Investment in backmolding technology pays in customer trust

More than 80 people work in Georg Kaufmann Formenbau's well-equipped moldmaking shop, 15 of them in the design area. A free-standing technical center for R&D and mold trialing also opened recently.
Editor's note: In the Focus: Niche Processes section of July 2002 IMM (pp. 10A-11A), we showed Krauss-Maffei's Injection Molding Compounding system, including an auto tailgate molded and inmold laminated at K 2001 in Germany. No less interesting than the machine is the mold that was made by Georg Kaufmann Formenbau AG. This moldmaker has built a solid reputation as a specialist in tools for backmolding and inmold lamination. The company recently took steps to be even more competitive in backmolding tools.

Georg Kaufmann Formenbau AG (GKF) of Busslingen, Switzerland began making molds for back-injection (BI) molding more than 20 years ago. Well-deserving of the title "pioneer" when it comes to inmold laminating, GKF to date has delivered more than 1000 BI molds, plus more than 600 tools for back-compression-injection (BCI) molding. With barely a look backward, the company recently celebrated its 30th anniversary by making major new commitments and investments to support its inmold lamination specialty.

Back-compression machines

Several modifications by machine manufacturer Krauss-Maffei make the 420-metric-ton injection system in Georg Kaufmann's new technical center ideal for back-injection and back-compression processes. Due to low pressure requirements, BI and BCI molds need a low clamp force relative to their size. The platens on this machine have tiebar spacing of 1400 mm horizontally and 1250 mm vertically—about what you would find on a press with twice the clamp force. The machine is based on Krauss-Maffei's C Series hydraulic two-platen clamps, which gave Kaufmann the parallelism so critical for IML molding. The hydraulics are modified to allow the simultaneous injection and compression the melt-flow process demands. Similarly, the MC4 controls are mostly standard but have software to control the varied profiling required when injection is concurrent with mold open/close.
During the anniversary celebration in May, GKF opened a new freestanding technical center that lets it give its primarily automotive customers a higher level of support and service. The focus of the center is a new 420-metric-ton Krauss-Maffei machine. It is specially modified for BI and BCI (see sidebar), as well as for another back-injection process recently developed by GKF to cut cycle time and ensure maximum appearance quality, even with more delicate films and foils.

Design, Process Development
Over the last five years, GKF has expanded its international presence by supplying tools in cooperation with partners such as RS Meccanica in Italy and Delta Tooling in Auburn Hills, MI. In addition, a subsidiary operation in Gastonia, NC called GK Tools USA is helping auto industry designers gain the development, cost, performance, and environmental benefits of inmold laminating. Company revenues for 2001 were 24 million Swiss Francs ($16 million).

When Georg Kaufmann started the company 30 years ago, he was a designer by training and experience. He was one of the first to realize the potential of the low-pressure molding technology developed by Siebold Hettinga and quickly worked on the molds used in the process. An emphasis on design has proven to be a good policy as OEMs and Tier One suppliers have increasingly turned to suppliers for upstream development of their concepts. Of the 80 employees at GKF's facility, 15 of them are in design.

The company has stayed on the leading edge of CAD/CAM technology, and part of the recent investment package went toward the latest in 3-D CAD modeling software. There are now 10 stations of AutoCAD and two of Catia. In addition, there are five Euklid CAM stations and three of Work NC. A robust internal network means all CAD data pass directly from the design station to the tooling equipment. There is no need for a model between CAD and steel.

With inmold laminating of surface film, back-injection and back-compression molding are adding exterior body parts and more to its base in interior panels such as these.
Process development is as critical as design and was a driving force behind the recent investment in the technical center, special injection molding machine, and CAD systems. At K 1998, GKF showed an early phase of a new form of back-compression called melt-flow back-injection molding. The new technical center will accelerate its use by allowing customers to see the benefits firsthand.

In both BI and BCI processing, the laminating foil or film is placed in the mold first. A BI mold is closed and then injected. A BCI mold is left slightly open, injection takes place, and the mold closing is used to distribute the material evenly. BI works best with small to medium parts; BCI works best with larger parts such as complete auto door panels.

In molten-layer BCI, a movable wide nozzle applies a layer of melt onto the core of an open compression tool. In melt-flow BCI, the tool is first closed on the laminate, and then it reopens slightly, and the melt is injected onto the core through a special high-volume hot runner system. In both types of BCI, the substrate is formed and bonded with the laminate by a very precise mold closing that fills all the corners and attachment points on the substrate.

Improving What Works Well
Back-compression was a significant improvement over simple back-injection in that larger, more complex parts could be made and the surface quality of the laminate was notably improved. Melt-flow BCI's advantages include shorter cycle times for higher productivity. The reduction varies with the size and complexity of the part, but reducing a 70-second cycle to 60 seconds is typical.

Additionally, the handling of the surface laminate is done vertically, which is both easier and more consistent than horizontal insertion. Kaufmann says the equipment investment is lower, and the machine takes less floor space than an older system. The process ensures virtually no bubbles or wrinkles in the surface laminate. Perhaps the biggest benefit of all, says Kaufmann, is that the shot-to-shot repeatability is greatly improved.

GKF generally reinvests 8 to 10 percent of its annual turnover to improve its services, and in some years that can reach 12 percent. Kaufmann says that the investments the company has made over time and now in the technical center, production machinery, and CAD systems are not optional. Rather, they are necessary to provide what the market needs. He also notes that these investments can return dividends. The company's most important working capital today, he says, is the trust its customers have in its competence.
Contact information 
Georg Kaufmann Formenbau AG
Busslingen, Switzerland
Georg Kaufmann; +41 (56) 485 65 00

International Molding Report: How much does manufacturing matter?

This report is prepared for IMM by Agostino von Hassell of The Repton Group, who provides IMM's monthly Molders Economic Index.

Percentage of GDP by manufacturing, 2001

Wrenching changes in the U.S. economy over that past 20 years appear to cast a long, dark shadow over the future of the U.S.-based injection molding market. Here is one stark projection: U.S. injection molding plants in 2025 will employ half as many people as in 2002. Their overall output, while growing solidly at about 3.5 percent per year, will shrink as a percentage of the overall economy.

Does manufacturing have a future in the U.S.? Does injection molding as a goods-producing industry have a future? Molding as a manufacturing industry does indeed. But that future is radically different from today.

We will have far fewer molding plants in the U.S. Most will be substantially larger, far more automated, and employ fewer workers per machine than today. At the same time, some once-active U.S. molders will evolve to become just technology providers.

The Decline of Manufacturing
Rodger Doyle in the May 2002 issue of Scientific American called it the "deindustrialization" of the United States. Others call it post-industrialization. The reality is simple: In 2001, manufacturing accounted for just 18 percent of the U.S. Gross Domestic Product (GDP). In 1950, manufacturing accounted for about 48 percent of the then-applicable measure, the Gross National Product (GNP).

