Editor’s note: In the first half of 2000, IMM outlined many of the challenges the molding industry faces. We explored some of the critical issues in management, sales and marketing, design, tooling, and manufacturing. As the last half of the year gets under way, we begin an exploration of how molders, moldmakers, and designers are meeting these challenges and thriving in this evolving industry. We start this month with management solutions, the strategies some molders use to keep their business in business in the new century.
Success stories in the molding industry aren’t hard to find. Large, high-profile, internationally located, multimillion-dollar molders are well-known and, thanks in part to M&A, growing by the day. Still, the molding industry is composed mainly of small- to medium-sized shops that don’t enjoy many of the perks that come with being a molding giant. But they face the same challenges, and then some, of running a plant, managing people, and growing the business. This month’s Blueprint story looks at several molders, all of relatively average size, and explores the strategies they use to help their businesses thrive.
|'We just couldn't keep doing this cyclical thing of bidding ourselves down. With this new business we can bundle services, develop partnerships, and create more value.'|
The first stop is Mount Prospect, IL, home of Advantage Molding & Decorating Inc., led by Penny Froh, president. Froh and Vice President Pat Ketner started the business on April Fool’s Day 1993 with one molding machine and one pad printer. And like many molders in the Chicago area, they began a life of service to Motorola, one of the region’s largest sources of molding programs, specializing in molding and decorating mobile phone lenses.
Within a year the company was making $2 million. By the end of 1995 that number reached $10 million, and is expected to top $20 million this year. Froh continually reinvested in the company, adding machines, people, and expertise. A second shop was opened in Naples, FL. Advantage was told by one Motorola division that it was "the best at molding lenses in the world." Business was booming.
Still, Froh says, Advantage competed on an essentially level playing field against many of the same molders for many of the same jobs. "Basically, we’re all just glorified job shops," says Froh. "We just beat up each other."
As the 1990s came to a close, Froh and Advantage realized that it would have to do two things to ensure its prosperity. The first was to diversify. The second was to start doing something none of its competition was doing.
The first was relatively easy. Advantage started chasing jobs in other sectors of the telecommunications and electronics industries, and started courting other Motorola divisions that could benefit from the expertise Advantage had developed.
The second part, doing something unique, was easy to identify, but harder to implement. "What our competitors don’t do is design," Froh says. So Advantage did what many molders are doing, or wish they could do. It added a whole new service to its offerings and created, from scratch, Rapid Design Group, a company that does all of the upfront work on a molding job: part and mold design, prototyping, reverse engineering, thermal and stress analysis, and first-time sampling and qualifying.
Froh hired two former Motorola designers for the new company, set up shop in a new facility just down the street from the Advantage plant, purchased the proper equipment, and opened for business. "We just couldn’t keep doing this cyclical thing of bidding ourselves down," Froh says of the old business model. "With this new business we can bundle services, develop partnerships, and create more value."
Of course developing a new service was not cheap, as Froh readily admits. But in the long run, the benefits of in-house design expertise far outweigh the costs. Possible proof of this came in June when Advantage was purchased by Textron Fastening Systems, a subsidiary of the manufacturing giant of the same name.
|JIT on steroids |
It would be an understatement to suggest that World Class Plastics is a JIT specialist. JIT is a way of life at the Russells Point, OH firm, apparently permeating every aspect of operations, including financing, sales and marketing, human resources, and production. "Our company is on a relentless warpath to become as lean and competitive as it can be by eliminating all nonvalue-added activities," says Steve Buchenroth, company president.
The company does this by embracing a number of JIT tenets that are the guidelines by which World Class Plastics operates. "Instead of wishing our customers would order what we can comfortably produce, we have elected to face reality as it is, not as we wish it were, or as it used to be," says Buchenroth. "We have revised our production process so that we can respond to the customer’s order." This means short runs, fast changeovers, and molding to order.
