Related to this story
Topics In Print
Companies & Associations
On his drive in to work each morning, Robert Kleckauskas thinks of new things for Arrow Plastic Manufacturing Co. to make.
Worthwhile concepts get sketched out, then handed over to develop into a computer-aided-design program. Engineers and his partners at Elk Grove, Ill.-based Arrow add their own thoughts, and the company is open to input from anywhere in the firm.
“Everybody's coming up with new ideas every day,” said Kleckauskas, Arrow's president and one of three partners in the firm.
New ideas and new products are at the core of Arrow, a 180-employee injection molding firm that makes dozens of different housewares products — including glasses, plates, pitchers, mugs, ice cream dishes and even watering cans — distributed by major retail chains throughout the U.S.
Arrow owns its own tools, creates its own products and molds them. To an outsider, it may seem like the company has the luxury of controlling its own future, but Kleckauskas is quick to caution that any consumer-product company — even those with proprietary lines and its own brand — has just as many business issues as any other company. Their issues are just different than those faced by injection molders making parts for other manufacturers.
“To have the idea is one thing,” Kleckauskas said during an interview at the International Home + Housewares Show in Chicago, between meetings with retailers interested in carrying Arrow's items. “Making the product itself is a huge investment in terms of molding and machine time. New products are developed at great risk. You don't hit a home run every day.”
Injection molders, like the 49-year-old Arrow, that make consumer products run the range from large corporate manufacturers to direct-to-consumer marketing specialists that also happen to mold. There also are existing contract molders that turn to proprietary products to help fill their press time.
The varied companies operating in the marketplace do not necessarily have some secret to success that others lack. Instead, they have to learn a specific set of rules to survive, just as molders do in any industry, said Jeff Mengel, a partner with Plante & Moran PLLC based in Chicago.
“It's not something that just happens,” he said. “They've been honing those connections and those products for years.”
In its annual survey of molders, Plante & Moran compared the profit margin for contract molders with those molders with at least 25 percent of their business from proprietary products. It found no statistical difference, Mengel said. Any benefit those proprietary firms would see by controlling the marketplace for their own pieces is taken up by the cost of marketing those products either to retailers or directly to consumers.
Making it in the consumer and proprietary products arena means developing all new skills in marketing — either through going directly to buyers or by fighting for retail space with major manufacturers, some of whom distribute inexpensive items made overseas.
Arrow makes 95 percent of its products in-house in Illinois, and uses its “made in the U.S.” status as part of its marketing. Its location and size also make it nimble enough to respond quickly to any changes in the marketplace, Kleckauskas said.
Rather than shipping a container of items from China and waiting for it to arrive, Arrow's customers can order on much shorter notice and in smaller quantities, he said.
“It's much more than knowing how to make something,” he said.
Traditional housewares companies like Arrow are not alone, however. Some firms hit by the recession are looking to consumer products to broaden their base. Financier Wilbur Ross, who created global auto supply firm International Automotive Components, has even noted consumer products as a growing market for the group's Brazilian operation.
The Brazilian branch, which operates under the name Plascar, wants to generate 20 percent of its revenue from consumer goods, said President Andre Nascimento.
It has created two different brands — EOS for its lawn and garden furniture and Siris for industrial packaging and items such as plastic shopping carts — to show existing retail streams that it is serious about getting into the business and is not just an auto supplier, he said.
“The high quality, excellent service and cost demands are very similar to the auto industry,” Nascimento said.
Mengel still cautions custom molders to do some careful investigations before jumping into a new industry. Sometimes it may seem like the old story about the grass looking greener on the other side of the fence, but as that story goes, the view is something of an illusion.
“I encourage everyone to go out and look for new grass,” Mengel said. “There's nothing wrong with keeping your eyes open for new opportunities, but it comes down to knowing where your talents are.”
Copyright 2010 Crain Communications Inc. All Rights Reserved.