Cells: The building blocks of manufacturing:A new machinery landscape

Gone are the days of bells and whistles, along with the need for just another machine. Molders want solutions, and equipment suppliers heed the call. This month, IMM takes a closer look at the “new norm” in the molding industry—a shift away from commoditization and toward specialization and cells. The first story looks to industry leaders for perspective on the change. The second reviews the current state of cell-building and who’s putting them together. The final story provides how-to instruction on building and specifying a cell. Plus, interspersed throughout the three stories, we look at reality—actual, running cells that molders and moldmakers have put together over the last three years.

Keenly aware of the significant changes affecting the injection molding industry during the past four years, processors have reacted by instituting changes of their own, ranging from employing lean manufacturing to adding new process technologies. Most industry watchers agree that we’ve entered a new era, coined by Jack Avery of GE Advanced Materials as the “new norm.” Rather than focus on the economic downturn, however, Avery and others are zeroing in on shifts in purchasing and specifying equipment brought on by the new environment. Far removed from the 1990s, today’s process holds the potential for more efficient and profitable operations.

In the Q&A that follows, top industry sources offer their insights on the current state, as well as the ways in which the new norm has influenced the process of buying and specifying machines and production cells.

IMM: Clearly, the business levels this industry enjoyed through 1999 have changed significantly. What is the “new norm” in the injection molding industry, in your opinion?

Michael J. Santa, president and CEO, Battenfeld of America (West Warwick, RI, soon to be South Elgin, IL): The continuous contraction over the past three or four years has stabilized, and it appears the current level will remain for some time. While downturns are typically viewed as negative, we could look at this as a renaissance of American manufacturing. Molding operations that have withstood the economic turmoil are companies doing specialized processing. There are no SPI stats on this, per se, but we have gone from a market that was nearly 70% commodity-based in the 1980s to one that is 35% to 40% commodity-based today. The market has changed its makeup significantly, and those who specialize in advanced processing techniques are now the majority.

Several factors are contributing to the intensity of the contraction. When you’re at the level we are at right now, it appears extremely painful given the level we came from. Machinery makers that geared up for 7000 units per year are now looking at 3500 as the benchmark for total annual machine sales in the U.S. We have to determine how to be profitable at a reasonable market share of 3500 units. Falling from a first-story window doesn’t hurt as much as falling from an eighth-story window.

Karlheinz Bourdon, VP, machinery technologies, Cincinnati Milacron (Batavia, OH): In the 1990s, U.S. and European molders invested heavily and steadily in machinery, at times to the extent that they overinvested. We ended up with idle capacity when the downturn came in 2000. The combination of idle capacity and the downturn resulted in new business for all machinery companies declining by roughly 50%. This figure is improving today, but the improvement is coming from larger machines.

The small machinery market is still headed downward, both in dollars and units. Midsize machines—200 to 1000 tons—are relatively stable. After a significant downturn in 2001, large machines have shown substantial growth. Units shipped between 2001 and 2003 have increased by 50%, and the market is growing, driven by the auto industry. Machinery suppliers need to adapt to these changing market conditions.

Jack Avery, manager of operational assets, GE Advanced Materials (Pittsfield, MA): What are we best at in North America? Innovation and creation of things that are new. Are we going to compete on cost with any of the other global producers? No. So we have to figure out how to add value. As a material supplier, we work on developing added-value technologies, not just material but also design, tooling, and molding technology.

Most material suppliers are working this way. We have to be in tune with our customers. Shoot and ship is long gone. Processors now have to figure out how to differentiate themselves to compete. Do you have a core competency or can you develop a new one? Basic strategic decisions have to be made that can change the whole business equation. Then find customers on the same page who need these skills and want the value in the product at the right cost. Don’t make the mistake of thinking that business levels of the 1990s will be back. Today’s business levels are a good baseline, and appear to be somewhat stable.

IMM: How has the current economic environment changed the relationship between suppliers and molders? In other words, how are machines, molds, and production cells bought and specified these days, and what are customers asking of suppliers?

Bruce Catoen, VP, automated systems, Husky (Bolton, ON): Besides the economic changes brought about by globalization, we are now moving into the next generation of molding owners. While former owners had a hands-on, do-it-yourself attitude, those taking over have more of a business perspective than a technology perspective. In addition, the recent downturn gave rise to a trend toward lean production, resulting in many processors cutting back on staff, project management, and excess capacity. Again, knowledge and resources decreased.

Due to the changing customer makeup, suppliers have to be able to provide a complete solution, and back up the sale with guarantees on performance and delivery for a period of time in the plant. Owners no longer want to buy a machine, per se, but rather, the ability to produce 1 million cups a year. Another difference is the openness to talk about part cost. Formerly held as close secrets, we now receive cost targets. A customer will say, “I need to deliver this part for this price. Can you do it and if so, how?”

