Michael Friend, president of UPT Plastics Inc. in Tempe, AZ, began business in 1988 pretty much the way many others have: first as a builder of high-quality injection molds, then adding two injection molding presses in 1990 and a third press in 1991, followed by a move into a "huge" 12,500-sq-ft building in February of 1992.
This spring, UPT--along with its packaging division, Owens Packaging Inc.--moved into a 50,000-sq-ft building that houses mold design and build operations as well as both molding divisions of the company: the custom molding division, UPT, and the proprietary molding division which serves the consumer packaging industry.
There are advantages to having both custom and proprietary business, says Phil Owens, president of Owens Packaging. Owens came to Friend in 1995 armed with 35 years of packaging industry background and many contacts. "Our mission was to service the packaging industry with high-volume, custom injection molded items," says Friend, who was attracted by the idea of having some proprietary products.
Owens Packaging's first contract came later that year. The company had developed a proprietary handle for 1-gallon PET containers, and Gatorade signed on the dotted line for the new handles. That same year, another customer had a need for a similar handle but one with a slightly different design.
The company built two 24-cavity molds and purchased a 400-ton molding press to handle the high-volume work. That's one of the drawbacks to having a proprietary product, says Owens. "There's a much larger investment required in building these molds because there's no customer to share this initial cost with," he explains.
For the packaging molding operation, the company builds only Class 101 molds. That goes for both its custom packaging customers as well as their own proprietary items. For Owens' custom packaging customers, which include several companies in the food and pharmaceutical industries, the company will share the cost of a mold in exchange for a three-year contract.
Currently, about 80 percent of Owens Packaging's business is from proprietary product lines. Paradigm Engineering, a product development firm in Tempe, is a partner company with UPT and works with Owens Packaging as well as UPT customers in designing new products.
Although UPT and Owens Packaging share the facility, management, and other personnel, the business units are segregated. UPT, as a custom molder, molds for Owens Packaging in a separate area of the building that contains ten presses which range from 90 to 200 tons clamp force.
In the packaging side of the new facility, there are three 400-ton presses to accommodate the large, multi-cavity molds capable of producing millions of parts annually. There is room to expand capacity with four additional presses, and by pushing out a wall at one end, another 10 presses can be added.
Owens says there are really two different philosophies driving a custom molding business vs. a proprietary molding business in consumer packaging. For a proprietary molder in the packaging industry, volumes are much larger, molds run for long periods of time, and two- to three-year contracts with customers are the norm. Caps and closures are non-seasonal products, so the work is steady and high-volume.
"This type of business allows you to plan better, and have a comfort level with the longevity of the business," says Owens. "We target specifically high-volume products in the consumer packaging business."
However, there are also other considerations for the molder, such as quality assurance issues. Owens points out most of the company's products, such as caps and closures for the food industry, are used in high-speed bottling lines, so quality requirements are extremely tight. "One bad cap can wreak havoc on one of these high-speed bottling lines," says Owens.
Currently, the company uses stringent process monitoring on the molding presses, periodic spot checks, and monitors quality with a coordinate measuring machine.
The high volume of parts requires other adjustments. With large raw material purchases, storage and lot traceability become extremely important. By the end of this year, the company plans to install silos to accommodate bulk material purchases. Packaging for the parts represents a lot of cardboard.
"Just managing the sheer number of boxes required to package several million parts a day is an enormous challenge," Owens says. The company stores finished goods and provides daily shipping service to its customer based on a "min-max" inventory control system.
Owens says success with a proprietary product requires you have a "very large market with several companies you can sell to." He understands why many custom molders seek some type of proprietary product. "You're not subject to the customer moving the molds on a whim," he says. "You have some control over your own destiny."
Still, Owens says UPT and Owens Packaging don't do anything other molding shops can't do as well. Their success, he adds, is based on the simple philosophy of meeting their commitments to customers.
"Whether you are a custom molder or a proprietary molder," says Owens, "meeting commitments is the single most important thing you can do."
UPT Plastics Inc.
Phone: (602) 968-6653
Fax: (602) 921-1123