IMM’s Benchmarking Report: 1998-2002

In its fifth year, IMM’s Benchmarking Report gives tangible numbers to tumultuous times, providing a window into the boom and subsequent bust.

As IMM’s Benchmarking program wraps up its fifth year of existence, the data gleaned from its participants provide historical production information documenting an extremely volatile time for molders. From the tail end of a high-tech boom that pushed molding to unseen heights, to a manufacturing recession that’s defied economic conventions and mired molders in a slump that many industry veterans describe as the deepest in their memories, the years from 1998 to 2003 were nothing if not eventful.

Although limited in scope, Benchmarking’s approximately 30 to 45 quarterly participants still provide a relevant and revealing look at industry trends—some expected while others are surprising.

The program tracks nine benchmarks on a quarterly basis, displaying results from three for each month in the quarter. In addition, IMM has compiled profile data to help characterize the program’s participants.

Those benchmarks have stayed largely intact over the last five years, and for the purposes of this article, eight benchmarks will be examined, including customer returns, employee turnover, machine utilization, mold change time, productive downtime, scrap, scheduled ship date on time, and training per employee. In addition, two sets of data from the profile information (wages and average machine rates) will also be examined.

Other than a few spikes or dips that can be chalked up to statistical anomalies, the data offer a steady overview of the time frame.

Idle Presses
Not surprisingly, machine utilization peaked in Q1 2000 at 69.4 percent, riding the fumes of the late 1990s economic expansion. Following that apex, it declined for five consecutive quarters and descended to its nadir in Q4 2001, bottoming out 57.7 percent.

But, as the general economy trended mildly upward, machine utilization followed suit over the last three quarters, climbing from that low and settling at 62.4 percent for Q3 2002.

Dipping Machine Rates
As times worsened for molders, and OEMs wrung discounts from their supply chain, machine rates steadily declined, with the effect of further thinning many molders’ already anemic profit margins.

Rates peaked in 1999, reaching an average of $55.55 for presses in 12 size categories ranging from 25 to 1200-plus tons. This rate was decidedly higher than the $33.67 posted in the program’s first year—1998—but it would soon diminish, reflecting the shrinking manufacturing sector by dropping every year since 1999.

Not even keeping pace with inflation, the average annual machine rates fell from $55.55 in 1999 to $53.80 in 2000, $51.42 in 2001, and dropping substantially to $47.26 in 2002.

Job Security
As the economy worsened, and jobs—especially those within manufacturing—became scarce, the overall employee turnover benchmark showed steady declines.

The turnover benchmark peaked at 23.6 percent during Q3 1998, presumably while molding continued rapid expansion and job seekers were able to pick and choose work to their liking from an array of opportunities. Soon after, however, it began steady and marked declines except for a small uptick in the second and third quarters of 2000.

Following Q3 2000’s 11.5 percent mark, five consecutive quarters of decreasing turnover rates ensued as the job market tightened.

The trend began a reversal in 2002 as the rate increased to 5.4 and 6.1 percent for the first and second quarters respectively, but Q3 2002 saw a return to form as the turnover rate fell back down to 4.6 percent.

Payday
While jobs have become relatively scarce as companies retain employees longer and reduce staff turnover, wages—at least those with benefits—have risen enough to keep pace with inflation.

When IMM began tracking data in 1998, a full-time production employee with benefits earned $11.48/hr. The following four years saw steady if not dramatic increases, rising to $12.51 in 1999, $12.97 in 2000, $13.81 in 2001, and $14.06 in 2002.

Employees working without benefits, however, saw largely stagnant wages over this same time frame.

In 1998, a production employee working without benefits received $9.18/hr. In 1999 he or she was paid $9.12, and $9.42 in 2000, but in 2001 the wage fell again to $9.28. Some better prospects can be gleaned for workers from the 2002 average hourly wage for workers without benefits, as the figure rose to $10.28/hr.

Production data
Other than the occasional statistical hiccup that smaller samples are prone to, the bulk of the Benchmarking program’s production data groups remained consistent over the last five years.

Technological advances in quick mold change systems can account for some of the drop in mold change time from its high of 156.7 minutes in Q4 1998, but the wide variety of jobs that mold shops now handle kept the overall time consistently greater than 2 hours with an average of 133.4 minutes.

Overall, productive downtime has fallen from its high of 23.9 percent in Q2 1999. The last quarter of collected data, Q3 2002, shows an overall decrease, registering at 20.0 percent.

Scrap, customer returns, and scheduled ship date on time largely remain a testimony to the participants’ efficiency. Scrap generally runs 1 to 2.5 percent, averaging 2.0 percent. Returns have stayed below .5 percent for the overwhelming majority of the report, averaging .30 percent, and the on-time ship date averaged 95.7 percent over the program’s five years.

Benchmark Your Operations
If you want to get involved in IMM’s Benchmarking program, participation is easy. In exchange for your time and data each quarter, IMM will send you detailed reports on key production and market data for every participating molder.

Should you choose to participate, your anonymity is guaranteed. Use the contact information below to request a sample report or enrollment forms, or simply to ask questions. There is no charge.

In the near future, watch for this program at IMM’s website, www.immnet.com, for online signup and data access.