LAS VEGAS — Philip Clemens recently got one of those calls that many molders dread. But today he is smiling about it. A major truck manufacturing customer "invited" the company of which Clemens is president, National Plastics Corp. of Fort Wayne, Ind., to bid in an online auction for the right to retain an existing contract for some close-tolerance injection molded parts.
The auction, conducted Jan. 10 by Pittsburgh-based FreeMarkets Inc., involved three business lots — and NPC was welcome to bid on each during three separate, two-hour bidding sessions.
"One of the lots was all the parts that we make for them already," the National Plastics president related to a roomful of processors Feb. 24 at the SPI Molders Division's annual meeting in Las Vegas.
That happened to be the third and last lot.
"We passed on the first lot," which was for $1 million worth of business, said Clemens.
The second lot opened at 13 cents per part, and closed at 6 cents.
"We dropped out early," said Clemens, noting that the incumbent producer had "real fat margins that got cut steeply."
Lot 3 started at $450,000, or 10 percent below National Plastics' previous contract price for the highly engineered, specially designed work. Between noon and 2 p.m., only National Plastics' status-quo bid of $500,000 was submitted. No one else wanted to touch the work at that price.
The result: "We still have the business," Clemens said, and "we found out the rest of the marketplace was not interested."
Clemens has tried to turn the tables, and use the auction results to his advantage. He said he has told his customer, "See, we told you the parts were underpriced!" As before the auction, National Plastics is trying to negotiate with the customer for price relief.
"I can see where an auction would be a good tool for standard commodity products that have uniform specifications," he said, but he is dubious about auctions working well with custom items.
Specifications, standards and companion responsibilities for custom and specialty design products cannot be transferred effectively to bidders, he said.