Here are some other data: In 1980, in a typical three-shift molding operation, molders employed 4.8 workers per injection molding machine, based on data from the U.S. Bureau of Labor Statistics (BLS). By 2001, this figure shrunk to 1.8 workers per machine. By 2025—if current trends persist—it will fall to .4 worker per machine.

Manufacturing currently remains the largest of the goods-producing industries in the U.S. in terms of employment, BLS data show. While factories account for just more than a third of goods-producing establishments, manufacturing employees outnumber those in construction and mining by nearly three to one. BLS data also show that manufacturing represents 5.4 percent of all establishments and 14.4 percent of all employment covered by unemployment insurance.

However, U.S. manufacturing employment as a portion of overall U.S. employment is small. In 2000, the U.S. Labor Dept. counted 18.4 million people working in manufacturing. By comparison, all levels of government employed 19.9 million people, retail trade employed 23.3 million, and the service industry employed 37.7 million.

This trend is common in highly developed economies. The situation is very similar in Canada, most of Western Europe, and Japan. Why? Several factors account for the stark fact that manufacturing is far less important to the overall economy today than it was 50 years ago.

In the same issue of Scientific American Rodger Doyle also wrote, "The traditional argument for the cause of deindustrialization is competition from low-wage labor in developing countries. But according to a theory proposed by Robert Rowthorn of the University of Cambridge, and Ramana Ramaswamy of the International Monetary Fund [IMF], deindustrialization is a natural consequence of economic progress in all developed economies. In their view, imports from developing countries have a relatively minor role; rather, faster productivity growth in manufacturing as compared with services plays the major part."

This certainly applies to injection molding. Productivity has grown sharply in the past 20 years. According to data from the IMF, manufacturing productivity in the U.S. grew on average 3.6 percent/year from 1960 to 1994. Productivity in service industries grew just 1.6 percent/year in the same time.

Total GDP, 2001

But productivity alone is not the only factor. Foreign trade has limited the prosperity of molders making simple commodity products:

  • Automation. The amount of manual labor needed has dropped drastically. Technologies such as quick mold change, automated trimming and inspection devices, automated assembly units, and automated materials delivery systems all have combined to reduce the direct labor input required while boosting output per worker.

  • Consolidation. Large, centralized molding plants are dominating. In the 1970s and early 1980s the U.S. had in excess of 35,000 injection plants, most of which were quite small with less than 10 machines. Since then demands for cost reductions, additional services, and just-in-time production from major OEMs have forced a massive wave of consolidation. Automotive and appliance firms prefer to work with other large firms. For instance, just 20 years ago General Motors purchased molded parts from about 2300 separate firms. Today that number is less than 500.

  • Services. Major buyers of molded parts—and this applies to all key markets such as medical parts, electronics, and automotive and appliance parts, to name just a few—want suppliers who provide a host of ancillary services: complete subassembly, basic design and engineering services, decorating, and materials selection in some cases.

  • Financial strength. Major buyers of molded parts have become much tougher about how much they are willing to pay for parts. Profit margins are razor thin and demands for give-backs are common. Major parts buyers—regardless of their pressure on molders to offer all the services plus just-in-time delivery—are very slow payers. This has winnowed the field to companies that have the financial strength to service customers while often waiting for payment for 90 days or longer.

  • Global trade. For many buyers of molded parts it has become more profitable to buy components abroad where labor costs are well below levels seen in the U.S.

    Understanding Trade
    Trade has become an integral part of the U.S. and world economies. The combined total of U.S. exports and imports has increased from less than 5.5 percent of GDP in 1950 to 11 percent in 1970, to 24 percent in 2000.

    The U.S. market for injection molded parts has seen change on a similar scale. Detailed data on how many molded parts are imported are hard to come by; statistics maintained by the U.S. Customs Service are not specific enough.

    But other data reveal elements of this change. In 1960, close to 96 percent of all injection molded parts in cars and trucks were produced inside the U.S. By 2001, average local content had shrunk to about 70 percent. What's more, over this 40-year period the average amount of molded parts per car and truck jumped by more than 500 percent.

    Consider, also, desktop computers. In 1982, 92 percent of molded products in desktop PCs assembled in the U.S. were locally provided. By 2001 this dropped to 33.1 percent.

    The bulk of molded product imports into the U.S. remains commodity parts—items such as low-value toys, plastics cutlery, drinking cups, combs, and similar items. However, in the past 10 years imports of more sophisticated items such as car components and parts for all types of electronics are entering the U.S. from abroad. This forces domestic molders to either abandon certain markets or compete through increased automation and technological sophistication.

    Yet, at the same time, U.S. molders making top-of-the-line products with very high value-added content are prospering in export markets. A recent study by the International Monetary Fund documented that workers employed in export-oriented firms earn 10 percent more than workers in similar firms that export less.

    The Future Molder
    The transformation is already apparent. Within 20 years you will see three basic types of molding operations in the U.S. Some companies will combine all three formats. These "new" types of molding operations are in place already, but they are not yet dominant:

  • Mega-molding plant. This operation has more than 100 injection molding machines—often substantially more. It's driven by constant investment in new systems to maximize automation, with the goal of reducing direct labor input to an absolute minimum. This operation offers a host of basic services: complete design engineering, assembly, decorating, just-in-time shipping, and so on. The typical molder has a central headquarters with all the basic services; it also runs smaller molding plants close to customers' assembly facilities. An example would be a supplier of automotive subassemblies that sets up plants in states within a few miles of newly established car assembly plants.

  • Micro-molding plant. This is a very different type of operation, often with 10 or fewer injection machines. What makes this type of plant so special is the level of technical sophistication and the high degree of value added. Typical markets are highly specialized medical parts, nano-devices, and ceramic and metal powder molding for precision applications. Such molders will also be major exporters, earning as much as 50 percent of their revenue from trade.

  • Nonmolding plant. Injection molders with major operations in the U.S. without a single injection machine is another key trend. There is no doubt that U.S. molders lead the world in technology for automated manufacturing, design, and product development. The actual molding and assembly is almost a byproduct of the engineering process. The "molder" either directly owns molding operations abroad (in low-labor-cost locations such as China, Malaysia, Mexico, or Brazil, typically close to the end customer) or through a joint-venture partner. All engineering work is done in the U.S. Some operations may maintain one or two molding machines to test parts and deliver accurate setup information, but the true purpose of these operations is to develop and direct manufacturing elsewhere. Injection molding machines and other equipment are purchased in the U.S. but shipped to other facilities outside the country. The bottom line: Profits are high for this type of "headquarters" operation.

