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LOS
ANGELES PLASTICS ENCOUNTER HEADLINES
Internet
best as tool for change, not upheaval
PLASTICS NEWS STAFF
By Joseph Pryweller
LOS ANGELES (April 17, 5:10 p.m. EDT) -- 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."
LOS
ANGELES HEADLINES TOP
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Plastics-laden
L.A. may face recession
PLASTICS NEWS STAFF
By Joseph Pryweller
LOS ANGELES
(April 18, 10:10 a.m. EDT) -- 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."
LOS
ANGELES HEADLINES TOP
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Energy-saving
equipment stands out at show
PLASTICS NEWS STAFF
By Bill Bregar
LOS ANGELES (April 18, 11:40 a.m. EDT)
-- 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.
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Technology
speakers stress open architecture
By
Bill Bregar
PLASTICS
NEWS STAFF
LOS ANGELES (April 18, 1:05 p.m. EDT)
-- 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.
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Italian
machine maker targets N. America
By Bill Bregar
PLASTICS NEWS STAFF
LOS ANGELES (April 16, 5:15 p.m. EDT)
-- 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.
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IQMS
adds staff, targets news markets
By Roger Renstrom
PLASTICS NEWS CORRESPONDENT
LOS ANGELES (April 16, 1:35 p.m. EDT)
-- 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.
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Pa.´s
Multi-Plastics extends stay along border
By Roger Renstrom
PLASTICS NEWS CORRESPONDENT
LOS ANGELES (April 16, 1:10 p.m. EDT)
-- 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.
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Calif.
bill would mandate high recycling rate
By Joseph Pryweller
PLASTICS NEWS STAFF
LOS ANGELES (April 12, 3:15 p.m. EDT)
-- 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.
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Execs
offer advice on mergers & acquisitions
By Steve
Toloken
PLASTICS NEWS STAFF
LOS ANGELES (April 11, 12:10 p.m. EDT) -- 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.
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Flextronics
flexing contract manufacturing muscle
By
Steve Toloken
PLASTICS NEWS STAFF
LOS ANGELES (April 11, 11 a.m. EDT)
-- 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.
LOS
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OF PAGE
Calif.
conference to examine regional issues
PLASTICS NEWS REPORT
LOS
ANGELES (Jan. 18, 3:25 p.m. EST) -- 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.
LOS
ANGELES HEADLINES TOP
OF PAGE
Speaker
to address contract manufacturing´s impact
PLASTICS
NEWS REPORT
SAN DIEGO (Jan. 18, 3:20 p.m. EST) -- 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.
LOS
ANGELES HEADLINES TOP
OF PAGE
Latest
speakers, moderator named to energy panel
Kyser,
left, and Kebler
|
PLASTICS NEWS REPORT
LOS ANGELES (March 21, 3:10 p.m. EST) -- 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.
LOS
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Toyota
revamping relationship with parts suppliers
Braga
|
By
Joseph Pryweller
PLASTICS NEWS STAFF
TORRANCE, CALIF. (Feb. 13, 10:30 a.m.
EST) -- 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.
LOS
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OF PAGE
Energy-crisis
panel may electrify L.A. Encounter
PLASTICS
NEWS REPORT
LOS ANGELES (Jan. 31, 11:45 a.m. EST)
-- 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.
LOS
ANGELES HEADLINES TOP
OF PAGE
L.A.
conference to examine host of hot regional issues
PLASTICS
NEWS REPORT
LOS ANGELES (Jan. 18, 3:25 p.m. EST)
-- 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.
LOS
ANGELES HEADLINES TOP
OF PAGE
|
