes through an applicator gun. The electrical
pulses dissolve on the mold surface and produce an ionized
alloy that bonds to the mold and hardens.
The process can be used to prevent erosion, heat cracking
and scuffing on the mold over time, Park said. Several
U.S.-based companies have been using Mold Doctor since
early this year, he added.
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E-seminars
make training more accessible
By Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 26, 2:45 p.m. EDT) - When W.
David Outlaw of molder Precise Technology Inc. was considering
creating his plant's first distance-learning training
program, he conjured the words of a long-suffering fan
of the local baseball team.
That anonymous follower of the Tampa Bay Devil Rays,
a team more accustomed to losing than a donkey at a
horse race, once wrote: "If at first you don't
succeed, failure may be your style."
Outlaw, plant manager of Precise's St. Petersburg, Fla.,
plant, had witnessed good workers leaving the company
and unwilling to sit through training that amounted
to endless hours of dull charts and lectures. Meanwhile,
they were stuck in the same mode of failure, unable
to get ahead with the company.
"We needed to train them a little differently,"
said Outlaw, who spoke June 21 in Cleveland at Plastics
Encounter. "Our work force was very inefficient.
And our policy stated that workers were only promoted
by their tenure. The relative go-getters we had who
wanted to learn were discouraged by that."
Something had to give, as the plant kept bleeding employees.
With some timely financial help from the state of Florida
and a new training regimen from the Society of the Plastics
Industry Inc., the company re-adjusted its attitude
and removed those advancement bars.
This spring, the Florida facility trained 60 people
- 20 of them from other area molders - in injection
molding basics. The employees, now certified through
Washington-based SPI's training program, took courses
through a satellite feed that was beamed into the plant.
State grants picked up the costs of the 28-hour training
program, estimated to run about $700 per student, Outlaw
said.
"The satellite dish had to be right here in the
workplace," Outlaw said. "No one wanted to
interrupt their living by going somewhere else. We tried
to run it through the local junior college but no one
had interest."
Distance learning, or the beaming of training courses
directly to a worker's facility or cubicle, has been
made easier by the evolution of satellite transmissions
and the Internet. SPI trained about 300 molding workers
in Florida this spring by satellite and expects to add
another 350 people at 16 sites in the state this fall,
said Gary Moore, SPI director of work-force development.
Meanwhile, resin companies such as Pittsfield, Mass.-based
GE Plastics are using the Internet to educate customers
on new products, design ideas and material applications.
GE Plastics runs about 50 e-seminars a month - up from
one or two per month last year - over a Web site that
includes a PowerPoint presentation and an interactive,
open-question period done through electronic mail sent
to the moderator.
About 5,000 people will have taken a Web seminar at
GE by the end of the year, said Sam Stiller, GE Plastics
e-marketing programs manager.
"Clearly for us, it's an efficient method of reaching
customers effectively and intimately," Stiller
said. "It's a tool to reach a lot of customers
with a variety of messages. And from a cost standpoint,
it makes sense."
From a time standpoint, GE's new approach is welcomed,
too. The resin supplier used to roll out an 18-wheel,
70-foot-long truck across North America. The moving
conference center, called Vector, would drive to different
cities for on-site training on new applications and
design tools.
"Customers really didn't have time to spend the
whole day with us," said Stiller, part of the Vector
team. "Some never got to participate. We can still
deliver in a live format now, but many others can attend."
Each GE course runs about an hour in length, enough
time to explore a targeted subject in depth but not
lose audience interest, Stiller said. The cost depends
on the topic and number of people involved but generally
can run under $100 a session.
Sometimes, the courses are targeted to a single company,
primarily product end users. At other times they can
reach a broader engineering community. GE field representatives
still continue their work at customer offices, using
the Internet courses as a base to build upon.
SPI prefers the satellite method to the Internet feed.
"When you're dealing with production workers in
particular, you prefer live, full-motion visuals where
you can show things and answer questions," Moore
said. "You just can't do full video and animated
graphics on the Internet."
SPI uses trainers from Charlotte, N.C.-based Polymers
Center of Excellence for many of its certification training
courses. It also has a higher-level, troubleshooting
course starting this fall beamed from Chester, Conn.-based
Paulson Training Programs Inc.
