Prism Plastics (Chesterfield, MI) has built a successful business providing plastic injection molding services to the automotive industry. The company specializes in the production of safety parts for seatbelts, among other components. After some lean times following its founding in 1999, the company "went from zero to $5 million in the first five years," says Gerry Phillips, Vice President and co-founder, and it has averaged 20% annual growth since then. Medical molding was always part of the company's diversification strategy, says Phillips, and it took the plunge in 2010 by establishing Prism Medical. It did not make a big splash. "We found it difficult to penetrate the medical market on an organic basis," Phillips candidly told PlasticsToday. It's not giving up, though: To show its resolve and commitment to the medical manufacturing sector, Prism is looking to acquire a medical molder.
Prism is not the first supplier of molding services to the auto sector to attempt diversification by entering the medical market. In fact, whenever there is a downturn in the auto industry, many suppliers flock to exhibit at the Medical Design and Manufacturing events organized by UBM Canon, which also produces this website. Their initial enthusiasm fades as they learn that medical device OEMs are wary of newcomers and tend to be more loyal to their existing supply chain than many other sectors. And when the auto sector rebounds, the molders inevitably return to their roots, cementing a feeling among medical device manufacturers that they are not in it for the long haul and won't be reliable partners. That perception tainted the efforts of Prism Plastics, says Phillips.
"Suppliers to the automotive industry typically try to get into this market when business is lean and then lose interest as soon as the market picks up again. That worked against us," says Phillips. The company was also hampered by an internal issue. "We had a dedicated resource that did not work out, which also set us back."
Unlike some of its peers, however, Prism has learned from the experience and applied that knowledge to form a new strategy to penetrate the medical market. "We are looking to acquire a healthy, growing company that shares our values for tight-tolerance, precision, advanced manufacturing. Basically, we are looking for a $10 million Prism Plastics, with a medical molding specialization," says Phillips.
The company has hired Stout Risius Ross Inc. to scout possible acquisitions. "We have identified a broad range of targets in different parts of the market, in different geographies, and with different processes within the injection molding field," explains Phillips. "We are a process-oriented, regimented company, and we looking for a like-minded company."
Beyond the acquisition plans, Phillips feels that Prism Plastics is well aligned with the ethos of medical manufacturing OEMs. "More than 80% of our output involves safety parts for seat belts, brakes and so forth. We produce more than 500 million parts per year, and we take that very seriously," says Phillips, citing the company's impeccable record in error-free production with extremely low levels of rejects. "That focus lends itself well to the critical nature of medical manufacturing," he adds.
If all goes according to plan, Prism expects medical molding to account for one-third of revenue by 2020. "If we maintain our current growth rate, or even if we grow a little less than forecast, our automotive business will more than double by 2020," says Phillips. With medical in the mix, Prism Plastics sees its revenue tripling from $30 million in 2014 to $100 million by 2020.