It seems that everyone has heard how lucrative the plastics industry is, and how easy it is to make money in this business, which is why everyone seems to be looking to buy a plastics processing company. Several molders told me recently that they get calls from business brokers on a weekly basis, asking if they want to sell their companies.
Although it might look easy, I was reminded by one company owner that it is a business that still requires a relatively high level of technical skill to operate successfully. And we began reminiscing about some of the more spectacular failures we've known over the years.
There was the case of one molder who ran a successful company for 25 years. He was at the plant every day, knew plastics and operated his company with the belief that all you need is five good cus-tomers that you take care of like they're God.
When he decided to retire, he sold to a group of men who owned used car dealerships. Now I don't know about you, but to my way of thinking there are not a whole lot of similarities between selling used cars and molding parts. But this company looked good on paper, and ran with seemingly little effort on the part of its molder/owner, which the buyers interpreted to mean: Big bucks for little effort.
Of course it took less than a year before the new owners found out otherwise, and they sold to a company that owned other manufacturing plants.
Then there's the saga of the ex-radio station manager and ex-banker who bought a company from a second-generation molder. He hardly had driven out of the parking lot before those two realized the only thing molding had in common with banking is the large amount of money that can be lost in a short period of time if one doesn't know the business in which one is investing.
Within six months, the molder returned to his old job, trying to pick up the pieces of his financially devastated company.
I often get calls from people who begin the conversation: ``We just bought a molding company and we don't know anything about the injection molding industry. Could you tell us*...*''
I shake my head and wonder what catatonic state these people were in when they signed up to buy a business they didn't have a clue how to operate.
Sure, it takes good business sense to operate any business, but a business like plastics processing also requires a solid technical base to make a successful molding operation. Good plastic parts don't make themselves.
Goldsberry is a Plastics News correspondent in Phoenix.