In March, PlasticsToday invited 15 industry insiders to discuss the state of the plastics industry. Highlights of the wide-ranging conversations were presented in a webinar on June 22 (which is available for download). In a follow-up series of articles, we're presenting in-depth accounts of the discussions that took place on various topics: partnering; jobs and skilled labor; onshoring; and the end of "good enough." You can also read our June article on the sessions here (which includes a list of concrete suggestions on what processors need to do to be world-class competitors in the post-recession environment), and our initial NewsFeed report here.
You’d likely be excused if your impression of terms like “partnering” or “solution provider” is that they’re only so much marketing. After all, suppliers look to differentiate themselves the same as any other business, and “partner” is an appealing role to assume. Maybe you justifiably use it yourself.
The recession has engendered renewed vigor on the part of suppliers to do what processors have long been told to do: add value. No longer is it enough to just sell equipment. Suppliers, to be competitive, truly do have to help processors in all aspects of their operations, going far beyond demonstrating payback on a particular purchase. Suppliers that aren’t going the extra mile will find themselves in the same position as processors who aren’t adapting to a radically changed market.
The bottom line is that partnering is now much more a reality than a catch phrase. Global competition and the relentless drive to cut costs—despite an overhead disadvantage for processors in higher-cost regions like the U.S. and Europe—mean that suppliers have increasingly become actual partners to many processors in recent years, and one expects that trend to continue.
Roundtable participants, from left to right—back row: Christof Heisser (Sigma Plastics); Bill Goldfarb (Universal Dynamics); Thomas Benson (Thermal Care); Miyuki Matsumine (Asaclean-Sun Plastech); Jeff Lewis (Slide Products); Eric Bullivant (Plastrac); Dave Lange (DME); Gregory Lewis (Matsui America); front row: Bruce Catoen (Mold-Masters); Mark Sankovitch (Engel North America); David Preusse (Wittmann Battenfeld); John Chalmers (Processing Technologies International); Mark Malloy (Progressive Components); Larry Doyle (The Conair Group). Not pictured: Tom Worcester (Günther Hot Runner Technologies).
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. I think collectively around the room we all contribute in different ways to helping someone manufacture an end product that can compete globally. If that is a function of where it’s manufactured, serviced, the dynamics of that particular market, then we have to be nimble enough, flexible enough to have manufacturing and engineering and sales and support there.
But traditionally speaking, years ago if I would’ve said coming out of a recession my projection was to have another 500, 1000 mold bases manufactured per month, that would be great. And all of a sudden we’re into technologies now we never thought we’d be into, partnering with different companies, leveraging some of their expertise and skills—co-developing products—that are initially geared toward the molder but have a lot of tooling ramifications that then require different sequencing devices and things that go inside the mold. The growth, to us, it’s new business.
We’re being forced that way because our customers don’t have the R&D manpower necessarily to do that internally anymore and really they’re open to having sales people walk through the front doors again. Not “peddlers” but “solution providers”…there’s a cliché we’re going to hear again.
Christof Heisser (Sigma Plastics): We get approached by a lot of companies that ask us, “How can Sigma, or Sigma Soft, help us, or help us to find a solution to a problem, find a way to make a part better, cheaper, or delivered on time and can we do this ourselves?” We even have analysts approach us and say my skill with making meshes is not enough anymore and what do I do to make this part better?
So I have to get more process understanding. They don’t want to spend their time dealing with making this simulation tool work, they want to work on making a better mold, a better part, a better process, and I think there’s really a sea change in that.â¨â¨
Obviously that will not happen everywhere in the industry, but especially here in the high-end medical and automotive, no one wants to recognize that all of a sudden “I have too much warpage in a part that I didn’t consider so I have to do re-do the whole mold again and it takes another week to get the parts out,”—nobody wants to deal with that anymore. Everyone wants to do it upfront. I’m not saying simulation is at a the point where you can do just simulations and the first part you make is actually one you can put in a car or something like that, but it is getting closer and closer to that point. I talk to Caterpillar, other companies, and they say, “The first excavator we make we want to be the one that goes to the customer, not a prototype.” Are they there yet? No. But that’s at least a goal.
Bill Goldfarb (Universal Dynamics): All these press releases, everyone’s a solution provider. There’s got to be something to this from the demand end. If you’re saying it, there’s got to be some expectation. That’s what they think.