    Contact information
    The Repton Group, New York, NY
    Agostino von Hassell
    (212) 750-0824;
  • Controlling the design

    Mold designs for the Cico egg holder (designed by Stefano Giovannoni and produced by Alessi) required the Global Shape Modeling feature of thinkdesign to locate parting lines and maintain aesthetics.
    Alessi is a world-renowned producer of tableware, kitchen utensils, and home products, yet the company has little or no in-house design staff. In a unique arrangement, Alessi works with more than 200 internationally acclaimed architects and designers such as Ettore Sottsass, Frank Gehry, and Phillipe Starck to bring their ideas to reality. Many of these superstars specify injection molded plastic for their products, and it is Alessi's job to translate the part design into a mold design. It is only possible, according to sources at Alessi, with some powerful CAD software and an ardent desire to maintain original design intent.

    IMM spoke recently with Cristiano Colosio, technical design manager at Alessi in Crusinallo, Italy, about the process of turning ideas into reality. "In our last collection, 50 percent of the products were plastic, and in previous years, the number has jumped to 60 percent, so we must be able to accurately take a part or product design, sketch, or model and turn it into a mold design," says Colosio. "Designers supply the design without any idea of how it will be made into a mold. Alessi has to respect the original integrity of the design but also reengineer it for manufacturability."

    Because it's company policy to use external collaborators and not internal designers, Alessi receives designs in various forms. "About 40 percent of the designs arrive as Alias, Rhino, or AutoCAD 3-D models that need to be modified for manufacturability by adding parting lines, draft, and ribs, for example. Another 40 percent are 2-D drawings or sketches, and the final 20 percent arrive as prototypes," he says. "We've selected a CAD package for mold designs that gives us the ability to accurately input, import, and rework designs."

    Colosio's technical design team works with thinkdesign from think3 for this and several other reasons. For example, while molds are created by trusted suppliers in France and Italy, Alessi must ensure that the final design needs no changes once in the moldmaker's hands. "We are able to eliminate 90 percent of all problems at the moldmaker level by solving them beforehand with thinkdesign," he says. "Alessi designers create the models so that the parting line is free of any problems, so the moldmakers need only execute the design."

    This is not a case of ego. Rather, Alessi must have close control over what is produced so that design intent is preserved. The final mold design and parting line must not be left up to the moldmaker's discretion to interpret (and modify) the designer's idea. If that happened, few of the 200 designers would be willing to work with Alessi again. "The parting line is very important to the style," says Colosio. "It defines the whole look. We subject the parting line to a lot of checks and controls."

    Another characteristic of Alessi's operation is that many of the plastic products it offers feature complex contours. Take, for instance, the Cico egg holder by Stefano Giovannoni pictured on this page. "This was a difficult project, because at the time, we were using several software packages," says Colosio. The software used initially couldn't control the parting line properly, nor could it locate a parting line that gave good aesthetics. To compound the problem, the initial design had been done in yet another software package.

    To solve a parting line dilemma, Alessi brought the original CAD file into thinkdesign. Original software could not locate a parting line for this model.
    Automatic parting line generation in thinkdesign produced a complex parting plane as a means of keeping the parting line out of view.

    To solve the problems, Colosio used thinkdesign's Global Shape Modeling feature. "Over the last two years, we've relied on GSM for complex shapes that need Class A surfaces for continuity, tangency, reflection line, and shadow," he says. "We split the surface, and then put the whole border in a new parting plane to uphold the aesthetics of the product."

    Automatic generation of the parting plane is another reason why Colosio banks so heavily on GSM. "Creating the parting line for complex surfaces in version 8, where the parting plane is associative, allows us to save time," he says. "When you work on a model or make changes to the design, it updates the parting line automatically. It is a new method to define a silhouette of the parting line, which is powerful and gives accurate feedback."

    When it comes to IM, there is another feature of the software that Colosio finds interesting. Called Smart Objects, it is a self-created library of features that becomes part of the internal know-how of the company. "When you have two shells that can be worked in different ways, for example, we put them in the libraries. These can be assemblies of several different steps. When we pull this out and apply it, we don't have to remember all of the steps." Each Smart Object can include up to 10 operations.

    Alessi Profile
    According to the second edition of Alessi: The Design Factory by Alberto Alessi, a member of the founding family, this company is actually a "research laboratory in the applied arts." It is able to merge industrial needs such as operations and facilities with its aesthetic design sense.

    During the 1980s, Alberto Alessi steered the company in a different direction. It was originally founded in 1921 to produce metal tableware and drinkware, but focused on design through Alberto's unique collaboration with designers and architects, and the creation of two main trademarks. The most well-known, Alessi, is geared towards mass production, while Officina Alessi is used for more experimental limited editions. While not a trademark, "Alessitronics" are electrical kitchen appliances produced in association with Philips.

    Contact information
    think3, Santa Clara, CA
    Sylvie Leotin
    (925) 201-2330;

    Materials Update

    Zytel HTN was selected by Piaggio for its low-emission Leader engine covers (liquid coolant family). DuPont's high-temperature nylon displayed the best combination of mechanical characteristics and ease of processing of any polymer tested.
    Some of the best applications of injection molded parts are the ones that barely get noticed. Take, for instance, the engine cover on Piaggio motorcycles. It's nylon, withstands high heat, saves weight, and dampens sound. When it works, the rider shouldn't notice it. Yet, if it fails to do any of these jobs, it sticks out like a sore thumb. The goal, then, was to make a cover that basks in obscurity.

    To do the job, motorcycle manufacturer Piaggio of Pontedera, Italy selected DuPont Zytel HTN high-performance nylon 6/6 for the covers of its liquid coolant Low Emission ADvanced Engine (Leader) family.

    Design director of Piaggio's Engine Div., Paolo Nesti, says, "We selected Zytel HTN for the Leader covers since it displayed the best combination of mechanical characteristics and processing ease of any polymer we tested." The mechanical characteristics of DuPont's high-performance polyamide that most appealed to Piaggio were its dimensional stability and resistance to constant high temperatures (more than 100C).

    Nesti continues, "During our testing, we saw that motorcycles with engine covers of Zytel HTN display far better sound and vibration dampening characteristics than engine covers made of similar polymers. Production benefits resulting from our switch from aluminum to DuPont's high-performance polyamide include a cost savings of around 25 percent and a overall weight savings of 40 percent."

    Piaggio's Leader family, launched in March 1999 to meet European environmental requirements, originally featured aluminum covers. Yet even as the Leader range was being announced to the world, Piaggio was already in talks with DuPont Italiana regarding the substitution of metal with engineering polymers to simplify production, save weight, and gain design freedom through injection molding. The first molding trials took place remarkably quickly, and the engine covers of Zytel HTN were in mass production by February 2000. The Zytel HTN engine covers were used on the 2001 models of Piaggio's Hexagon, Runner, and X9 motorcycles (four-valve, 125-cu-cm and 180-cu-cm liquid coolant configurations).

