When Inland Technologies Inc. opened the doors of its Fontana, Calif., custom injection molding plant in May 1993, it hit the ground running. With six new presses, the company offered clean-room molding with ISO quality standards already in place at the 24,000-square-foot facility.
It wasn't so long ago that anyone could start an injection molding company on a shoe-string budget in their garage. All it took was a couple of vintage presses and one customer willing to give them a shot.
No longer. Demands placed on injection molders for service, technology and quality mean amateurish firms won't cut the resin anymore. Increasingly, even start-up firms are not in the market for presses older than 10-20 years.
Thomas Gagliardi, president and chief executive officer of Thomas Industries Inc., an equipment appraiser, auctioneer and liquidator in Guilford, Conn., said the key to efficiency is up-to-date technology.
Gagliardi, who often is asked to appraise equipment for company owners thinking of retirement, said presses more than 10 years old have become increasingly difficult to sell.
``There's no way you can be competitive, create an investment and build a molding business with machines over 10 years old,'' he said.
Although Bob Risbridger hates to admit it, he said he agrees.
``There's a huge oversupply of used machinery, and molders realize they cannot be competitive with pre-micro-processor equipment, generally presses 10 years old or older,'' said Risbridger, president of Plastics One Inc., a Wallingford, Conn., firm that buys, rebuilds and resells used plastics processing machinery.
Risbridger said the market for older machines has dropped drastically. Markets in Mexico, Central and South America that were good a few years ago have dried up because molders there also want new-er, sophisticated equipment, he said.
Machines that are 20 or more years old are ``going to the graveyard,'' Risbridger said.
Recently, Gag-liardi was asked to appraise a company with 62 injection presses.
``The average age of the presses was pre-1980, with some as old as 1963.''
He declined to auction off the equipment, knowing that there was almost no market.
Gary Hengeveld and Glenn Crossno, owners of Inland Technologies, originally considered buying a small molding company from its 70-year-old owner.
``He had eight old presses with old auxiliary equipment in an old building,'' Hengeveld said.
``The more we thought about it, the more we realized that the industry isn't going that way. The industry is moving away from the garage-shop molder and they're going out of business as their markets are going away.''
That realization made it easier to choose new equipment in a new building, even though the capital required was more and the risk involved greater. But the choice is one that more start-ups tend to go with.
In May, Rod Roth and two partners opened R&D Plastics LLC in Hillsboro, Ore., with four new, smaller-tonnage Toshiba molding machines and one used Toshiba press with 570 tons of clamping force. That was quite a bit different than the way Roth's father did it.
Roth's father, Merrill, co-founded Grant & Roth Co. 50 years ago in a rented room in the back of a garage that belonged to a funeral parlor, where they built a compression molding machine to make a part for one customer. Rod Roth said that starting a molding business in your garage today is virtually impossible.
``The business climate was incredibly different back in 1946,'' Roth said. ``There wasn't the kind of market out there then and you could build a business on the back of one customer.''
R&D Plasticsseeks customers and markets in the high-tech electronics and telecommunications industries.
``They'd leave if they walked in here and saw a garage shop'' Roth said. ``Even the low-tech consumer products market needs high productivity and quality, because they all face the same problems that high-tech markets face.
``If you don't have the equipment and systems in place, you can only sell to a very limited market,'' he said, adding that it is crucial for machines to have process repeatability and be able to hold tight tolerances.
Gagliardi said the trend toward starting up a molding business with newer equipment also has to do with downsizing issues - having the ability to do more with less equipment and fewer employees.
Hengeveld agreed. Inland now has 12 new presses with 85 tons of clamping force or less and specializes in high-volume, small, precision-tolerance parts for a variety of high-tech industries.
Starting an injection molding business today is not easy or cheap, and those interviewed agreed that true start-ups firms are more rare now than 20 years ago.
Individuals taking the plunge into molding tend to be a different breed of entrepreneur. Most have some plastics industry background, and many have an engineering degree or a financial background, rather than mold making or long-time processing experience.
``We're not production people per se,'' said Roth. ``My partners and I came out of a production management background, and while I understand the theory of molding, I can't go out there and start up a mold.''
That means he cannot operate a one- or two-person show like his father did. He needs employees trained in processing. And because molders need the ability to run lean and mean, he needs presses that give him maximum uptime and minimal repair costs.
Another factor influencing the purchase of new molding presses for start-up companies is the good deals on interest and financing packages most machinery suppliers offer. Also, maintenance costs on new equipment are much less, and there is less downtime.
``Molders realize that payments on new machines offset downtime and repair costs,'' Risbridger said.
Roth said that although the payment on his new machines is larger than payment on older presses, the new presses come with service and warranty agreements that cover the machines beyond the start-up phase, when business expenses are usually the highest.
The trend toward start-up firms buying new equipment also is being driven by molders who realize that 90 percent of getting a good part lies in the mold, Risbridger said, which means they make a tremendous investment in getting the best mold money can buy.
Risbridger offered this analogy: ``You can have the best stereo in the world, but hook it up to lousy speakers and you get bad sound.''
Still, there continues to be some market for used equipment, according to several dealers contacted. A typical buyer for older molding equipment is age 50 or older and is going into custom molding of low-tech products with low volumes and slow cycle times, where quality standards are not as stringent and dimensions not as critical.
``They're doing products that don't require a machine with all the computer bells and whistles,'' said Jim Martin, president of Classic Plastic Machinery in Brunswick, Ohio. ``They don't understand the new computer-aided equipment and don't know how to work on it, so they don't want it.''
Jim Hubert, an associate with Right Equipment Co. in St. Petersburg, Fla., said he has a client that purchases all mid-1970s Reed machines ``because that's what he's familiar with.''
Hubert said that whether a start-up company goes with all new or all older equipment depends on the products being molded.
``Some products don't justify the cost of a new machine,'' said Hubert, adding that the biggest demand among those seeking used machines is for presses that are 10-12 years old, primarily because of price.
``Everyone wants new equipment with 10-year-old prices,'' said Hubert. ``But that's not reality. That's the price range they can afford.''
Martin agreed that price is really an issue for those seeking out older equipment, and used equipment has gone through a major devaluation in recent years.
``At one time, 10-year-old presses were prime pieces of equipment. Now they won't bring top dollar anymore,'' he said. ``The market hasn't gone away, but it's definitely different.''
Martin predicts that as machines built in 1988 and 1989, the first years of computer-controlled presses, come onto the used market, pricing will get stronger.
``We're having a stabilization of the market now,'' he said. ``Five years from now, we'll have a better situation in the used-machinery market.''