Injection molding trends for U.S. moldersInjection molding trends for U.S. molders

What will it take to be competitive in the future? You?ve heard the trends: specialization, staying close to your customers? needs, and being very, very good at what you do.

The most recent Plante & Moran LLC (Auburn Hills, MI) study, conducted in 2003 using 2002 data for 100 molders, presents some sobering information. In 2002, median utilization rate for all injection molding presses was 38%. In the lowest quartile (25% of respondents), based on annual sales, utilization was 25%, and in the top quartile, utilization was 48%. Plante & Moran LLC conducts molder surveys annually, so it has extensive data available.

?You could take 25,000 machines and toss them into the ocean and just about come up to 1998 capacity,? says Jeff Mengel, a partner in Plante & Moran and a developer of the survey. The point: Overcapacity continues to be the enemy of both molders and machinery makers. While 2003?s results should present a light at the end of this tunnel, it?s definitely different from the brilliant glow that shone on everyone during the 1990s. Now, it?s more of a spotlight, and it?s shining on those injection molding companies that have all but abandoned shoot-and-ship or commodity molding in favor of specific niches based on technology, capabilities, markets, or geographic locations.

Finding a Niche

One niche is size. There are relatively few large presses out there in the injection-molding marketplace, and molders with large-press capacity are seeing higher utilization than those limited to low-tonnage presses. According to the survey, the percent utilization for presses in the 701- to 1500-ton range for the top quartile was 66%. In presses greater than 1500 tons, the utilization for the top quartile was 59%.

For example, large-part molding in structural plastics applications is a strong sector, given the ongoing development of metal-replacement applications. EnviroTech Molded Products (Salt Lake City, UT) uses a proprietary process called Bulk Injection Molding to produce huge parts of extremely thick wall sections. EnviroTech displayed two new products at the recent SPI Structural Plastics Division (SPD) meeting in Charlotte, NC, one of which, The Plastic Bag Filter, won in the Industrial/Military category.

Coinjection and multimaterial molding are also becoming more common in large structural applications. Many John Deere 7000 tractor components on display at SPD were coinjection molded for toughness, lighter weight, and durability. Bemis Manufacturing Co. (Sheboygan Falls, WI) entered the John Deere 7000 tractor engine enclosure, which received the SPD award in the Agriculture/Lawn & Garden category. Standard and coinjection molding processes allowed Bemis to produce the part cost effectively with 6- to 8-mm wall sections. It also allowed for part consolidation and the molding of many details.

Inmold decorating with films and textiles, including leather, is permitting innovative design for automotive applications, and inmold assembly for large parts is helping reduce the number of components used, providing new avenues of business for injection molders specializing in structural components.

Other Survey Results

The standard injection molding process, however, comprises some 63% of the molding business, as a percentage of sales. When molders were grouped by sales in the Plante & Moran survey, smaller molders (those in the lowest quartile) averaged sales of $7.5 million and showed flat sales through the three-year period ending in 2002.

The top quartile looks a bit better. Those companies averaged $37 million in annual sales and saw a 15% growth rate over three years from 2000 to 2002. However, of the total, 30% of companies surveyed yielded gross margins of less than 10%. That translates into some pretty thin profits.

Many injection molders are seeing business pulled and moved elsewhere, meaning some significant losses for these companies. Plante & Moran noted that 10% of the survey population lost close to 20% of the prior year?s sales due to customers moving chunks of business.

Online bidding was responsible for some of the lost work; 32% said their existing products were subject to online bidding, though they reported a 90% success rate in keeping the existing product. Half of the companies surveyed participated in the online bidding for a competitor?s existing product, with only a 22% success rate.

Competitive Issues

The custom molding community is suffering due to shortened product life cycles and OEMs that outsource work to overseas competitors. The obvious remains true: Molders who are entrenched with their OEM customers can count on repeat business, program after program, and tend to be busier than those that have to continually seek out new business.

Many molders that are experiencing growth in this current market have attacked a niche?utilizing new molding technologies such as in-mold decorating, inmold assembly, two-shot molding?or developed broad engineering capabilities. Programs that involve intense engineering tend to stay in the U.S., at least through the design, development, qualifying, and initial production stages, even if the ultimate goal is to take the production molding offshore.

Once in a while, however, molders are seeing work return from other countries. One example is that of Schain Mold & Engineering (Rochester Hills, MI), which recently brought a program back to Michigan from Mexico, where it had been taken for cost reasons.

The program involved molding and subassembly of components for a major OEM customer and was originally designed and developed by Schain 10 years ago. The OEM then relocated the program to a manufacturer in Mexico due to cost considerations. At the time of the relocation, Schain was a much smaller company and lacked the necessary resources to handle the size of the program, explains president and CEO Robert A. Prainito.

Now this customer faces huge pricing pressures from a Chinese competitor. As a major supplier to this OEM, Schain re-examined the program, quoted a new price, and won the bid. The entire line, with nearly $1 million in equipment, was shipped to the company and installed for a March 1, 2004 startup date.

Schain recently purchased a new 35,000-sq-ft facility. ?This time around, we have the resources to provide this customer with the product it needs at a price that is more cost-effective than Mexico,? says Prainito. ?We hope this will inspire other small manufacturing business owners . . . to believe that it can be done.?