    Nesti confirms that this is one of the first times, to his knowledge, that thermoplastic engine covers have been commercialized on four-stroke scooter engines. "Today's high performance engines mean higher oil temperatures leading to constant overall engine temperatures of around 140C," he explains. "DuPont's Italian technical center in Cologno Monzese provided us with feasibility studies that confirmed that 35 percent glass-reinforced Zytel HTN would be suitable for the Leader liquid coolant covers, even taking account of this tough specification. We were comfortable with this recommendation since we have been working with DuPont since 1998 to substitute other metal and rubber engine components with thermoplastics."

    DuPont specialists recommended Zytel HTN because of the resin's high temperature resistance and increased flex modulus (compared to standard nylon), dimensional stability, rigidity and tensile strength, good heat aging characteristics, and high glass transition temperature performance.

    From February 1999, Piaggio spent a year subjecting the application to a range of rigorous testing. In Nesti's words, "We confirmed that the high temperature performance of this polymer was excellent." Piaggio found that Zytel HTN resisted constant exposure to gasoline and engine oils at 140C with ease. It retained its dimensional stability over a range of impact and burst resistance tests. Whereas other similar polymers had suffered distortion and warpage problems during testing, Zytel HTN did not. During molding trials, Piaggio and DuPont worked with molder Istamp, located near Turin.

    Piaggio's Leader features four-stroke SOHC engines from 125 to 180 cu cm, in two- or four-valve configurations, liquid or air cooled. The engines were expressly designed to provide customers with high performance and maximum environmental acceptability. They comply with the 1999 European Multi-directive (Euro1) with particular reference to gas and noise emissions.
    Contact information 
    Piaggio SpA, Pontedera, Italy
    +39 (0587) 272 111;

    Seed of idea spawns big-machine cell

    The Lechuza range of plant containers (top) now includes three designs in eight colors and a variety of sizes, each with a built-in irrigation system. At left is a sample showing the foamed PP core inside the transparent PP outer layer.
    Although qualities such as marketing instinct and entrepreneurial spirit are often applied to younger people in smaller businesses, it's the exception that makes the rule. Horst Brandstätter is exceptional. He heads the Brandstätter Group, which is not small—$250 million-plus in sales and more than 2000 employees. Nor is it new: It was founded in 1876 to make locks and metal fittings.

    Horst Brandstätter has been in the business "only" since the 1950s. One of his first steps in 1958 was to create machinery and molds to bend plastic hose into a hoop—a Hula-Hoop, to be precise. It was a success, and when the fad passed, the company employed the technology it had developed to begin making simple toys. In 1974, Brandstätter used an intensive and highly strategic marketing campaign to launch what has become the company's flagship product: the Playmobil line of figures, vehicles, and other toys for small children that is now a nearly global phenomenon.

    None of this, however, was on Brandstätter's mind when he searched for a way to keep his plants alive while away on long trips.

    Can't Find It? Let's Make It
    The self-watering planters Brandstätter saw on the market either would not keep plants healthy long enough or had an unattractive appearance—or both. So, at around the age when most people are thinking of retirement, he created the basic concept for a line of self-watering planters and a separate business to market them. He then harnessed the design, moldmaking, and molding experience within the group to make it a reality. The Lechuza line of planters is already on the market across Europe and growing well.

    The move from making toys to planters carried the staff of the geobra Brandstätter production group into another, much larger dimension. Prior to entering the planter business, geobra's molding machines—185 in Dietenhofen, Germany and about 370 total worldwide—were small to medium, only a few near 500 tons and most much smaller.

    Since the upper end of the Lechuza product line features planters that measure 27.5 inches across and weigh up to 8 kg, a much larger machine was clearly in order. Moreover, it had to be a two-component press.

    In the end, the new machine needed a new production hall of its own at Brandstätter's manufacturing complex in Dietenhofen. Robert Benker, geobra's technical director, says, "We literally built the hall around the [2200-U.S.-ton] injection molding machine." Existing halls had height limitations and limited available floor space. The dimensions of the new building could be specific to the machine and the crane needed for the large molds.

    The 2200-ton Battenfeld HM hydraulic molding machine has two injection units mounted in parallel. The complete production cell, including the Unirob R25 linear robot, was supplied by Battenfeld.
    The new facility consists of a 14,000-sq-ft molding production hall with 39-ft ceilings and an 18,000-sq-ft warehouse space for planter production. Two 275-ton machines and one 550-ton system are also in the production hall to make smaller planters. The components of the irrigation system are molded on some of the toy-molding machines located nearby. Forty-five molds were acquired to produce different components of the horticultural system such as the pot, water level indicators, bottom inserts, filling shafts, shaft covers, and screw caps. In all, geobra invested $3.25 million in the new facility and its equipment.

    With New Technology, Support Rules
    The larger size of the products and machinery was not the only challenge geobra faced in making the planters. Benker says, "Molding this particular pot is not exactly easy and straightforward. Following the design requirements, we need to inject from the thin wall into the thick wall. The 70-cm container starts with a wall thickness of 4 mm at the injection point at the bottom of the pot. Along the flow path, the wall thickness grows, culminating in 15 mm at the top edge of the pot."

    To compensate for the sink marks likely with walls that thick, the pots are sandwich molded. The inner core is chemically foamed PP structural foam. The cosmetically critical thin outer layer is made from transparent, nucleated PP for a smooth, glossy finish.

    The molding cell for the production of large planters is built around a fully hydraulic Battenfeld HM 20000/14400+9200 molding machine. The two injection units are mounted parallel and are a bit unusual in that they are of similar size. (Most multicomponent machines of this size have one large main unit and a smaller additional unit.)

    An 18-lb pot (left) is held by suction from the bottom to avoid cosmetic problems caused by touching the planter walls while warm. Air is fed into the pot during the demolding process to maintain its shape. The Unirob handling device (right) has an additional swivel and rotational axes on the gripper arm and a four-step vacuum gripper for demolding and positioning on the cooling belt.

    During initial development the geobra technical team tested a wide range of injection molding techniques including physical foaming, internal gas, and external gas technology. Benker notes that Battenfeld provided help with gas injection technology, even though there was no promise that a machine would be purchased.

    "The support included not just technological details, but also contacts that allowed us to exchange information with other companies with relevant expertise," says Benker. "Even during sampling at the Portuguese moldmaker, Battenfeld's telephone support really helped us." In the end, Battenfeld was chosen as geobra's supplier.

    Two melt streams converge in this coaxial nozzle installed between two injection units and the mold.
    Quality that Conquers Markets
    Benker says the core competence geobra has developed over a quarter century of plastics molding was the critical element in developing the new product and technology. Equally important, however, was providing the same high level of quality as that found in its toys. It was clear from the outset that Lechuza production would have to use the high degree of automation and minimal personnel found in the production of Playmobil components.