Bruce Catoen (Mold-Masters): I think Tom [Benson, Thermal Care] mentioned the lack of ability from the processors now to be able to handle that scope. Before they had the project engineer, they had those people. They’ve cut out all that cost and now they’re looking at us to provide what they would’ve done themselves.
Heisser: I see this to a bigger extreme in the plastics industry where it appears to me commonplace that you don’t pay the moldmaker before actually the mold makes good parts, and in the metal industry it is not that far yet. So we talk to a lot of moldmakers who say okay, “How can I make this mold work so that I ship it only once to my customer and I get paid right away?”
Tom Benson (Thermal Care): Part of being a solution provider is helping them to think of their own process differently. Bill [Goldfarb] used the term "payback," but in reality if a company is going to be there for a while, payback isn’t really what they want to look at. They want to look at ROI, the cash-flow analysis, so it’s helping them to understand it may take you, on the payback analysis, three to four years to “pay it back,” but over the life of the equipment, 10-15 years, you’re way ahead.
So, something to think that process that through. And something else we’ve noticed is that’s it’s very easy, especially since they don’t have a lot of people right now, to get excited about a specific activity, a robot on a press, and not realize where the actual bottleneck is in their facility. You can spend all this time and money to do something to improve the efficiency in one item, but then you’re bottlenecked downstream: maybe it’s a finishing operation, a packaging operation. It’s really helping them to see their total plant process and helping them to find ways to optimize and cut their cost and differentiate themselves from their competitors. So that’s part of the solution provider, it’s not just “How does my equipment fit to your application?” it’s how can I make you a better company through thinking outside the box or thinking differently than maybe the old traditional ways of thinking.
Rob Neilley (PlasticsToday): How receptive are processors to that?
Benson: They’re very receptive.
Jeff Lewis (Slide Products): They’ve been asking us similar questions for a long time, and we’re just getting better at helping them do it. I want to listen to everybody. I want to know a little bit about everything in the process because the customer is asking me for it. He knows I sell Slide, but he’s asking me about hot runners, or he’s asking me who I think has got the best machine out there, things like that. They’re asking for lots and lots of input. The U.S. is getting better at what I see in Latin America. I go down there quite a bit, and it’s still 110% unconditional. If you’ve got something to talk to them about they’re like sponges. This nation has got to get better at it and they’re seeing that. The guys in Latin America crowd around somebody with something to say. They want to be better.
Eric Bullivant (Plastrac): That goes to the inability to change. I used to go and do a trial, and people were saying, “It’s not going to work, or I’m used to this” and the way the market is going with let-down ratios and things of that nature, you know the cost of pigments and color compounds have gotten expensive, they’re increasing the pellet size getting smaller, and they need to feed all that stuff and that’s where we come in. They’re being forced to make decisions, and oil’s going to be going back up shortly, and that all weighs into the end product. So they have to do something. It’s very rare you go into a plant and they’re still mixing by hand.
Catoen: But don’t you think it used to be 15 years ago you could throw a dart and you’re going to hit the broad side of a barn and you’ll be okay. But now, everything has been squeezed down so that if you don’t do it absolutely right, if you don’t get the best of the best of the best, you’re not even going to be competitive, you’re not going to make the buck at the end. So they have to think so much more about lightweighting, so now all the simulation becomes so important. They have to think about the energy so much more, because outside of labor and resin that’s becoming the most important element. All these things now have to be really fine tuned, so they have to understand it more to be competitive.
Lange: One thing that’s been a positive out of this is we’re much friendlier with our competition than we’ve ever been before. We’re shaking hands, we’re talking about common problems, partnerships are forming, so like our customer, who used to build molds and competed with the shop around the corner, consortiums are being developed to share technology, to leverage talents in certain parts of the country so they have a better shot at winning total programs. That’s a healthy environment to be in when we can work, whether it be at a roundtable, or as competitors, but, in some cases, partners.
Catoen: Partnerships…that’s a great way forward, right? I see that, too.
