Working under intense pressure from larger rivals, some medium-sized automotive injection molders have gone on the counterattack by taking a new lead in product development.
Mayco Plastics Inc., a family-owned molder in Sterling Heights, Mich., developed a new product before customers existed or raw materials were fully developed.
Siegel-Robert Inc., a larger supplier in St. Louis, has taken a new approach by opening a 10,000-square-foot technology center. The facility validates products and tooling before they go to plants, shaving weeks off development time.
The company invested $4.5 million to set up the center and add coinjection and conventional molding presses.
``It's important for our customers to have full-service suppliers,'' said Siegel-Robert Chief Executive Officer Halvor Anderson. ``Our center gives us the opportunity to be more responsive in the development of products.''
Those molders — suppliers to either carmakers or larger auto-parts suppliers — have heard stories about their demise for the past several years.
With the industry undergoing an unequaled wave of consolidation, companies are amassing greater size to make integrated parts modules and move globally, said Jeff Sands, director of automotive corporate finance and investment-banking services for PricewaterhouseCoopers LLC in Detroit.
Smaller companies will find it difficult unless they discover new ways to open doors with customers, he said.
``It's very difficult for anyone under $500 million [in sales] to work in the automotive sector,'' Sands said. ``The shoot-and-ship shops are being displaced by those who can provide more complete, value-added services.''
According to newly released figures from PricewaterhouseCoopers, of the 620 automotive acquisitions last year, 320 involved parts suppliers. The average value of the 10 largest deals rose from $800 million in 1997 to $1.8 billion last year.
Toolmaker Hunt Machine and Manufacturing Inc. of Tallmadge, Ohio, is facing the same struggles from the mold- making side. The shop has worked closely with Mayco to develop a new air-bag product.
``It's a period of continuous renewal for [smaller] molders and mold makers,'' said Vice President Dave Hunt. ``To continue to survive, we both have to establish niches based on some kind of product or technology.''
Key Plastics Inc. of Novi, Mich., offers another example. After buying Italian molder Foggini Group in February, the company now touts itself as the only supplier of all interior trim components in both Europe and North America.
The company has focused attention on specific components to carve out its identity, said Leonard Griffin, president and chief operating officer of Key.
``It was important to us to be identified with certain products and not necessarily with entire systems,'' Griffin said. ``Our objective is to be a global supplier of certain highly engineered, value-added components.''
This year, Key expects sales to climb to about $550 million, dramatic growth for a once-small Tier 2 molder.
Meanwhile, smaller companies such as Mayco survive through nimble use of technology. The supplier — with $50 million to $60 million in annual sales — is investing more than $3 million this year in three new multishot presses and automated equipment.
The company's strategy is to break open a niche as a major supplier of plastic airbag covers and doors. The part is one of the single largest product lines at Mayco, even though the company did not begin volume production of it until 1995.
``We weren't the first to do this, but we started early in the learning curve,'' said Mayco account manager Houdd Newman. ``It is a special breed of commodity, and there are certain things you need to know. Our learning curve lasted eight years and continues.''
In 1991, when Mayco started considering airbag covers and doors, the company had no imminent contracts for that part. In fact, airbags were just beginning to gain notice.
And the raw materials used in early models, including thermoplastic urethane, did not perform well, said Mayco President Timothy Hoefer.
The company, which has a chemist on staff, wanted to find a better way to make the product. An early start meant greater development costs. But the company banked that its larger supplier customers eventually would pay those costs, Hoefer said.
``We were scrambling from the beginning, hoping the whole thing would quickly evolve,'' Hoefer said. ``We wanted to be on the leading edge before others were doing it. It was a huge leap philosophically for us.''
Mayco's seminal, rotary-molding process has been imitated by other suppliers. The process involves a rotary platen that spins inside a press, allowing different materials to be molded onto the same part in two or three shots.
The airbag substrate and skins are made from a combination of thermoplastic olefins and elastomers and styrenic block copolymers. The amount and location of the materials vary by part, Newman said.
The elastomers and Kraton-brand copolymers provide the soft feel that carmakers wanted, while the TPO substrate offers strength, Newman said.
It is a difficult process on a safety-sensitive area of the vehicle, said Ed Trueman, vice president of marketing for Multibase Inc., a Copley, Ohio-based TPE supplier. Mayco was instrumental in helping refine the molding technology, he said.
``Aesthetically, the [airbag doors and covers] have to be perfect,'' Trueman said. ``Before the advent of rotary technology, it was a manual, laborious process. They'd shoot a substrate and take it to another press for overmolding.''
Mayco is installing new Engel rotary presses this year at its 640,000-square-foot Sterling Heights plant. The first press, with a clamping force of 825 tons, arrived in January. The others are coming in late April and May. Those presses have clamping forces of 990 and 1,300 tons.
When all the equipment is installed, Mayco will have 56 presses, including two other rotary machines that were installed in 1995, Newman said.
``With rotary presses, we can focus on adding more details to future products,'' Hoefer said. ``Complicated art can be made a lot more easily on rotary machines.''
At Siegel-Robert, a technology center opened a year ago is helping the company conceive new products and speed delivery, said David Rudder, Siegel-Robert executive vice president of technology development.
Previously, the company could not easily explore coinjection or gas-assist molding without a bit of hardship, Rudder said. The company, which recorded about $485 million in 1998 sales, did not have a satellite facility to develop new products and processes.
``Now, we don't have to take the time at our plants and interrupt production schedules to look at new parts,'' Rudder said during a media open house March 25. ``We do that here [at the center], where we aren't under the same kind of time pressures.''
The center includes four Battenfeld presses: two coinjection units with clamping forces of 220 and 500 tons; and two conventional presses of 500 and 44 tons. The center also includes an Airmould pressure generator for gas-assist molding.
The coinjection machines, shooting multiple materials from a single nozzle, have helped the company solve some demanding customer problems. For a new minivan, Chrysler Corp. wanted Siegel-Robert to make an inside door handle in four different colors, Rudder said.
Siegel-Robert's original approach in 1996, using a glass- and mineral-filled nylon 6 resin, led to too much scrap and flash.
The high reinforcement content also wore out tools prematurely, he said.
For several months, the company worked to perfect an alternative part using two materials. A non-filled nylon resin was used for the surface of the part, which also featured a strong core of glass-filled nylon.
``We couldn't do this without coinjection,'' Rudder said. ``It would be a struggle otherwise.''
The strategy of companies such as Siegel-Robert, Mayco and Key could help those suppliers remain successful in a more-challenging environment, said Sands at PricewaterhouseCoopers.
Still, others without the same investment resources could face a more troubling future.
Carmakers and large suppliers will price a company to death unless it is indispensable in some way, he said.
``It's a trying scenario,'' he said. ``If a company is not exhibiting new technology, doesn't have the critical mass to supply globally and is not spending for research and development, it will be awfully tough to make any money.
``When that happens, it might be time to get out of the business.''