    Consequently, the large machine is at the center of a cell, with all components integrated and supplied by Battenfeld. Benker points out that while the containers are still warm, the glossy surfaces can be easily scratched. Battenfeld's Unirob robot is equipped with tooling that allows it to grip only the bottom of the 18-lb pot, automatically cut the sprue, and then transport the pot to a conveyor that also adds cooling time—all without contacting the planter's surface. Benker says geobra wanted a line with as much automation as possible, which the Battenfeld system provides.

    The impact- and weather-resistant Lechuza planters have received an enthusiastic reception in the interior landscaping market in Europe, with negotiations for distribution in the U.S. and other markets in process. The line includes three pot varieties in eight colors with diameters from 8 to 28 inches. A long-term study by the Bavarian State Institute for Wine & Horticulture confirmed that the irrigation system minimizes maintenance requirements while optimizing plant growth conditions. We can only wonder what Horst Brandstätter might be shopping for and not finding right now.

    In the Lechuza self-watering planter, water is stored in the base of the pot and absorbed by the plant as needed.
    Horst Brandstätter has grown the Brandstätter Group mostly on the worldwide success of Playmobil toys such as the one in the foreground. He decided to use the company's moldmaking and molding expertise to fill a gap in the plant container market with products such as the Lechuza Quadra model shown. The electric irrigator visible in the pot was one of many designs developed and not used in the final products.

    Contact information 
    geobra Brandstätter
    GmbH & Co. KG
    Zirndorf, Germany
    Judith Schweinitz
    +49 (911) 9666 144

    Battenfeld of America Inc.
    West Warwick, RI
    (401) 823-0700

    Market Snapshot: Consumer electronics

    Plasma TV's are dropping in price to become more accessible to the average consumer. Hitachi's retails for $8999, including a tuner an speakers, and doesn't require custom installation.
    A walk around any consumer electronics "big box" store is proof that the industry remains strong even in the face of economic weakness. At this year's Consumer Electronics Show (CES) in Las Vegas, NV, companies introduced hundreds of new products and technologies, as well as variations of older products incorporating new technologies.

    Products that fall under the heading "consumer electronics" are almost too numerous to mention, much less cover in a brief magazine article. An idea of the size of this industry comes from the Consumer Electronics Assn. (CEA), an Arlington, VA trade group that boasts 1000 corporate members with $80 billion in annual sales. But just how much of the molding is still done domestically?

    Hecho en Mexico
    Consumer electronics manufacturing, for the most part, left the U.S. in the early 1990s for the lower-cost manufacturing climate of Mexico. Although many have had specific segments of their business in Mexico since the early 1970s, one by one CE companies—including Philips, RCA, and Zenith—took most of the remaining manufacturing south of the border to join their Japanese compadres who were already there. Cities such as Tijuana, Juarez, and Reynosa became hotbeds for CE manufacturing.

    Today, companies like LG Electronics (formerly Zenith), Matsushita Electronic Components, Panasonic, Sony, and Hitachi have proliferated along the border. A few molders and moldmakers have responded and set up shop to serve this industry.

    One such company, Dynamic Plastics Corp., operated a facility in Tijuana serving Sony, Matsushita, Panasonic, Sharp, Sanyo, Hitachi, and other CE OEMs in Mexico until September 2001, when it became part of Xpectra Corp. USA (Niwot, CO). Xpectra is a contract manufacturer with operations in Santa Cruz, CA and Niwot.

    Today, Dynamic operates in a newly constructed 165,000-sq-ft facility with 28 presses ranging from 90 to 1950 tons. In addition to molding, Dynamic has complete value-add operations that include painting, hot stamping, pad printing, silk screen printing, and ultrasonic welding.

    John Conley, VP of business development for Xpectra, is bullish on the consumer electronics industry. "Our focus—91 percent of our business—is the television industry in Mexico," he says. "In personal conversations with key customers, which include all the main players in the TV industry, the segment is healthy and doing well."

    Conley projects that demand for tube-type TVs from manufacturers in Mexico will continue to rise slightly over the next several years, although the evolution of plasma and LCD flat-panel display technologies might alter the market. One question yet to be answered is whether those TVs will be manufactured in Mexico or the Far East. Another question is when will the price point for these TVs be attractive enough for the mass market?

    For example, Samsung Electronics Co. introduced a 24-inch monitor that is high-definition TV ready. The monitor, which began shipping in July, costs $6999. The company also introduced a considerably more expensive 42-inch plasma display monitor.

    Consumer electronics sales are expected to rise steadily over the next three years, according to data from the Consumer Electronics Assn.
    "Right now, we certainly think the Far East has the upper hand in the near term for two reasons," says Conley. "First, there's not a plasma tube manufacturer in North America. They're all in the Far East. Second, there's the form factor, i.e., the new products are thin and lightweight, essentially removing the transportation advantage of manufacturing in Mexico. The big guys are still making decisions about where to manufacture."

    In spite of a projected "gradual decline" in the market for tube-type TVs, Conley is optimistic. "The consumer electronics industry, particularly the TV business, is going up," he notes. "We're producing record numbers and running at high capacity levels at the Tijuana facility. We're seeking to increase our capacity due to demand we see for long-term, future growth."

    A less rosy report comes from Precision Mold & Tool Inc., headquartered in San Antonio, TX, which has two satellite facilities in LaFeria, TX and Reynosa, Mexico. The Reynosa facility was sited specifically to service what was at the time Zenith, now LG Electronics. Domingo Auces, marketing and sales manager for Precision, says the consumer electronics industry hasn't been as strong this year as in the past two years, despite the reported surge in sales.

    "So far this year, from a tooling perspective, we're down in that market segment," says Auces. "Many companies are building tools—especially those larger molds for TV housings—in Asia, and then bringing them back to Mexico for molding."

    However, Xpectra's Conley notes that Dynamic Plastics can compete in Mexico "pretty close" with China. Two customers are currently moving molds from China to the Tijuana facility. "We can satisfy their supply chain needs better from Mexico than they could from China," he adds.

    What's Hot? What's Not?
    Regardless of where CE manufacturing is taking place, it's obvious that DVD is taking consumers by storm. The format took a while to catch on, wading through some rough industry waters with respect to standards and so forth, but now that these hurdles have been cleared, DVD has taken off. Sales of DVD players in April of this year hit 1,090,767 units, a 72.8 percent increase over April 2001.

    So successful are DVD's inroads into the market that even those who predicted it would be a decade before DVD overtook videotape products are having second thoughts. Among those is Circuit City, which announced in June that it will phase out videotape movies as that segment loses ground to DVD. Best Buy announced it is paring back its purchases of videotape movie stock and increasing its DVD inventory. VCR unit sales slid 2.5 percent to 552,041 units sold in April 2002. With a penetration of around 30 percent of U.S. households, DVD has become an entrenched format.

