A consolidation boom slowly is helping to shake the rotational molding industry's garage-shop image, industry sources say. The past two years have seen corporations march in with open wallets to purchase smaller rotomolding shops, creating an era of megamolders.
Rotonics Manufacturing Inc., Snyder Industries Inc. and Norwesco Inc. are some of the main buyers in the consolidation move.
In 1995 alone, RMI in Gardena, Calif., bought Custom Rotational Molding Inc., InjectaPlastic and Trigon Industries Ltd. In 1994, Snyder in Lincoln, Neb., obtained Roanoke Industries Inc. and Crown Rotational Molded Products Inc. Norwesco, a tank maker with sales estimated at $37 million, plans to open a plant in Owego, N.Y., in October.
Phil Dodge, development associate at Quantum Chemical Co. in Cincinnati, said this buying frenzy is common, and not just in the rotomolding industry.
``When larger companies see a fit, they offer a package where the small rotomolder just can't refuse. It's really not unique.''
Other factors contribute to this business trend, industry officials said.
Glenn Beall, of Glenn Beall Plastics Ltd., a Libertyville, Ill., firm specializing in plastic product design and consulting, said customers today are demanding full services. That makes it difficult for smaller shops to compete with industry giants such as Bonar Plastics Ltd., with 1994 sales reported at $40 million; RMI, with sales of $36 million; and Snyder Industries, with sales of $27.5 million.
Full service includes putting a greater emphasis on engineering, design work, packaging, assembly and quality control, he said. Additional services improve the industry because rotomolders are able to take on more demanding jobs, he said.
``Even injection molders have gotten better because customers are demanding more services.''
Beall said, in general, the earliest rotomolders have not been willing to reinvest in their companies in order for the industry to reach the next plateau.
``Older business owners hesitate to take out a loan for a million dollars and replace machines with the latest razzmatazz,'' he said. ``They don't want to worry about a five-year loan when retirement is just ahead.''
Even the government has had an impact on the industry, said Sherman McKinniss, RMI president and chief executive officer.
``With many of the smaller companies potentially facing $15,000-$20,000 fines, if in viola-tion of environmental or work-safety laws, it's a tough situation if someone isn't up on it,'' said McKinniss, who has been involved in the industry since 1961.
Corporations also are looking at plant locations closer to their suppliers and purchasers, Beall said. This would shorten delivery times and reduce shipping costs, he said.
John Cali, general manager for Bonar Plastics Ltd., a division of Bonar Inc. in West Chicago, Ill., said consolidation has been going on for 10-12 years.
``It's just a less-expensive way to get started,'' Cali said. ``It's a way of bringing the products to the markets instead of bringing the markets to the products.''
Bonar, a maker of toys, tanks and containers, actively looks, sometimes on a daily basis, to purchase smaller companies, he said. But many of those companies have smaller or older equipment that does not fit.
But don't expect corporations to close their wallets soon, industry officials said.
``My guess is that the pace of acquisitions will lessen in the next couple of years, but it definitely won't stop,'' Beall said.
McKinniss is more enthusiastic about consolidation.
``You will see more of it because the bigger molders are spread out all over the country,'' he said. ``You'll see more $20 million to $30 million companies instead of hundreds of million-dollar companies.''
Said McKinniss, ``It's become an industry.''