In Florida, unlike most states, if employees pass the
certification test, the company gets back the course
costs. Setting up the satellite dish can cost another
$3,000-5,000 for a company but can pay for itself in
productivity improvements from trained workers, Moore
said.
Kentucky also is setting up a matching grant program,
Moore said. And while the states of Massachusetts and
New Hampshire do not offer funding, companies there
have paid the cost of the long-distance training, he
said.
At Precise, the training lasted two hours each day,
twice a week for seven weeks. Testing was then done
through SPI's National Certification in Plastics program.
If Precise, based in North Versailles, Pa., develops
leaders through the program, the satellite hookup will
be worth the time and expense, Outlaw said.
"The theory is that we can keep training from becoming
a cure for insomnia," Outlaw said. "We mix
a few hours of training with practice in the plant,
and that keeps people challenged instead of having them
fall behind."
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China lures some
companies, worries others
By Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 26, 11:40 p.m. EDT)
- Mold-making-equipment supplier Incoe Corp. has opened
a Hong Kong office and has its eye on opening its first
manufacturing plant in China.
The Troy, Mich.-based company launched a sales and engineering
office in Hong Kong in late May, said Colin James, Incoe
vice president of international sales. The office, headed
by James and called Incoe Hong Kong Ltd., will distribute
Incoe's mold and hot-runner systems in Hong Kong and
China.
The company is looking for a Chinese partner to help
Incoe expand into that country later this year, James
said. He was interviewed June 20 before speaking the
next day at Plastics Encounter Cleveland.
China rapidly is emerging as a power in manufacturing.
While much of North America and Europe are suffering
the effects of an economic downturn, China's domestic
growth has exceeded 8 percent during the first half
of 2001.
"It's the most desirable location for Incoe's growth
plans in Asia," said James, who recently moved
from Incoe's office in São Paulo, Brazil. "We
have many large customers in that region. Now it's up
to us to service them at a nearby location."
James' first choice of location would be in Guangdong
province, the southernmost region of China that includes
Western manufacturing centers in Shenzhen and Guangzhou.
Another possibility, but a less probable one, would
be to open the plant near Shanghai, James said.
The Shenzhen area, near Hong Kong, has become a major
port city for many U.S-based electronics, telecommunications
and appliance companies.
Incoe plans to start with a small, joint venture plant
and expand later. Competitors such as Madison Heights,
Mich.-based D-M-E Co., where James worked for more than
20 years, have facilities in China. Incoe also runs
an Asia-Pacific operation in Singapore.
The heady growth of China has disturbed some U.S.-based
mold makers and molders, concerned over the amount of
business lost to their Chinese counterparts.
China has made a charge in the amount of imports to
the United States. According to Census Bureau statistics,
19.5 percent of imported products, or about $2.5 billion
in goods, came from China to the United States last
year.
"There's been a move from Taiwan and Japan to China,"
said Michael Paslawskyj, director of economic research
for Livingston, N.J.-based CIT Group Inc., at Plastics
Encounter. "In China, labor is about as dirt-cheap
as it can be."
Molds are made quickly in China by some good shops,
James said. They can be completed in 30 days or less
in some cases, through good project management and a
large work force.
Still, North American companies should not lose too
much sleep - not yet, anyway - over business moving
to China. For one thing, the exodus has not hit every
industry hard. Automotive mold work for U.S.-sold vehicles
still primarily is done on Western shores, said Pete
Mozer, president of Auburn Hills, Mich.-based Delta
Tooling Co.
And those customers going to China also face some hidden
costs and difficult issues, some of which could drive
them back to North American companies, James said. A
company has to know with whom it is working or it could
get burned, he said.
"We've heard of molds arriving in pieces or falling
apart," James said. "It then can cost $10,000-$20,000
to repair a mold coming from Asia. You have to find
a quality mold shop in Asia before you give them work."
And just because an Asian company signs a letter of
credit does not mean it will honor commitments, James
added. It is best to work through a middleman in Hong
Kong or Singapore to find the right shop before moving
ahead, he said.
Yet, that situation should improve as Chinese mold makers
learn the trade, he said. It is an area to watch but
not one to cause undue worry, he said.