Lange: We all are selfishly focused on our own top lines and bottom lines but we benefit in many cases when we do it collaboratively, and the customer and end-customer is asking for that. Some of the arrogance, to your point Christof, has gone away—if we were “all that” we wouldn’t be in the position we’re in right now. There’s a lot of global dynamics taking place, but, I would say a lot of it is an open-ness now for new thoughts, new ideas. Problems are many and they don’t just have to do with the part that’s being manufactured. There’s a lot of cooperation.
Rob Neilley: At the processor level, are you seeing that cooperation as well, more of it?
Dave Preusse (Wittmann Battenfeld): Not only do we see it, I guess the Wittmanns, you could say, have bet the farm on that belief with where we’re at—molding machines, auxiliaries, we’re pretty vertical as a supplier. Even if there are exports, which plenty of us sell to, decisions, engineering, projects that are happening in the U.S. and it’s shipping somewhere else, in those destinations they also have possibly a weak engineering workforce, so they’re looking for proven systems. You see it in IML systems where somebody does want the automation in the mold and the molding machine because they want a more turnkey work cell, they want it proven, they want to test it out, and plenty of suppliers who may not want to do some of the risky auto projects, you do them anyway, because that’s what the market is asking for. So definitely more integrated solutions are something that customers are after and there’s less finger pointing in those arrangements, they have less engineering staff, and we’ll continue to see that. That just makes sense.
Larry Doyle (The Conair Group): I think it depends which end market the customer is in. There certainly is a need, based on some of the people who have been let go from processors, some of the expertise is gone, and they look to a supplier to provide some of that expertise, and therefore look for a total system, somebody that can integrate it, somebody that can do some engineering. We’ve had a couple of instances where customers didn’t need new equipment, and we provided engineering support, and that’s exactly what they needed in terms of shifting resources from one manufacturing location to another. They definitely are a little more receptive, but there are still some out there that don’t see value in it. They’d rather do on their own, find a good auction, buy some used equipment, and go for it.
Mark Sankovitch (Engel North America): I would tend to agree with Dave and Larry. The challenge, though, is everyone wants that—they want to add value to the product, but how you get to there? They don’t want to take the risk, so from the processors’ standpoint, they want to bring the risk back to their suppliers, like us, so we end up having to carry that risk, so that’s a challenge and there’s a cost to carry that risk, but we’re not being compensated to carry that risk. At the end of the day, we have to be profitable. We have no problem taking on risk as long as you can be rewarded for the risk.
Lange: Yeah, there are subcontracted programs. Vertically integrated molders that are trying to keep it all in-house have relationships with “shoot-and-ship molders,” for lack of a better word; they’ve got to have flexibility, they’ve got to be nimble and expand and contract and to have all of that capital investment under one roof. And not be able to fill it and keep the machines running…?
Catoen: The OEMs are forcing that to some degree, too, because their programs are so big and expansive. Nokia takes on a program, or Unilever, or Kraft takes on a program, you know it’s going to be multiple tooling suppliers, multiple processors—they’re helping to make sure. There’s a lot of cooperation required here.
Lange: I think partnering is going to be a thing if there is some growth here each of us are only going to have so many resources, and we’re going to partner, and we’re all looking to find those customers who are willing to partner with us and I think back to that win-win scenario—we’re all going to have to get into the ugly stuff if we’re trying to do volume, and market share is still a big thing that we’re all after.
And I’m going to be a little bit optimistic coming out of what we just came out of. Things can only get better, so I see some of that and there’s a lot of technology we all know, and for the molders as well, and I think that’s going to continue to change the dynamics—you know, web-based stuff, that’s fresh right now. When Webex came out with that software that no longer scares the IT guys for vendors to communicate with the equipment on the factory floor and provide techs, we’re doing it for sales, designing of systems with customers, we are crossing borders.
This is global, right, we’re all doing projects for people in different countries and I think that part of that, everybody’s going to have to keep re-educating themselves, and the guys who aren’t able to do that, it’s going be a problem for them. It really is. You’ll never have enough service techs to support your 500 customers. Well, why don’t I just go online, and look at my machine in your plant right now, why don’t I debug it, proof it out, and why don’t you order some parts, and why don’t we do this stuff? The technology is there. That’s going to continue to be a big dynamic. I think the technology is going to continue to be a dynamic. We have to embrace it; it’s not going away.
We have to re-invent ourselves, and it’s the same for the molders. —John Clark