In Germany, the world's leading country for injection molding machinery, the executives are restless. Fed up with high German labor costs and seeking closer access to new markets, they're looking to move manufacturing out of the country. Based on what I heard at the K'95 show in Dusseldorf, Germany, Southeast Asia will compete strongly with the United States for any new initiatives.
It was the same story at each press conference in Dusseldorf. Between bites of rich, meat-laden dishes and gulps of ever-present mineral water, the lunchtime chatter always got around to the generous new contract with Germany's 3 million-member mega union, IG Metall. The pact will hike machine makers' labor costs 11 percent, said Germany's factory equipment trade association VDMA.
In response, German plastics machinery companies have laid off significant numbers of workers and sourced some components from Eastern Europe.
Now, it's only a matter of time before Germans move some machinery production to emerging countries, as the plastics industry booms in Southeast Asia.
``China is already the third-biggest export market of German machinery makers'' behind the United States and France, said Bernd Knorr, director of the VDMA's Rubber and Plastics Machinery Division. That's the hot region of the world; the United States is seen as a mature market for machines.
But how to do it? At a K'95 news conference, Wolfgang von Schroeter, executive managing director of Mannesmann Demag Kunststofftechnik, made an interesting point: ``We have to differentiate geographically. What a customer requires of an injection molding machine is different in Central Europe and in the U.S.A. It will differ between North and South America, and even between North and South Europe, and be fundamentally different in the Far East, and in Japan, Malaysia or China.''
Demag took action to become more global in 1993, when the company bought Van Dorn Plastics Machinery Co. to establish a U.S. manufacturing base.
Von Schroeter is president of the European Committee of Machinery Manufacturers for the Plastics and Rubber Industries.
Even if Europe's recent recession made the layoffs inevitable, German machinery executives I talked with seemed genuinely troubled. Cracks may be showing in Germany's heralded system of a highly skilled, high-paid industrial work force.
Demag cut 210 jobs, 25 percent of the work force, at its Schwaig, Germany, headquarters. Another major German employer, Battenfeld GmbH, cut more than 300 jobs, 36 percent, of its German injection molding workers over the past two years.
Most said the layoffs are over. ``We are not happy about this,'' said Knorr of VDMA. ``But I personally think that in '95, the number of employees in our industry will come to a stable level of 25,000 to 26,000 people. This is certainly the lowest level we should have for our industry to remain competent.''
Helmut Eschwey, member of the managing board of the company that owns Battenfeld, SMS Aktiengesellschaft AG, said of the layoffs: ``It's done, it's over, it's finished. This is as low as we will go.''
The restructuring has prompted a debate inside Germany of how to retain production. At K, there was lots of talk about ``intelligent engineering'' to reduce machine design and assembly costs. As Eschwey put it: ``The only way to survive in injection molding in Germany with the high labor costs is to go simultaneously to cut costs and improve technology.''
Battenfeld had tried to buy Van Dorn but lost to Demag, and Eschwey said the company is still considering whether to assemble injection molding machines in the United States. (Battenfeld already has U.S. plants making blown film equipment and blow molding machines.)
Eschwey said Battenfeld also is looking at several Asian factories, including one in China. When? ``It's important not to miss the window of opportunity, but it's also important not to go there too early,'' he said.
And that was the common German position during K'95. Nothing concrete. Nothing worthy of the big headline. Just a strong suggestion that the next German beachhead for producing injection molding machines will be Southeast Asia.
Bregar covers machinery for Plastics News.