"Be prepared to be very patient," James said.
"Just like in the U.S., you sometimes get what
you pay for with a cheap mold."
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GM
pushing resin program on molders
By Rhoda Miel
PLASTICS NEWS STAFF
CLEVELAND (June 22, 12:20 p.m. EDT)
-- General Motors Corp. wants its molders to purchase
resins through GM, allowing it to leverage the massive
buys into volume cost cuts.
The resin resale program is not mandatory, but participation
will play into future sourcing decisions, said Mary
Blair, global commodity manager for corporate raw material
for Detroit-based GM.
The program has existed for several years, and "numerous"
suppliers have taken part in it, Blair said. The difference
now is that the company will use it as part of the overall
criteria as to which supplier receives a contract for
a specific component or module.
"If I had two suppliers out there that went into
the final round, one participated [in the resale program]
and one did not, I could ensure that the one that was
participating would not be at risk from fluctuating
prices," she said.
The idea, Blair said, is that GM can leverage its entire
buying might for chemicals ranging from plastics to
paint and solvents and help cut the potential for price
fluctuations, while also ensuring overall quality supply
"all the way back to the oil well."
That is buying and quality power that most companies
do not have.
But the program could mean molders will miss out on
their own volume discounts, Jeffrey Wincel, vice president
and general manager of Donnelly Corp.'s modular systems
business unit, said during a June 20 panel discussion
at Plastics Encounter in Cleveland.
While participation in the resale program is voluntary,
it will have to play into suppliers' long-term decisions,
since failing to take part could mean risking future
contracts.
"You're really put in a difficult situation,"
Wincel said. "You need to satisfy your customer.
If you don't satisfy your customer, you don't get new
business. If you don't get new business, you don't make
profits."
North American automakers have been revising their relationships
with suppliers for years, seeking givebacks and rebates,
and forcing warranty and development programs further
down the supply chain.
Late last year, DaimlerChrysler AG was the focus of
suppliers' wrath when it stated it would require a 5
percent price cut by the start of 2001 and another 10
percent cut by the end of 2002. It eventually had to
negotiate with some suppliers to phase in reductions,
but the resulting ill will has left some companies with
a sour taste in their mouths.
Automakers that take a hard-line approach risk missing
out on new technology, Wincel noted, since suppliers
that develop a new system are more likely to bring it
first to a friendly face.
"Suppliers are being told, `Unless you do this,
unless you do that, you're going to be gone,' "
he said. "So the suppliers are saying, `We're just
not going to give you the technology.'
"As this cycle continues, the [original equipment
manufacturers] realize they're not going to get the
technology and they're going to have to back off and
change the way they do business.
Donnelly has stepped back from certain customers in
the past because of those kinds of problems, he said.
The Holland, Mich.-based manufacturer of interior and
exterior mirrors cut back on GM in the early 1990s when
the company took a hard line during Jose Ignacio López
de Arriortua's 10-month stint as head of purchasing.
Donnelly continued developing new technology, however,
so that eventually it won back GM business but with
better terms.
When customers cut costs and times get tough, processors
have to plan carefully for their future survival, said
Chain Sandhu, owner and president of NYX Inc., a Livonia,
Mich.-based molder of interior and under-the-hood components.
"You have to know going in what your cost is,"
he said. "If you don't know what your cost is,
you're going to be one of those companies that [doesn't
survive]."
That means having good machines that can produce quality
products, having technology that others do not have
and having confidence to take on projects others cannot.
NYX maintains a 24-hour design operation, with offices
both in Michigan and in India.
No
one can make it without knowing their core competence,
or by relying on 20-year-old machines that cannot stand
up to the task at hand.
"What we are trying to find is that we know when
to say no," he said.
Many of the complaints coming from auto suppliers are
the result of programs designed by automakers to provide
short-term cost-cutting results, rather than providing
long-term growth strategies, added David White, director
of sales-composites for Dearborn, Mich.-based Meridian
Automotive Systems.
So far, overseas automakers that have manufacturing
operations in North America have not encountered the
same friction with suppliers, he said. Those companies
tend to stick to a long-term plan. The transplant or
"new domestic" automakers are sticklers for
last-minute design changes or flaws, but more willing
to work with a committed supplier.
