Plastic and metal suppliers have joined forces lately to serve the market for computer enclosures, also known as chassis.
``The industry has been heading this way for a few years ... to get costs where they need to be,'' said Carole Cross, strategic commodity manager in Austin, Texas, with Dell Computer Corp.'s worldwide procurement organization.
``Suppliers are starting to execute and listen to what the OEMs want: Optimize the supply chain,'' Cross said in a telephone interview.
The integrations minimize packaging, freight, intercompany markups and subassembly.
Recent combinations include joint ventures, partnerships and acquisitions. Suppliers needing additional capacity are investing vigorously in small Texas towns and elsewhere.
At least three injection molders will establish new facilities this year in New Braunfels or San Marcos, Texas, about 30-50 miles south of the state capitol in Austin. Two of the firms are in ventures with sheet-metal stampers.
Separately, an integrated plastic-metal operation is being developed in Round Rock, north of Austin and down the road from Dell headquarters.
Other projects are under way or being explored in Las Cruces, N.M.; Guadalajara, Mexico; Ireland; and some Pacific Rim locations. Many of the suppliers involved already serve multiple original equipment manufacturers such as Compaq Computer Corp., Hewlett-Packard Co., Gateway 2000 Inc., Apple Computer Inc., Micron Electronics Inc. and Motorola Inc.
Wanting to stay in Dell's loop is a driver for some suppliers.
Dell ``set a strategy on where we want to go and why, and we addressed [that] with the supply base,'' Cross said. ``Pretty much, people are meeting the strategy.''
Dell aims to ``take out middle steps that are not value-added'' and benefit from the lower costs and faster production cycles.
``What shakes out is still to be determined,'' Cross said. ``The jury is still out ... [on companies] trying to come together [and] getting managements and organizations in line.''
The president of one supplier acknowledged the process is still in its infancy.
Different customer philosophies have led to ``a lot of swings in plastics and metals'' for various enclosure boxes, even in the same product line, Cross said. Some designs use metal boxes with a plastic bezel, and others have gone to plastic shells.
``It depends on the product you are trying to put out [and] comes back to cost, flexibility and market focus,'' she said.
Although not limited to suppliers to Dell, the following injection molders, named first, and metal stampers have made deals:
Complex Tooling & Molding Inc. of Boulder, Colo., acquired Krasberg Corp. of Des Plaines, Ill., on Nov. 17.
Trend Technologies Inc. of San Jose, Calif., acquired Cam Fran Tool Co. Inc. of Elk Grove Village, Ill., on Dec. 3 and is building the facility in Round Rock. Trend said it is establishing the nation's first integrated factory designed with sheet metal, plastic and assembly capabilities to make computer enclosures.
Texas Jacobson Co. of New Braunfels and Parkview Metal Stamping Inc. of Chicago created the joint marketing venture Parkview/Jacobson in November. The firms began linking manufacturing operations at Parkview's Las Cruces site, and will soon in San Marcos.
Beach Mold & Tool Inc. of New Albany, Ind., and Lightning Metals Specialties Inc. of New Braunfels formed the joint venture LMS Beach in late December. Beach is constructing a molding and assembly facility on Lightning Metals' land.
Palo Alto Products International (Pte.) Ltd., based in Palo Alto, Calif., is building a New Braunfels injection molding plant, relocating molding work from Taiwan and subcontracting with Lightning for metal components.
Some OEMs separated themselves years ago from most production. Sun Microsystems Inc. of Palo Alto, for instance, said in its fiscal 1997 10K report: ``The company is increasingly dependent on the ability of its suppliers to design, manufacture and deliver advanced components required for the timely introduction of new products.''
Sun prefers to concentrate on developing enterprise network computing products. One insider referred to Sun as the closest thing to a virtual manufacturing organization.
OEMs want suppliers to ``put together the whole enclosure — server, router, cabling, speakers, fans — up to power supplies and workstations,'' Stuart Benton, Trend chairman and chief executive officer, said in a telephone interview. ``They can put in a mother board, memory and maybe a floppy, and it is gone'' to market.
Apple and Sun, in particular, have used Trend. For two years, Trend has assembled Apple's midlevel workstation ET, performing the full electromechanical test at the end of the line.
``We don't put in power supplies now, [but we] will on the next version,'' Benton said.
``Everybody wants to partner with a limited number of people worldwide,'' Benton said. ``They want you in Europe. We are looking at Ireland. They want you in the Pacific Rim'' for low-end operations.
Palo Alto Products, originally Palo Alto Design Group, takes pride in carrying its proprietary concepts to a ship-to-dock finished enclosure. According to the firm, most of its competitors only carry out OEMs' designs.
``The computer industry has become cost-sensitive in the last few years,'' said John Toor, Palo Alto vice president of research and development. It is ``difficult for anybody to produce these sorts of products.''
Palo Alto ``tries to supply a product assembled as much as possible [so the OEM needs only to] simply snap in the circuit boards or drives,'' Toor said. ``We are working to integrate as much as possible.''
Other suppliers have grown after starting as low-end contract manufacturers. Solectron Corp. of Milpitas, Calif., and SCI Systems Inc. of Huntsville, Ala., for example, have evolved from labor-intensive stuffing of circuit boards to become significant suppliers of higher-technology automated assembly systems.
A Motorola engineer has seen sheet-metal benders bring toolmaking and plastics molding capabilities into their operations.
``The trend makes sense for me,'' said Nausel Nausel, a product engineer for systems with Motorola's computer group in Tempe, Ariz. ``We are using some U.S. manufacturers for chassis, and they have the injection molding capacity in-house.''
Van Holley was a Dell employee for seven years until leaving two years ago. Now, he is Lightning Metals' director of operations.
``We position ourselves [so that suppliers] come to Lightning to get computer-related metal components and enclosures,'' Holley said.
He views the plastic-metal evolution as an extension of OEMs reducing their supplier bases and favoring a one-stop-shopping approach.