Say sayonara to the status quo. A new exercise in mind bending is required in the post-recession era.

An old chestnut holds that when the tide goes out, you see all sorts of things previously hidden—and out of sight is out of mind, after all. As the plastics industry starts to find its footing again in the wake of a virtual free-fall during the first three quarters of 2009, it’s inevitably time for the kind of soul-searching that has to take place following a historic gale that was capable of taking ships down with all hands (and did), and still may not have blown itself out.

That’s why in March, in Chicago, PlasticsToday invited a broad-based group of suppliers to sit down and talk in two separate Executive Roundtables about the state of the plastics industry: where it’s been, where it is, and where it looks to be going.

The following is just a fraction of what we heard. On June 22, you’ll also have a chance to view a webinar of the sessions at PlasticsToday.com, including a Q&A with sister publication Injection Molding Magazine’s editor-in-chief Rob Neilley and yours truly, the editors with whom these suppliers graciously shared their insights.

Do we know where we are?

Naturally, the first thing we wanted to know was whether we have indeed emerged from recession and are in a recovery. Economists have drawn their line and said yes, and by definition, one has to concur. But how do the various GDP data play themselves out on shop floors?

Dave Lange of mold component supplier DME wasn’t the first to use the phrase “cautious optimism.” Christof Heisser of Sigma Plastics beat him to it. “What we see in the marketplace is cautious optimism,” Heisser said. “It was a pretty dry desert six months to a year ago, but I do see there is a route to recovery.”

And it was, as Lange predicted, a phrase that would be used more than once. Thomas Benson of Thermal Care put it another way: “The glass bottom is getting thicker. I think the probability of us falling back through again is minimized. Medical and packaging clearly are the two markets that are the strongest, the building industry is still weak, and a lot of others are not nearly as strong. We’re still seeing a lot of tight credit out there, which makes it real difficult.”

Lange, for his part, observed, “We saw an uptick in the fourth quarter, but primarily because we think that had more to do with molding than the tooling side. We’ve seen a nice increase, in general, in tooling in North America right now. It seems to be more on the quick-turnaround tooling than on high-volume dedicated molds that are going to run for the next two years.”

“Quite frankly, there was nowhere to go but up,” said Bruce Catoen of Mold-Masters. “Everybody sat on their wallets for so long, the pent-up demand had to release at some point. We’re seeing that release now. The question is, are they going to put their wallets back, or is this going to keep up? From what we see, this is something more sustainable than a bubble, or a mini-bubble. We have to see real programs coming through. We’ll see the first tool come through, and we’re now seeing subsequent tooling come through after that. This means they’re increasing their capacity past even their original expectations, which is very positive for us.”

David Preusse (Wittmann Battenfeld) noted that on the machine side, the uptick that began in November 2009 holds some encouraging signs. “We noticed it moving upward in November, although it didn’t show well on the P&L statements, but there’s certainly an increase in business that started in November. Some markets were less affected—medical and packaging. Automotive was the largest hit: They just turned everything off for a while, but the fact is the auto sector is beginning to buy again, to buy parts, to start putting machines back into operation. There are some leading indicators, and it’s exciting right now. It’s getting healthy because automotive is buying. You’re seeing guys who haven’t bought for three years coming back and they’re buying again. It’s a great sign, we’re feeling a little bit of relief, and people are smiling.”

What is recovery?
Conair’s Larry Doyle asked the question, and it’s relevant. “Are we going to recover back to the levels of 2008 or 1999?” he posed. “That’s always a question in my mind: What do we expect recovery to really mean? I think the market today is stable, and processors are feeling optimistic. We’re on the path to recovery, no doubt. It’s just going to take a long time, I think, to get back to some normal level, whatever that is.”

Something important to note is that the narrative in the press regarding recovery can be deceiving, as Thermal Care’s Benson was careful to point out. “Talking about the press and that they don’t sense the recovery, two things that are very popular—unemployment and consumer confidence—have absolutely nothing to do with recession recovery. They are totally lag indicators.”