"Ten years is short term for a Japanese automaker,"
White said. "One year can be extremely long term
for an American one."
The GM program is not the only mass purchasing plan
under consideration. Covisint LLC still is working out
the logistics of allowing automakers and suppliers to
use the on-line purchasing program to coordinate raw
resin purchases, and potentially combine orders for
volume discounts.
The venture, formed by the North American "Big
Three" automakers last year, would phase in the
raw material purchasing program with steel, then eventually
expand to resin, said spokesman Tom Hill.
Covisint has not set a date yet for the system. At one
point, officials hoped to have steel purchasing for
suppliers and automakers set up by late 2000, but the
program has not moved as quickly as they had hoped.
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Dot-com consortiums
to do battle
By Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND - The plastics and chemicals
industry already has said "no way" to many
of the independent trading exchanges that have sprung
up on the Internet.
Now, the next battle for the hearts and dollars of plastics
consumers will be fought by consortium-based dot-com
companies.
One industry watcher, Leif Eriksen of Boston-based consulting
firm AMR Research Inc., believes those companies could
be in for a rocky road. They include hubs such as Omnexus,
Elemica and the recently merged ChemConnect Inc. and
Envera, as well as automotive consortium Covisint LLC.
AMR has predicted that by 2004, about 25 percent of
plastics purchases in North America will be made on
the Internet. The battle over who controls that market
is just starting, Eriksen said.
"Even if as much as 20 percent of plastics and
chemical industry purchases are done on the Web, those
companies can only take about 0.001 percent on each
transaction," said Eriksen, AMR research director
for chemical and process industries. "Can you survive
on that? They can't all survive, but maybe one has a
chance."
For most of the companies, the honeymoon period is close
to over, Eriksen said. Investors, and especially chief
financial officers of large resin suppliers, are going
to want to see a return on their money soon.
"No more blank checks are going to be written,"
he said.
Besides distributor GE Polymerland, most of the sites
have not generated enough transactions to satisfy investors,
Eriksen said. He added that the case can be made that
GE's site is more of a single-source distribution arm
that a more-diverse e-marketplace.
The winner in the plastics industry among dot-coms could
be private marketplaces run individually by resin companies
or other kinds of suppliers, not the more-ballyhooed
public models, Eriksen said. Like Polymerland's site,
many of them are focusing on connecting the computer
systems of both customers and suppliers to their Web-based
products and services.
"What hasn't changed is that the customer is king,"
Eriksen said. "Power has shifted to the buyer.
Customers already exist for those [resin] companies,
and that is why I think private exchanges will win the
battle."
Eriksen spoke June 20 at Plastics Encounter Cleveland.
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Equipment
sales plunge in first quarter
By Joseph Pryweller
PLASTICS NEWS STAFF
CLEVELAND (June 21, 12:05 p.m. EDT)
-- Is anybody out there buying machinery?
New figures released by the Society of the Plastics
Industry Inc. show U.S. equipment sales sliding by such
a degree in the first quarter of this year that it makes
last fall's weak results look downright inspiring.
The figures, compiled by the SPI Committee on Equipment
Statistics, reveal that 908 injection molding machines
were sold during the first quarter of 2001, a 42 percent
fall off from the fourth quarter of last year. And the
value of those machine shipments dipped to $162.89 million,
down 45 percent from last quarter.
The value of blow molding machine shipments was down
16 percent from the fourth quarter of last year. Auxiliary
equipment sales were off 11 percent from the fourth
quarter.
"Every one of the machinery areas we looked at
was off during this period," said Lori Anderson,
SPI director of economic and international trade affairs.
Anderson presented the first-quarter figures July 19
during Plastics Encounter, a conference and trade show
in Cleveland sponsored by Plastics News.
The downward-sloping results reflect the economic downturn
that is challenging all segments of the plastics industry.
The slowdown, which started in the middle of 2000, has
led to layoffs at several machinery companies.
The downturn has brought about a glut of capacity at
processing plants. In the fourth quarter of last year,
capacity utilization shrank to a shade under 80 percent.
In June 2000, capacity had peaked for the year at close
to 82 percent before starting its slide, Anderson said.