    In response to this rapid growth, Sony Electronics used the CES forum to showcase a new line of DVD players with expanded video and audio capabilities at prices starting at about $150. At the top end is the DVP-NS755V DVD player, offering multichannel Super Audio CD, progressive output, and MP3 playback.

    Trying to capture the best of both worlds, Hitachi unveiled an expanded DVD player line, a new VCR player, and a DVD-VCR combo player. Hitachi's Home Theater-in-a-Box system comes with an AM/FM receiver, built-in progressive-scan-output DVD player, and a six-speaker package for $429.95.

    Digital TV, HDTV, and Audio
    Videophiles are also catching on to DTV, which saw April unit sales soar to $216 million, a 134 percent increase over April 2001. The CEA projects that 2.1 million DTV products, including integrated sets and stand-alone monitors, will be sold in 2002. Future predictions say that by 2006, some 10.5 million DTV products will be sold.

    Hitachi just announced its 2002 projection TV line, including sets with integrated ATSC terrestrial and cable HDTV tuners, VDI, and IEEE 1394. The company reinvented its Ultra Vision line for 2002 with breakthroughs in all of the core technologies for high-definition projection televisions.

    Manufacturer-to-dealer sales of audio products grew to more than $579 million during April, up 7 percent over April a year ago. Factory-to-dealer sales of aftermarket auto sound products, which were up by more than 21 percent to $120 million, were largely responsible for this increase. Dollar sales of sound systems were up 18 percent to $145 million, and conversions from tape to CD players in cars continue to drive this market. Year-to-date aftermarket auto sound products rose nearly 9 percent over the same period in 2001 to $783 million. In-dash CD player manufacturer-to-dealer sales reached $109.6 million during April, the largest single audio category in terms of revenue. Flush-mount speaker sales rose 25 percent to $19 million.

    Wireless, Web-based monitoring makes its debut

    Maca Plastics CEO Andy Culbertson adopted a wireless, Web-based process monitoring system that has improved productivity and eliminated waste at his facility.
    How would you like to link the factory floor to your ERP system and supply chain? Thanks to a new wireless technology, you can. It's called 802.11b/802.11a, or wireless mobile computing—a name that definitely needs work. Even without a catchy label, however, the technology is opening doors for molders.

    Imagine being able to carry a PDA that gives you real-time production data, get a call on your mobile phone when a machine alarm goes off, or equip forklift operators with portable Web pads that carry inventory data. Andy Culbertson, CEO of Maca Plastics, did more than just imagine. He implemented a Web-based, wireless production and process monitoring system from Syscon-PlantStar, and then set in-house programmers to work writing software with PlantStar as the core. The results have been so positive and wide-ranging that Maca has yet to measure them all. "We know that this has eliminated waste for us, and that we have accomplished greater cost downs for our customers that formerly were not possible," he says.

    Maca is a small, progressive molder located in Winchester, OH with $11 million in sales. It serves Tier One automotive suppliers whose JIT systems require a safety stock inventory. As a result, inventory control is crucial. After installing the Web-based PlantStar system, raw material and inventory inaccuracies at Maca are down to single digits, the lowest they've ever been.

    Quality improvements have exceeded customers' ppm requirements, too. "We have since achieved and maintained a Sigma 6 threshold," says Culbertson. "Across the board, we now average 4 ppm quality defects per year and 0 ppm defects for JIT delivery. It is because of this type of software that we can do that. It shows us where defects are coming from so that we can eliminate the cause."

    Culbertson believes the wireless business operating software system (Boss) concept is a total plant monitoring system that will have a bigger impact than when Milacron put the first PC on a machine. He spent several years watching the industry for suppliers of production and process monitoring systems. "I looked at all the brand names, talked to each company, and then ran demo software. We selected PlantStar because Web-based html software is what we were looking for."

    Maca found the system easy to integrate into other types of business operating systems. "We wrote our own software called M2K Boss, with PlantStar as the core. It is an enterprise planning and control system that integrates into the accounting module Made to Manage." The system gives Culbertson real-time supervisory control and data acquisition (Scada).

    "We always had a lot of data," he says, "but not in a form that can be read easily and quickly. Now we can manipulate the data as graphs and charts." Instead of one huge spreadsheet, the software automatically processes data into a graph or chart using color coding. This alone has improved productivity on the shop floor, according to Culbertson. "The human brain processes visual information 10 times faster than numerical information," he adds.

    Although Maca has yet to add up dollars saved, Culbertson is amazed at the productivity benefits. "With the same amount of equipment, we have increased our capacity by 2 to 21/2 machines on the floor," he says. "We're identifying nonvalue-added effort and 'created' nonvalue effort. It's like running around, picking money up off the floor. We find waste areas like setups or scheduling material into a workcell."

    Culbertson offers examples of waste elimination. For one, the system identified that when technicians were doing a tool changeover, they would move dryers out of the workcell into the holding area. At this point, there might be 10 lb of material still in the dryer. Someone would have to empty the dryer, which created 15 minutes of nonvalue-added time.

    Programmers at Maca wrote M2K Boss software using PlantStar software as its core to combine Scada, video monitoring, and accounting systems.
    Another example involves a specific machine problem. One technician assigned to monitor 10 machines found that one particular machine would alarm and stop. Data showed that this machine regularly had more downtime than others. Further investigation revealed that the radius on the nozzle tip was incorrect, and the setup indicated that the nozzle tip hadn't been changed since the last job.

    Rather than dealing with crisis management, Maca technicians now use the PlantStar system as a diagnostic tool. "Our people are being trained in root cause analysis and elimination," says Culbertson.

    The wireless option means plug-and-play convenience, because it doesn't require a programmer or hardwire installation. "With 100 employees, and three people in our IT department, plug-and-play makes sense. We can't spare the manpower or resources to hardwire everything," he says.

    To connect to the Internet, Maca runs two satellite systems, one for live streaming video and the other for Scada. When an alarm goes off, it alerts Culbertson's mobile phone and PDA.

    According to Steve Thomas of Syscon-PlantStar, the types of benefits that Culbertson describes have been available for some time, although they've been economically out of reach for all but largest molders. "If we had implemented a system such as Maca's in previous generations, it would have cost $100,000 to $120,000," says Thomas. "By going to a Web-based architecture, we have eliminated the hardware and can invest in IT infrastructure." The result is that Maca's installation today costs less than $40,000—a third of the former cost.

    Syscon-PlantStar believes it can now put powerful tools in the hands of more people by changing to the latest and most prevalent technology—Web-browser-based system architecture. Wireless adds an even further installation cost reduction to the mix by eliminating the hard wiring required for terminals on the shop floor. "This technology has the power to make information portable," says Thomas, "and that can mean such improvements as having inventory and production information available on forklift trucks, mobile access to maintenance manuals, or remote device diagnosis and monitoring."