Tom Worcester of Günther Hot Runner Technology characterized the upturn by saying, “I’m seeing a lot of people over here [in North America] and they’re looking at how they can automate, reduce their costs, streamline, the whole shooting match. Do I see a recovery? Or is it possibly a reinvestment hoping to capture some of the work that has been lost to offshore molding? I see people retrenching—let’s use that term—and with that in mind, they’re looking to stretch the limits, I feel, in order to accomplish their goals.”

Echoing Doyle’s take, DME’s Lange admitted, “The recovery is different from what we’re used to seeing. It’s not traditional growth for us. We’re being forced into areas that we’ve always talked about wanting to be in, much closer to the processor. Why? Because in the end it’s not really the mold base that we’re after, it’s not the ejector pin, the leader pin bushing—it’s a better part.”

What comes next?
Making a better part is what it’s all about, naturally. And the overwhelming consensus is that there has been a paradigm shift in how to get there. Manufacturing in North America had been on the decline ever since the advent of true globalization, and the recession only hammered home the manufacturing realignments that had long been under way. Some molders, as Wittmann Battenfeld’s Preusse noted, have long had “a successful recipe.” Others, for too long, clung to the idea that their operations were “good enough,” only to be faced with a devastating wake-up call that world-class operations are the only ones that will thrive.

As Engel North America’s Mark Sankovitch put it, “If ‘good enough’ is what your philosophy is, you’re going to get bypassed, because in the purest sense of business it doesn’t stand still—it’s a moving target and it’s always changing. If your whole model said, ‘I got it figured out,’ well, it may be good for today, but it isn’t going to last as you move forward.”

This, he also implied, is true for suppliers, too, who are trying to find their best shape and size in a new processing environment. Times have changed for everyone, which means that the new realities will evidence themselves in the way both processors and suppliers do business. Partnering will become ever more important as lean processors look to suppliers to really be the “solution providers” we hear about. Engineering, training, and program and system development will evidence a much greater and closer cooperation between suppliers and processors than ever before, if for no other reason than most processors no longer have the internal resources they once did, and must depend on suppliers to augment the functions and skill sets lost in the leaning of operations.

And speaking of skill sets, the rapidly aging skilled labor force in North America was of great concern to all involved. Will plastics add jobs, and will onshoring be a trend with legs? Where will the labor come from? Who will train them?  

What can you do?
We put a simple question to our panels: What advice would you give processors about how to be world-class competitors? Here's what they told us.

Jeff Lewis, Slide Products
1. Stay fluid. Speed in production, whatever way you have to accomplish it, is still the only way you’re going to reach your goals and quotas. And speed isn’t always the key ingredient; it’s just you have to identify what’s keeping you from producing parts every 9 seconds instead of 13 seconds, and everything that feeds into that you have to make a priority. If you’re not meeting your quotas, someone else will.
2. Make your plants a team. Discourage an attitude of everyone-for-himself.
3. Do it at the best cost you can in terms of energy.

Bruce Catoen, Mold-Masters
1. Bring back innovation. It’s a clichй, but what made America great was innovation. Bring that back. That innovation spirit is going to be really important in the recovery. Change the paradigm to something different, and play by different rules from everybody else in order to give yourself the advantage.
2. Continued investment in technology is needed to drive your company long term. Running at status quo will not keep you operating profitably.
3. Spend the time to understand your customers’ needs and to really address those needs.

Eric Bullivant, Plastrac
1. Empower your employees. If you ask your employees what you can do better, they’ll tell you. They have good ideas and if you include them, it makes them feel better about everything they do.
2. Training is important. If you require your employees to learn more, they can run the equipment better and you can cut your cycle times and make more parts.
3. Automate your operations where ever possible.

Miyuki Matsumine, 
Asaclean–Sun Plastech
1. Re-examine your core business and determine whether your grand strategy is where the market is going.
2. Be energy efficient. At every level of the company, you should be conscious about saving energy and expense.
3. Look into new technology and then take the opportunity to grow by investing in long-term business, not looking only to the short term.