The SPI results paralleled those compiled by consulting
firm CIT Group Inc. of Livingston, N.J. The company,
also presenting its economic figures at Plastics Encounter,
forecasts that capacity utilization at processors will
average "a depressed" 74 percent in 2001,
said CIT director of economic research Michael Paslawskyj.
"Any number below 80 percent means that people
aren't buying," Paslawskyj said.
During most of the 1990s, capacity figures reached more
than 83 percent, he said.
Purchases of plastics machinery this year are expected
to fall to $3.03 billion, 16.5 percent below the record
$3.64 billion set in 1995, Paslawskyj said.
Yet, some good news came on the global front for machinery
companies. Exports outside the United States last year
soared to a record $915.9 million, 20 percent higher
than in 2000, according to the CIT figures.
"We were a bit shocked by that," Paslawskyj
said. "We don't expect them to rise to that level
this year, but we could be surprised once again."
For machinery imports into the United States, Japan
continues to be the most dominant player, accounting
for 33.5 percent of import sales last year. Imports
for Germany, Canada, France and Italy all declined in
sales, compared with 1999 figures, while Japanese imports
were up more than 20 percent.
SPI recently started releasing the quarterly machinery
figures. The association will announce first-quarter
2001 figures for extrusion equipment within the next
month, Anderson said. SPI also plans to begin compiling
figures for mold-base manufacturers later this year.
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Fledgling
firm helps streamline resin transport
By
Frank Esposito
PLASTICS NEWS STAFF
CLEVELAND (June 21, 10:15 a.m. EDT) -- Graham
Brisben's goal is to keep plastic resin rolling, rolling,
rolling on train tracks and highways all over the world.
With that in mind, he founded Plastics Logistics Group
LLC, a Chicago consulting firm that opened its doors
in February and now has a roster of five clients.
PLG offers services in all areas of plastic resin transportation
and logistics. Its current projects include working
with Canadian National Railway to improve plastic resin
operations at its cargo flow terminal in Toronto and
finding ways to optimize short-line resin traffic for
Burlington Junction Railway in Iowa.
Brisben has plenty of experience in that area, having
spent almost two decades working for the Burlington
Northern railroad and Transplastics, a Tampa, Fla.-based
bulk trucking firm specializing in resin transportation.
Plastic resin transport is especially attractive to
railroads because of its high volume and high shipping
rates, Brisben said. But the market has maintained a
relatively low profile. In his former job, Brisben said
he often would get informational requests from customers
on transportation-related topics such as hopper truck
operation and railroad efficiency.
"These [topics] were mysteries to customers,"
Brisben said in an interview at Plastics Encounter Cleveland,
held June 19-21.
The firm's potential client base includes plastics processors
looking to improve their inbound resin delivery, resin
suppliers looking to manage their rail and trucking
operations, and transportation companies seeking growth
options in the plastics market.
PLG even can extend its services to include designing
and installing rail sidings if a processor wants to
"bulk up" from gaylords to rail cars, Brisben
said.
"A lot of the time, plastics companies just look
at their traffic management as a cost center,"
Brisben added. "But if they look at their salaries,
benefits and overhead, they can often provide that function
at a lower cost."
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Indiana
Polymers plans Canadian warehouse
By
Frank Esposito
PLASTICS NEWS STAFF
CLEVELAND
(June 21, 9:45 a.m. EDT) --
Resin
distributor Indiana Polymers Inc. now is supplying generic
and custom compounds and expects to announce a site
for a Canadian warehouse by the end of the year.
The company's increased business in Canada and Ohio
also has allowed it to add a sales rep in each of those
areas this year, bringing its companywide total to seven.
Additionally, Indiana Polymers is extending its product
mix beyond standard commodity materials into more grades
of engineering resins such as polycarbonate and ABS.
The compounding entry is being done through a group
of regional toll compounders. The move came about as
a way for Indiana Polymers to help its compounders with
processing issues, according to Donald Berrill, who
joined the firm as a sales representative in Cambridge,
Ontario, earlier this year.
"Now, a guy will say, 'We're having a problem with
warpage,' and we'll be able to modify a compound with
filler to solve it," Berrill said in an interview
at Plastics Encounter Cleveland, held June 19-21.
