Processor concocts recipe to take on low-wage competition

Gira Plastics Technology Division (Radevormwald, Germany) is out to change the way processing is done.

The first surprise delivered by Gira''s operation is its production plant, an all-glass structure that more resembles an airport terminal than a processor''s shopfloor. Rows of injection molding machines, no evidence of scrap or resin pellets on the floor, and few operators are also noticeable features.

Gira managing director Alfred A. Bulitz is making it his mission to show that processors in high-wage countries like Germany can successfully compete with low-wage counterparts.

How does it do it? First, Bulitz doesn''t spend his time belly-aching about the competition. Second, he relies heavily on advanced technology to process the more than 8000 different value-added products-such as electrical and electronic products, controls and switches, automotive parts, medical technology, and climate control devices-that Gira produces.

Automation is the key to the concept in Germany. Gira operates with about 700 employees on a four-shift system around the clock. In many markets 24/7 operations are nothing out of the ordinary. In Germany, a country that has refined the fine art of bureaucracy, such possibilities are generally capped. "We went to our local city officials with detailed plans to show them that without such possibilities we would not be world competitive. They saw the need for us to remain viable-for one thing we''re the town''s largest employer-and issued us a permanent permit to work around the clock," Bulitz says.

Director of Plastic Production Gerhard Gebauer points to lost work time the company previously endured when it shut down equipment at the weekend. "We demonstrated how high our loss was each Monday morning when we had to start heating up our [43] injection molding machines after the weekend break, which took about 4 hours," he says.

Presses, mainly Arburg and tiebarless Engel units, along with six-axis robotic assembly and handling, automatic palletization systems, high-speed milling, and spark erosion equipment in its mold center, require a minimum of human intervention. These purchases round out recent investments that Bulitz says amounted to €22 million in the last two years. In September the company started production in its Class 7 cleanroom, where the company is processing components for eye surgery and cardiopulmonary devices.

Further investments in new injection molding machines probably won''t be in the company''s near future although its product line is expected to expand. Bulitz plans to handle the higher output with the introduction of double-daylight molds, so-called TandemMould technology, developed by Christoph Jaroschek of Bielefeld University in Germany (February 2003 MP/MPI), which he says can double each machine''s output.

Chinese connection

Although Bulitz believes Gira can fight low-wage competition with automation, he isn''t averse to doing business in both China and Eastern Europe to help bolster the German headquarters. The company took two-and-half years to find a moldmaker in the Far East that could fulfill Gira''s demands-Ace Mold of Hong Kong, which produces in China.

Bulitz says Chinese-made molds won''t supplant its own mold shop in Radevormwald. Molds made in China are less complex than their German-made counterparts, yet they may require a high amount of manual labor and finishing that would not make them viable for production in Germany, he says. "We''ve calculated that to have molds made in China and inject parts there plus transport back to Europe is up to 20% more expensive than shipping the mold back to Germany for processing here," he says.

Another new production area for Gira is Eastern Europe, which increasingly is becoming a market for Gira products. The company set up an operation in the Carpathian-mountain region of Romania that is still home to Romanians of German ancestry.

Bulitz says he decided to locate the operation outside the EU in what many people consider an underdeveloped country because the newest countries to join the European Union from Central Europe (Poland, Hungary, Czech Republic) "have priced themselves out of the market."

"Romania offers wage costs similar to China but is 10,000 km closer to Germany," says Bulitz. Other deciding factors are easier communications (in German); high work ethic and motivation; and a similar culture. "To deal with the Chinese you need a high degree of sensitivity and stamina," Bulitz says. "Our staff in Romania are overwhelmed by the locals'' enthusiasm and willingness to work."

Gira sees Romania as the jumping off point for the company''s export drive into Russia and other CIS countries. Gira transfers the work to Romania that requires substantial manual assembly and where technical know-how is not the key. High-tech production and automated assembly will continue to be done in Germany, he says.

Gira today exports about 25% of its production but expects this to jump in the coming years. Processing thermoset electric and electronic devices makes up about 15% of the total output. The creation of Gira''s two foreign operations hasn''t meant a reduction of personnel in Germany-rather, the opposite is the case, says Gebauer.

Bulitz is confident that his mix of modernization and reliance on foreign operations will enhance the international competitiveness of this medium-sized family processing operation, which just celebrated its 100th anniversary.

Robert Colvin [email protected]

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