Thomas Benson, Thermal Care
1. Spend some time doing strategic planning. Understand what your business really is.
2. A lot of people don’t understand their costs correctly, so carefully look at where your costs are. Look at ways you can improve the overall efficiency of the plant.
3. Be flexible. Look for opportunities for shorter runs, or taking in product you might not have done. Where can you go that you haven’t gone before?

Dave Lange, DME
1. As an organization, as a molder, understand what it is that really differentiates you. “How are we going to be different from every other person that’s molding a part?”
2. Be closer to your customer.
3. Be the company that has a little bit of vision to anticipate where things might be five years from now, that starts to carve out the niche, starts to differentiate itself a bit as being more of an expert in a particular area. Continue with your core business, but start carving out that niche.

Christof Heisser, Sigma Plastics
1. Know your market and your future markets.
2. Know your costs. If you don’t know your costs, your company is an impending train wreck.
3. Invest in technology. You can only be profitable if your productivity is up. The only way you get ahead in productivity, or increase productivity, is to use new technology, the latest and greatest machines. The guys in China buy new stuff.

Bill Goldfarb, Universal Dynamics
1. Have good old-fashioned communication with your vendors, the partnership we’ve spoken of, but not on an only-when-there’s-something-wrong basis.
2. Look into the future; be open minded to new things. One of our biggest customers was open minded to a new corn-based resin, which was thought to be novel, and now it owns the market. It identified and took the risk.
3. Look from within. Some of these energy savings are really just found from within.

Tom Worcester, 
Günther Hot Runner Technology
1. From the moldmaking side, innovate, be creative, and think out of the box. Really change your thought process.
2. Processors need to have the same approach. They need to think totally differently now. “Good enough” isn’t any longer.
3. What you offer has to be more than just value-added. It has to be, “Can I build this entire unit, or system, can I assemble it totally automated, and can I help in the design of it?”

Greg Lewis, Matsui America
1. Improve your process. Improve efficiency, and reduce running costs.
2. Look at payback differently. It used to be three or five years, but now we’re talking about 18 months for payback on a new piece of equipment. That’s a tough nut.

Larry Doyle, The Conair Group
1. Processors need to think about “Who am I?” They’ve got to really understand what their business is about, what their core competencies are, and how they translate those core competencies into competitive advantage. If they can’t do that, then they’re in trouble.
2. Invest in human capital. Make sure all your people are onboard with who they are, and invest in those skills to make them even stronger and to define those competitive advantages even further.
3. Challenge everything. Just because you’ve done it that way forever doesn’t mean there isn’t an alternative out there. Cut cost and improve reliability; cut cost and create a competitive advantage.

David Preusse, Wittmann Battenfeld
1. Know your core competency and find efficiency within it.
2. Embrace technology and innovation. It was required before, and it’s certainly required coming out of a recession.
3. Increase the value proposition and vertical integration. The ultimate customers who buy the parts have their pressures in their marketplace. They will go to the next guy; they will move their molds around. It’s a nasty business that way, but that’s going force people to adapt and change.

Mark Sankovitch, 
Engel North America
1. Understand your core business. Do what you’re good at. Go back and understand it. When you branch out, whether it’s LSR or putting in the cleanroom, do the due diligence.
2. You’ve got to be able to do forecasting. The days of having 100 machines in a warehouse that you can draw from are gone. Work with your supplier, give them enough time to get you the product so you can be successful.
3. Make sure you have a good understanding of your income statement and your balance sheet. You don’t have to be a financial wizard, but you’ve got to have your house in order. That’s extremely important. When that growth comes, you’ve got to be able to finance that growth.

Mark Malloy, 
Progressive Components
1. Have strategic planning in place—a vision, a mission, and strong management. Know where you want to go.
2. Communicate. Advertise and market what you do well. Very few molders and moldmakers do this. They have all these strengths and no one knows about them.

John Chalmers, Processing 
Technologies International
1. Take a more flexible stance regarding the products you’re prepared to manufacture. The mindset in Europe and Asia is much more flexible. They understand there’s much more market fragmentation.
2. Energy conservation is going to continue to be at the forefront of where people need to look to make up some of these diminished margins.
3. Use technology to overcome shortfalls in the labor pool.

—John Clark