The Canadian warehouse will be Indiana Polymers' third,
joining sites in Columbia City, Ind.; and Midland, Mich.
The firm's product mix is split evenly between prime
and off-spec material. Commodity materials currently
generate about 70 percent of total sales, although its
engineering resin share has been growing in recent years.
The slowing U.S. economy will prevent Indiana Polymers
from matching the 25-30 percent annual growth rate it's
achieved recently, but the firm still expects double-digit
sales growth in 2001, Berrill said.
Berrill added that Indiana Polymers has no plans to
enter into compounding on its own.
"We're going to stick with what we do best, and
that's distribution," he said.
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Panel to focus on work-force development
PLASTICS NEWS REPORT
AKRON, OHIO (June 11, 2001) --
Managers looking for innovative ideas on how to motivate
workers and maximize productivity can gather much food
for thought from the June 21 morning conference session
at Plastics Encounter Cleveland. As part of the free
business conference accompanying the June 19-21 trade
show, a panel of processor executives will share insights
into novel training programs and other initiatives.
Panelists include Wayne Wilson, corporate director for
safety and training at United Southern Industries Inc.
in Forest City, N.C.; Bill Saborsky, vice president
of corporate human resources for Erie Plastics Corp.
in Corry, Pa.; and Karl Szanto, VP of operations for
Tech Mold Inc. in Tempe, Ariz. Troy Nix, executive director
of the Mid-America Plastics Partners Inc. trade association
in Indianapolis, will moderate the session, which is
designed to be highly interactive between audience and
panelists.
This 90-minute panel immediately follows an 8:30 a.m.
breakfast presentation by W. David Outlaw, manager of
Precise Technology Inc.´s St. Petersburg, Fla.,
injection molding plant. Outlaw will detail how Precise,
working with the Society of the Plastics Industry Inc.,
won state grant funds to create an ambitious satellite
training program at the plant - not only for Precise
employees, but also for those of competitive Florida
molders.
To register or for more details, visit www.plasticsencounter.com/cleveland
or call (888) 368-7229.
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OF PAGE
Encounter
conference gains speakers, waives fee
PLASTICS NEWS REPORT
AKRON,
OHIO (May 17, 11 a.m. EDT)
-- Plastics News has added speakers and waived the fee
for the business conference at the June 19-21 Plastics
Encounter Cleveland trade show.
The morning conference sessions -- which start at 8:30
a.m., well before the exhibition floor opens each day
-- will feature nearly two dozen presenters from firms
including Meridian Automotive Systems Inc., NYX Inc.,
Delta Tooling Co., PolyOne Corp., Donnelly Corp., Ferro
Corp., CIT Group Inc., StackTeck Systems Inc., General
Polymers, Incoe Corp., and Midwest Tooling Group Inc.
One new addition to the program is W. David Outlaw,
manager of Precise Technology Inc.´s St. Petersburg,
Fla., injection molding plant, who will kick off the
June 21 program with a breakfast case study. He will
detail how Precise, working with the Society of the
Plastics Industry Inc., won state grant funds to create
an ambitious satellite training program at the plant
-- not only for Precise employees, but also for those
of competitive Florida molders.
Outlaw´s talk immediately precedes an interactive
panel discussion by various plastics processing company
executives about innovative workforce-development ideas.
On June 19, meanwhile, Chris Gick, director of industry
dynamics for Nova Chemicals Corp. in Pittsburgh, will
assess the factors impacting polyethylene, polypropylene
and polystyrene supply and demand, and offer his view
of the mid-term prospects.
Gick´s presentation immediately follows Tuesday
keynote speaker Tom Murdough, chairman and chief executive
officer of rotomolding giant Step2 Co., as he suggests
managerial tips for dealing with change in today´s
fast-moving environment.
The program´s other management-oriented topics
include economic outlooks, work-force development, mold-maker
competitiveness, automotive supplier challenges, e-marketplace
viability, and compounding and distribution market trends.
The price for the June 20-21 injection molding and extrusion
technical training seminars also has been discounted
deeply, to just $99 for the first 20 participants in
each, in recognition of industrywide belt-tightening.
For details or to register, visit www.plasticsencounter.com/cleveland,
or call (888) 368-7229.
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