Michael Grant, managing director, Axxicon Moulds (Cleveleys, U.K.): As a large moldmaking operation, our main change is an increasing focus on serving a smaller customer base in a more comprehensive way. We’re now participating in the production process from early supplier involvement stages through to production. In addition, the emphasis on business is more commercial and more engineering oriented. Today, we serve the market with project engineers who are also account managers, while previously we relied on a traditional sales force. We’re including a good deal more design involvement. In addition, the types of molds we’re asked to produce are more complex. Three components are now being molded as one to save cost. Customers are also asking for better guarantees, especially in terms of the number of shots per year and improved cycle times for cost reduction programs.

Jim Healy, VP, automation sales, Conair (Pittsburgh, PA): Looking at the total market for automation, it went from $95 million in the late 1990s to a low of $61 million in 2001. However, that trend was reversed in 2002, and by 2003, the market reached $77 million. The overall auxiliary equipment market is smaller today than in the 1990s, but it is clear that automation demand is climbing, particularly as a percentage of overall demand.

We are asked to get involved with product designers and moldmakers more often early on in the design phase to offer input on what is required for automation. Many things can be modified up front to make automation work more smoothly as a part of the total process, such as ejection methods, cavity layouts, and part designs that provide surfaces for the EOAT to grip without affecting cosmetics. We find ourselves involved in more project kickoff meetings. There is also a movement in the industry as a whole toward flexible automation. Robotics must be able to adapt to multiple parts and molds to ensure future flexible usage and make the most of the investment.

Ben Martin, marketing director, Conair (Pittsburgh, PA): We’ve been talking about early supplier involvement for 15 years, because being involved earlier makes it easier for us to help the customer and improves performance of the automation system. Until recently, customers weren’t as enthusiastic about the idea. Now, driven by the state of the economy, they want it and need it. What has happened after the buying frenzy of the 1990s, when bells and whistles were the norm, is that processors now want an overall solution. Rather than simply peddling standard automation products, suppliers must provide solutions that are right for the specific application. Customers are buying what they need now with the opportunity to expand later. They’re seeking to improve productivity and profit in the near term.

Larry Doyle, marketing manager, Demag Plastics Group (Strongsville, OH): Molders today have shifted business strategies to make products faster and offer superior quality. While there is still some general purpose molding that will stay here in North America, the trend is toward more niche offerings, such as parts that require a lot of engineering, upfront design, large tonnage, high speed, and multiple components. IML [inmold labeling] is growing in North America, as is any kind of IMD [inmold decorating]. Cell manufacturing addresses the needs of these niches, those of the molder, and those of the end customer because parts are more sophisticated. Molders save time and increase quality by reducing labor and content, and minimizing the times anyone touches the product.

We’re also seeing a more integrated approach in the design of workcells. Customers are giving us the end result and the part, and then asking us to work together with other suppliers to meet the end objective. In turn, we are getting to the right solution faster. There are so many valuable benefits to this process. By starting with the mold size and cavitation, we can determine the best way to specify the machine, while at the same time think of how the other components will integrate and work with the machine. By knowing exactly what the end product is, we can suggest process technologies to cut costs and provide input on product design for that process. We’re also discussing volumes and cycle times. Customers will provide annual volume and shifts, and then ask us and the other suppliers to design for the needed cycle time.

Paul Caprio, VP, injection molding, Krauss-Maffei (Florence, KY): It is apparent to us that the buying opportunities today are trending toward engineered solutions such as multimaterial applications, high-speed workcells, and high-precision applications. There are not as many opportunities for, say, just another 300-ton generic machine. Customers are looking for machinery companies to do more than just quote the machine as well. They have fewer engineering people on staff due to downsizing, so they look to us for turnkey projects for machine, mold, and automation.

K. Bourdon, Milacron: For decades, Ferromatik has operated a lab called Technikum to run tests on customer molds. This is also where customers come with new product ideas to seek our advice on the best process, material, and moldmaker. It allows us to optimize production with a network of suppliers very early in design and development. We are trying to transfer this principle to the U.S. market. It is essential to making more complex projects work efficiently and produce parts at the lowest cost. The process relies on our systems approach and also on the flexibility of having an open network of auxiliary suppliers and moldmakers with experience specific to certain products or processes. We are able to select the best supplier for the application without being obligated to any specific partners.