    What types of molders are buying this type of system? The most active area is automotive, but Thomas is also seeing some interest among medical and consumer product processors.

    Another benefit of transferring to browser-based technology is that it also makes Syscon's software more compatible with a wider range of systems. In the past, being compatible was expensive. Data-gathering devices as part of a monitoring system were almost always a proprietary set of hardware and software provided by the monitoring system OEM. That equipment accounted for 70 percent of the cost. Eliminating that hardware requirement and being able to run on a PC, PDA, or WebPad brings down the cost considerably. In fact, Syscon is now getting out of the hardware business altogether.

    "Customers are coming up with new and different applications to add to our system," says Thomas, "like document control for ISO, managing part drawings, video feeds onto the shop floor, and material data sheets. It's a bit like PDM and ERP rolled into one."
    Contact information 
    Maca Plastics Inc., Winchester, OH
    Andrew Culbertson; (937) 544-8618

    Syscon-PlantStar, South Bend, IN
    Lyn Davis; (574) 232-3900, ext. 203

    IMM's Benchmarking Report: First quarter 2002, data group 2 of 3

    The IMM Benchmarking Report is in its fifth year and this month provides data from the first quarter of 2002. We've developed a strong core group of molders who have volunteered this data, but we are constantly looking for more participants who want to take advantage of what the report has to offer. Its validity, vitality, and survival depend entirely on data from molders. If you enjoy and make regular use of this information, we encourage you to join the project today.

    For those new to the Benchmarking Report, the project is simple, and for those already familiar, we've made some changes you should be aware of. First, the accident incident rate is no longer one of our nine benchmarks. It's now featured in our profile information, which characterizes the molders by press quantity, resin quantity processed, parts quantity, and revenue, among other measurements (see table, below). The average lead time has also been added to the profile data. Replacing the accident incident rate in the benchmarks is the average number of mold changes per machine, per week. The rest, you'll find, is the same.

    As always, several molders have volunteered to share their benchmarking data with us each quarter. The information comes in two parts. First are profile data already mentioned; the information in the pies is the benchmarking data. We're measuring nine benchmarks: machine utilization, productive downtime, training per employee, mold change time, scheduled ship date on time, scrap as produced, customer returns, employee turnover, and number of mold changes. Each month we present three of these nine benchmarks.

    If you want to participate, e-mail the address in the box to the left. Your anonymity is guaranteed. This service is free of charge.

    Contact information
    Injection Molding Magazine
    Denver, CO
    Tony Deligio
    (303) 321-2322
    Fax: (303) 321-3552

    Molders Economic Index: Is the recovery fragile, or does it have legs?

    IMM MEI and Federal Reserve Industrial Production Index

    We strongly believe that the recovery in the injection molding manufacturing economy will continue. We anticipate solid growth for all this year and at the very least 3.6 percent in years to come.

    At such a rate of expansion, overall output of molded products in the U.S. will virtually double in 20 years. When the boom molding economies of Mexico and Canada are included, growth will double the output of molded products in the NAFTA territory in as little as 14 years (below).

    Projection Growth of Molding Market

    What can derail the current economic recovery? We have a few storm clouds on the horizon. The possibility of major terror attacks looms large. Consumer spending may take a major hit from the depressed state of the stock market. And Argentina's meltdown is seemingly spreading to Brazil.

    Still, according to a late June poll of 55 economists conducted by the Wall Street Journal, the U.S. gross domestic product (GDP) is expected to grow 3.5 percent for the second half of 2002 and 3.6 percent for the first half of 2003.

    The Decline of the Dollar
    U.S. molders can rejoice. The value of the U.S. dollar slid sharply in past weeks and is trending lower. For instance, in May 2002, it took 1.09 euros to buy $1. By early July the two currencies had reached virtual parity. The same is the case with the Yen, which has strengthened considerably in past weeks, partially a reflection of a manufacturing recovery in Japan.

    The effect of the lower dollar will not be immediate. But with the current values likely to persist, molders will see over the next six months higher prices for imported machinery, molds, and materials. And competing molded products from Asia and Europe will also rise, on average, 10 percent in price. At the same time export opportunities for U.S. molders have been boosted: They can, without financial loss, lower prices abroad by as much as 10 percent.

    There are some negative effects for molders with operations in Europe: Profits from there will have a reduced impact on their overall corporate bottom lines.

    The lower dollar value started to show an initial, albeit minor, impact in May. U.S. import prices were flat in May as falling car and capital goods costs offset price rises for petroleum and industrial supplies. The Labor Dept. said U.S. import prices were unchanged, well below Wall Street expectations for a .4 percent increase, and following a 1.6 percent rise in April.

    In months to come we will see an increase in import prices, most economists predict with great confidence. Already in May prices for imports of industrial supplies and materials rose .4 percent, following a 6.2 percent rise in April. Export prices for the month also fell, posting a drop of .1 percent, pulled down by the cost of some agricultural products and capital goods.

    Historical Data for Key Markets

    Growth in Manufacturing
    Manufacturing activity grew for a fifth straight month in June and at a faster pace than the previous month. The Tempe, AZ-based Institute for Supply Management (ISM) said its index of business activity rose to 56.2 in June from 55.7 in May. Analysts had been expecting a reading of 55.5.

    Also in late June, Commerce reported that durable goods orders—items expected to last at least three years—rose .6 percent in May, compared to a .4 percent increase the previous month. However, at the same time the Commerce Dept. said construction spending fell by .7 percent in May to the lowest level in five months, due in part to a drop in office and other commercial construction. Many analysts had forecast a .3 percent increase.

    The ISM report aligns closely with reports from injection molders who tell us of solid increases in orders and shipments and a solid outlook for later this year. Still, many molders and other manufacturers are not yet convinced this recovery is a strong one. As a result, few have made big commitments, including investments in new plants and equipment-a key ingredient for a sustained rebound.

    Overall industrial production rose .2 percent in May, according to the last report from the Federal Reserve. Categories reporting higher production levels included home electronics, computers and office equipment, appliances, furniture, and carpeting. But production of automobiles and parts and communications equipment declined. In April, industrial output went up by .3 percent, according to revised figures. That was a slightly smaller gain than the .4 percent increase previously estimated by the Fed.

    Inventories are down again. In April, inventories dropped for the 15th straight month, Commerce reported. As the economy moves into the prime selling season—back-to-school sales as well as the lengthy holiday season—retailers will be forced to boost inventories and create a mini boom for molders.

    The biggest change molders report is that orders neatly spread out over many months appear to be a thing of the past. Most buyers of molded products who used to sign long-term delivery contracts have shifted to just-in-time ordering, creating sudden flurries of last-minute orders. This adds to the level of uncertainty among molders: They do not know how much more they will sell and thus are reluctant to boost production capacity through the purchase of new machines.

