Periodically Plastics News publishes data about the processing companies that serve various segments of the plastics industry. These data are not only valuable sources of basic information regarding the industry, but they lend themselves to analysis and to drawing valuable conclusions.
In 1995, Target Group Inc. analyzed these data and correlations were obtained between company size and employee productivity. We now have used the newest data of the injection molding segment in combination with similar data for the previous four years to learn whether there are any trends as to growth, material usage and markets served by injection molders.
Of the top 100 injection molders evaluated, data in sufficient detail were available only for 76 companies for the four-year period and these formed the basis for our evaluation.
Compounded annual growth in dollar sales over the past four years averaged 16 percent. This is a rather enviable figure, since during that period the U.S. economy grew at only about 4 percent and the plastics industry (as measured by growth in resin shipments) grew only at about 9 percent.
While some of the 16 percent per year growth is attributable to mergers and acquisitions, a considerable portion of it is real growth.
Of the 76 companies, 24 grew faster than the 16 percent average. Indeed, five of them enjoyed growth rates of more than 30 percent. Only eight companies showed no growth or negative growth in sales. While we suspected that company size might have an influence on growth, no such correlation of statistical significance was found.
A second variable examined was materials used by the molders using the information reported by each as being processed in their operation. The average molder used nine different polymers. Forty-eight percent used fewer than that, while 52 percent used more. Only three companies specialized to the extent of using a single resin. Again, there was no correlation between company size (measured in sales dollars) and the number of materials being processed.
The most widely used materials were polypropylene, followed closely by ABS and polycarbonate. The least used materials were thermosets (only 15 percent of the companies do thermoset molding), linear low density polyethylene (24 percent) and thermoplastic elastomers (37 percent).
These percentages are based on the number of companies using the materials, not the poundage of resin used.
While no effect attributable to company size was noted, company growth rates did have a small effect. Companies growing the fastest in sales used as many as 9.5 resins, while the slowest growing ones used only 8.6 resins. The highest growth companies, however, used the same materials as the slower growing ones: no material was characteristic of the higher growth companies.
A total of 24 end-use markets were served by the injection molders. The average molder claimed to serve 6.5 markets, with 15 of the 76 serving a single market, which nearly always was automotive. Very few molders claimed to serve more than 10 markets.
Automotive is the most competitive market, with 49 suppliers serving it. Consumer products was next, with 39 suppliers.
Business machines, appliances, industrial, medical containers/ closures, electrical/electronic and telecommunications each were served by about 30 companies each, while waste management, furniture, outdoor furni-ture and aerospace were the markets with the least competition, with no more than five suppliers each.
Relatively few markets correlate with the size of the molder. Automotive tended to be the market mainly for the larger ones, while business machines, appliances, garden/lawn and medical seemed to be favored by smaller processors.
One important question is whether any market segment offers greater growth opportunities.
There was only sporadic correlation: telecommunications, appliances, consumer products and agricultural markets seemed to represent the better growth opportunities, while companies serving the packaging industry appeared to enjoy less growth.
Lantos is president of Target Group Inc., an industrial consulting group in Erdenheim, Pa.