M. Santa, Battenfeld: Customers today want to know less about the product and more about what your organization is going to do to increase their profitability. It is about solutions in a partnering atmosphere, rather than making deals. Decisions are being made today on a mathematical formula—here’s the investment; here’s the ROI; who can support that the best? There might be a time when one supplier’s product won’t be the right solution. Those types of scenarios are the ones that lead to the potential for “coopetition,” in which competitive suppliers market their services cooperatively. Everyone is extremely challenged to increase profitability, and the only way is to bring new and creative solutions to the customer. Our success filter requires each sales opportunity to be closely evaluated and qualified. We must be able to earn a reasonable profit by making our customers profitable. Satisfying both is critical to success.

IMM: What percentage of your business, or your customers’, involves production cells, and do you see cell manufacturing as a growing trend?

J. Avery, GE Advanced Materials: We are starting to see more cell specification. The manufacturing community begins to see that these can add more value. OEM or captive molding operations are starting to bring in suppliers and have them integrate into their plant. Processors have to find a relationship that works for the long term.

Integration is the caveat to specifying cells. If you don’t have all of the operations integrated, there’s no chance of success. That includes the molding machine, mold, material, and robotics. So far, it appears that machine manufacturers are the primary integrators for manufacturing cells in cases where the cell is specified in total. In cases where the automation is done in-plant, more than likely a robot supplier or an integrator will do the job.

Processors should also be looking at what happens when the application for which the cell was specified goes away. Consider whether you have flexibility with the cell, and use your basic understanding of your capabilities when you build the cell. It’s time to be more strategic and look down the road. Ask yourself if your current capability will be valid three to five years from now, and design the cell accordingly.

Chris Navratil, VP and general manager, TecStar-Illinois, MGS Mfg. Group (Germantown, WI): At MGS facilities, workcells vary from fully automated to semiautomated. All of them supply value-added activities to improve productivity. We’ve never felt that direct labor reduction was the key to being profitable, because the direct labor component is only about 10%. Instead, productivity improvements via automated workcells are the key to cost reduction. For every 10% improvement in productivity, we can add 4% to the bottom line.

We have a number of examples where workcells have helped us win business from Asia. In one such instance, we use a highly sophisticated cell to manufacture a low-tech product, bettering per-part target cost and improving quality over the Asian processor. We are also working more closely with our suppliers to create solutions. For instance, we have an application that requires handling and assembling parts with internal springs, a technically challenging job because the springs get tangled and are hard to feed. In a joint venture with a German automation supplier, we designed a way to handle the springs in great volume. The first generation produces 45 pieces per minute, and the next generation will double that.

M. Grant, Axxicon: Around 70% of our customer base uses production workcells, which is relatively high because we have a large number of OEM and Tier One customers, both of which are more active with workcell manufacturing in Europe. Custom molders typically aren’t specifying workcells. They seem to make more sense for high-volume, low-cost manufacturing, in part because they require a higher investment up front. The trend is to make those workcells flexible—to be able to change EOATs, locations, workstations.

B. Martin, Conair: The trend toward cell manufacturing is definitely on the rise. Automation and materials handling products sold as part of a cell are showing marked increases. These require upfront engineering and integration with tooling and machinery.Automotive customers are heavily into cell manufacturing, but demand is also coming from other industries. As we see cell business picking up, more requests are going through our engineering team because we have to look intensely at what the workcell is going to be doing rather than just suggesting a particular robot for a specific machine or part.

L. Doyle, Demag: It has become essential for molders to incorporate workcells to remain competitive. Processors have to add value to what they are selling, and they need to streamline costs at the same time. Cells allow them to differentiate their product and take advantage of the new processing technologies. To accommodate this trend, we have created an applications group to establish alliances with multiple moldbuilders, automation houses, and auxiliary equipment suppliers. After identifying their specialty areas, we can then choose from the partner base according to customer needs. This more proactive approach is vital.

P. Caprio, Krauss-Maffei: Workcells are very popular if the customer is fortunate enough to know how much of a product will be needed. Unfortunately, this is not usually the case, so the molding machine needs to be flexible to handle a change in product. We have seen a greater need for workcells among our customer base, and for this reason, we purchased an automation house nearly 18 months ago so we would have the ability to offer turnkey solutions.

Workcells optimize the output and minimize the amount of direct labor in the production area. Another benefit is that processors with worldwide facilities can make the first cell in the U.S., optimize it and work the bugs out here, and then order identical cells that can ship anywhere in the world to be at the right geographic location to service their worldwide customers in the most efficient manner.

B. Catoen, Husky: We’re seeing a move toward automated workcells when part volume and length of contract permits. Many molders still run free drop [shoot and eject] for short runs as automation cannot be justified, but for higher volumes or higher value, customers will take the extra step to automate. Some custom molders who want to take advantage of the benefits of automation are finding creative ways to make automation more flexible. They are looking for their automation to do more than one thing. This generally requires a higher level of vision, planning, and standardization. For example, a thin-wall molder could easily run three different container sizes in a single workcell if it were designed correctly up front.