To support this strategy, the company first employs a relatively unusual production arrangement. It groups machines into cells of three to six presses. One production tech runs each cell and is responsible for all quality inspections, material control, peripheral equipment, and mold change scheduling. With this infrastructure in place, these are some of the rules the company follows:
Jump now to the Pacific Northwest and the town of Tualatin, OR, home of Puget Plastics Corp. As has been documented, this region was devastated in recent years by the departure of millions of dollars in molding business to plants overseas and in Mexico. Hewlett-Packard and Apple, once mainstays of the region, both moved programs out, reducing capacity by as much as half in many shops. Others shut down all together.
It was into this environment that Dale Behm entered in 1998 when he was hired as president and ceo of Puget Plastics. His mandate was "to reposition Puget as a major player in the injection molding industry." The goal: increase annual revenues from $40 million to $100 million by 2002. Behm is attempting to accomplish this with two popular tools—the joint venture and the partnership. "Business models are changing rapidly in the marketplace," he says. "The question is, how do you bring companies together in a unique way?" Let us count the ways.
Start in Guadalajara, Mexico, where Puget operates 35 presses and where H-P took some of its programs. Here, Behm did something few, if any, molders have done before. Puget formed a core supplier relationship with H-P, and then a partnership relationship, a task that proved "extremely difficult, but mutually beneficial." The partnership is not a contract, but a memorandum of understanding between the two companies, committing Puget to a certain level of service, and H-P to a certain level of capacity.
Back in Oregon, in early June Puget announced a joint venture with TriQuest Precision Plastics, also based in the Pacific Northwest and, like Puget, also owned by a company started by Alaskan Native Americans. The JV, which affects TriQuest’s Northwest operations only, combines the facilities of the two companies in the Puget plant. With the agreement, additional molding machines, cleanroom capability, and painting equipment will be added to the Puget stable of services. "The goal is to establish the largest molding operation in the Pacific Northwest," Behm says modestly.
Leapfrog now to an undisclosed location somewhere in the Southeast U.S. There Puget recently formed a virtual partnership with an OEM that molds its own plastic parts in-house. The OEM also needs metal stamping. The agreement stipulates that Puget take over and manage the molding operation inside the OEM’s facility, thereby becoming (virtually) a molder of proprietary product at an operation captive to the OEM’s plant. Puget will also facilitate a partnership for the OEM with a metal stamping facility. Are you keeping up?
Coming full circle, return now to Guadalajara, where the one thing Puget did not have—that its competition did—was a painting facility. Behm solved that by convincing a well-known Midwest painting firm to build a new facility next door to the Puget plant in Mexico. The painting company will serve all customers in the region, but its proximity gives Puget the advantage.
"It’s all a little out-of-the-box stuff," says Behm. "It’s the way to go today." Indeed, he says he expects to meet the revenue goal and hopes to ride a resurgent Northwest economy back to success.
In North Attleboro, MA you’ll find another molder—part of a four-piece puzzle that, when assembled, creates a contract manufacturer called IntegraTech Solutions Corp. The molder is the Thermoplastics Div., lead by President Dick McKenney.
McKenney’s leverage in the market is rooted in the fact that IntegraTech is composed of four complementary divisions. The first is the molding division. Of the remaining three, one assembles circuit boards, one is a metal fabricator and assembler, and one produces and distributes electrical and mechanical fasteners. All four are linked electronically and can easily share data and information about a product or project.
"When we approach a customer, we can offer a complete solution as a contract manufacturer," says McKenney. "We can draw on any of the products or services produced by any of our sister divisions." If a customer needs a circuit board encased in a metal-lined molded case, assembled, tested, and shipped, IntegraTech can do it. McKenney’s core competency remains in molding, with other valuable services at his customer’s beck and call.
And, because the molding division also provides design and moldmaking services, a product can be ushered from conception to production, to assembly, to packaging, and to distribution all under the IntegraTech name.
What does the future hold? McKenney says other businesses and services may be added to the contract manufacturing solution, and distribution will be enhanced to serve customers nationally.
Where To Now?
The beauty of these three success stories is that they are just a few of many in the molding industry. The drumbeat of change as the molding industry matures is loud and clear. And while this seems frightening on one level, it’s incredibly exciting on many others. The opportunity for molders to be creative, thoughtful, and far-thinking is tremendous. Look for more such stories in these pages in the coming months.