Walter J. Jungwirth is president and CEO of Engel North America.
The U.S. economy lost 1.7 million jobs from Year 2000 to the end of 2003. Therefore it was welcome news when the economy saw job gains of almost 1 million from March through July of 2004, but this gain is not enough. The quality of work being added to the economy is declining in 48 out of 50 states according to the Economic Policy Institute. Jobs are shifting from higher paying industries, such as manufacturing and information, to lower paying industries, such as retail and hospitality.
Plastic is the material of the twenty-first century. But similar to the national picture, the plastics industry itself has also lost many manufacturing jobs. With a focus on the injection molding industry, the question needs to be asked, ?Is the U.S. plastics industry competitive?? Having had the privilege of travelling on all continents, visiting important injection molding centers, and speaking to people of all company levels and cultures, I?ve been provided with an insight and global view on competitiveness.
To begin, let?s characterize markets as follows, according to geography:
- Main markets offer high volume and growth potential through applied processing technologies and innovation. Training and quality control are of great importance. Examples are Japan and Western European countries, i.e. Germany, France, Spain, and Austria.
- Supportive markets offer good growth potential, and applied processing technology is used often. Examples are Taiwan and South America.
- Emerging markets offer possibility for volume and growth potential in selected end markets such as automotive, packaging, building, medical, and technical molding. Technology and innovation are used infrequently. Examples are Bulgaria and Russia.
- Secondary markets offer limited growth potential and declining volume. Processing technology is not used. The countries of Africa serve as examples.
What about China? China for many years was a main market unto itself. However, in recent years it transitioned to a global emerging market providing lower-end products, and has now become a main global market for all products.
Where Does the U.S. Plastics Industry Fit?
Using the four market definitions above, we can analyze the U.S. plastics industry using the following criteria:
- Installation of robots and automation cells in the U.S. is lower than in Europe or Japan.
- The machine base in the U.S. is outdated, considering the technological life span of approximately seven years and practical life span of 12 years for machines and equipment.
- Molders do not differentiate between the lowest cost of investment and investing to achieve the lowest cost of production.
- Fewer than 10% of large machines (above 1000-ton clamp force) are equipped with automated tool-change equipment.
- Machines are equipped with quality control programs but they aren?t often utilized.
- Training of employees is not a top priority?it is performed only when budget or time permits.
- Companies seldom enter into cooperations (partnerships) with raw material suppliers, toolmakers, or machine builders, thereby reducing the possibility for real innovation and consequent cost savings.
- When looking for cost saving measures, most companies concentrate on reduced pricing from their suppliers (short-term savings), instead of improvements to manufacturing processes (continual/long-term savings).
Injection machine suppliers all remember the so-called ?Golden ?90s? when we saw high demands for automotive, electronics, packaging, medical, and general consumer goods. We also remember the sharp drop in our industry in the year 2000. This has less to do with lower labor costs in offshore countries, and more to do with a general shift within our industry.
The U.S. must be seen as a main market, but we also have to recognize the decline of quality standards, applied technologies, and innovation, which indeed are causing a direct loss in our global competitiveness.
The U.S. must invest itself to maintain its important role as a main market in the global plastics industry.
As we all strive to maintain our global competitiveness, let us remember the following quote by Thomas Cleary from the book The Japanese Art of War: ?In any field of endeavor, specialists are superior to dilettantes, even if the specialists are not as talented as the dilettantes. This is because specialists always take their art seriously, while dilettantes are mere hobbyists. ?This does not apply only to Arts. In all actions and attitudes, success is based on single-minded seriousness while failure is based on whimsicality.? Let the U.S. plastics industry once again be specialists.
Engel North America, Guelph, ON