    Europe and Japan
    Both Europe and Japan show signs of growth. For instance, in June the Japanese government reported the sixth increase in industrial production. And overall industrial output has shown measurable signs of growth all over the Euro territory.

    The European Central Bank, however, is somewhat worried that the boost in the value of the euro could create inflationary pressures. Yet at the same time the standby tool—higher interest rates—seems to be an unpalatable choice because it could slow the emerging economic growth patterns.

    Housing Boom
    Although construction spending slowed somewhat in May and June, housing starts surged an unexpectedly large 11.6 percent in May, the biggest percentage rise in almost seven years and a reversal of two straight months of falls, the Commerce Dept. reported.

    In May starts on new homes jumped to a seasonally adjusted 1.733 million annual rate. Single-family starts—the largest category of activity—jumped 9.6 percent, an increase not matched since July 1995, Commerce said. For molders in markets such as appliances, furniture, building parts, electrical components, and small appliances, housing starts typically translate to orders some six months later.

    The housing market appears to continue its boom and this will, many molders say, help sustain a recovery.

    Computers Show Growth
    Finally, real signs of growth in the PC market mean good news for office and home electronics such as notebooks, printers, scanners, and copiers.

    Global PC shipments likely topped the 1 billion mark in April, 25 years after the start of shipments in 1977, IT market research firm Gartner Japan Ltd. said in early July. It took more than 20 years for the total number of shipments to reach 500 million units, which came in the first half of 1998. This means that since 1998 more than 500 million PCs were shipped. The overall outlook: total shipments will top 2 billion by 2008 or earlier.

    Yet, despite U.S. growth in PC and related shipments of more than 14 percent for the first six months of 2002, parts are increasingly coming from Asia, Mexico, and Latin America.

    Agostino von Hassell of The Repton Group, New York, NY, prepares this index. Contact him at

    When does outsourcing make sense?

    In the outsourcing matrix, the lower the strategic value and criticality of the part being molded, the better candidate it is for outsourcing. The reverse is also true: Unique or proprietary processes tend to be more profitable and should be kept in-house.
    At a time when slashing costs and speeding up lead times is paramount to gaining and maintaining business, molders and moldmakers often outsource some components of the work. However, many do this in a haphazard way, outsourcing a specific task when their own shops get into a time crunch or some other "emergency" situation.

    That's the wrong reason, says Jeff Mengel, CPA and consultant with Plante & Moran LLP (Auburn Hills, MI). "Outsourcing is a strategy," says Mengel. "Outsourcing should be the result of proactive planning, not reactive to a specific situation."

    Reactive outsourcing often happens when a molder or moldmaker takes on a job for which it lacks skills, capabilities, or machine time. Sometimes it's a moldmaker taking a mold job for a cheaper price, and then deciding there's absolutely no way he can do it for that and subs it to a smaller shop down the street. However, says Mengel, "If it's a question of keeping people busy, I won't outsource."

    Proactive outsourcing as a long-term strategy is done as a way to expand business, reduce personnel, or acquire new technology or skill sets that a molder or moldmaker doesn't have in-house. "You can't have all the skill sets necessary," says Mengel. "Do what you do best, then outsource the rest."

    Kiran M. Gandhi, senior manager of operations management consulting for Blackman Kallick Bartelstein LLP (Chicago, IL), notes that a successful working relationship with an outsource supplier requires treating that company as an extension of your own manufacturing facilities. That means developing a clear communications channel to maintain quality. Other tips Gandhi offers include the following:

  • Define and document your requirements for quality, packaging, and delivery.

  • Work with its staff to develop a complete understanding of your requirements in all key areas.

  • Have it develop an internal quality plan and work flow procedures, and make sure it meets your standards. It's critical that the company you choose to perform outsourcing functions has a similar quality program so that it can provide products that meet your requirements.

  • Be present during the first production run. Don't assume your supplier knows what you want. Be there to help clarify any issues from the beginning, and get the job started off right.

  • Establish reporting procedures and a lot traceability system for problem reporting and taking corrective action. "This allows you to track any defective merchandise, identify the problem, and take the necessary corrective action," says Gandhi.

  • Monitor performance and establish a feedback system.

    "Outsourcing frees your time to concentrate on developing innovative new products and services, and becoming more proactive to the needs of your customers and marketplace," Gandhi adds.

    For more information, contact Blackman Kallick Bartelstein LLP, Chicago, IL, Kiran M. Gandhi, (312) 980-2963,
  • Current outsourcing strategies fall into three primary categories. The first covers some types of commodity activities that are best outsourced. For example, many mold shops outsource their mold base requirements. Which is the better use of machine time—cutting details or hogging out steel for a mold base? If your machine utilization is low, and Mengel says some shops have been hovering around 30 percent utilization, then it might make sense to make mold bases. However, if a shop is busy, it makes more sense to buy a mold base from a company that specializes in it.

    There are also unique activities that can be outsourced. For molders, this might include services such as EMI/RFI shielding, painting, coatings, or even silk screening or other decorative processes. For moldmakers, a unique activity would be texturing or etching cores and cavities, or electroless nickel or teflon plating.

    Third, there are what Mengel calls "unique assets." These are processes more difficult to duplicate than machining or molding. "Anyone can buy a machine, but some processes require an expertise," he says, "such as rapid prototyping."

    Outsourcing Issues
    There are several things to consider when developing an outsourcing strategy:

  • Return on assets. This is a major consideration, says Mengel. Currently, machine assets aren't worth much due to a general overcapacity. That means it might be better to outsource specific tasks to avoid buying equipment.

  • Sunk costs. "Utilize what you have," advises Mengel. "If you have to hire talent to run the machines, that's not good. Idle machines don't cost much, but idle people do. In this economy, manage people rather than machines."

  • Reallocation and allocation of resources. "Ask yourself where you want to be in the food chain of manufacturing," says Mengel. Commodity manufacturing tends to be price sensitive because it's easy and requires no special skill sets, so this type of work is best to outsource. Then there's the "utility" category. The strategy for outsourcing utility work is different because it involves components that are difficult to make and usually requires some skill sets. Moldmaking falls into the utility category.

    Mengel says that Plante & Moran's recent surveys reveal that 40 percent of molders say they have moldmaking capabilities. However, many molders outsource much of their mold requirements to mold shops. "Saying they do it and actually doing it are two different things," he adds. "For molders, building molds internally did not correlate with financial success."

    Unique activities for which you already have equipment and the skill set to do in-house are probably best kept in-house, Mengel notes. Typically, unique or proprietary processes tend to be more profitable because they require higher levels of expertise and specialty equipment.

    "Figure out where it makes sense to outsource based on this matrix [p. 11]," says Mengel. "Keep the unique and proprietary processes in-house and then have a strategy in place to outsource work as it moves into the commodity quadrant."

    Contact information
    Plante & Moran LLP, Auburn Hills, MI
    Jeff Mengel; (248) 375-7334