Many North American industrial blow molders have the moves of a magician this year: Some of their core product areas have performed a vanishing act.
Housewares and toys, once linchpin markets, have downsized or moved offshore. Fuel tanks and drums, two other prime markets, face legislative threats, a slowdown in sales or competition from other processes.
And while other consumer and industrial products have not been hit quite as hard, a little magic dust could help most areas grow in 2001.
``Normally, different product lines react differently,'' said Jerry Bauer, marketing manager for Hoover Group Inc., a blow molder based in Alpharetta, Ga. ``But, in this case, it's been across the board and widespread. It really didn't matter what we did.''
A recent industry report on industrial blow molding shows a diminishing market. During the second half of the 1990s, blow molding production grew on average by 6-7 percent annually, said consultant Peter Mooney of Plastics Custom Research Services in Advance, N.C.
His firm had predicted growth to continue to soar into the double digits as the millennium approached. Instead, the year 2000 saw an 8 percent decline in resin use and a similar decline in the number of plants. To compound matters, the deterioration in the toy and housewares markets led to fewer blow molders in North America.
Mooney estimated that 145 North American companies performed industrial blow molding in 1998. In 2000, that dropped to 125.
``For the last five years, `bigger is better' has been the mantra,'' Mooney said. ``Now, blow molded tanks are under pressure. Housewares have gone, and toys have gone to China. So many key markets went down for blow molders at the same time. They took some of the biggest hits among all types of molders.''
Some of those markets might not be coming back any time soon. Toronto-based TPI Plastics Inc. purchased a former Hasbro Inc. plant in Amsterdam, N.Y., in 1997, only to close it two years later when business faded away.
TPI had contracted with Hasbro to do $3 million in work in 1997. It dropped to $200,000 the next year and then to nothing, said TPI owner Donald Henderson. The company, operating out of Saratoga Springs, N.Y., instead found a new market niche in decorative outdoor products.
``Retailers didn't want to be in larger toys,'' Henderson said. ``It takes up too much space and doesn't generate dollars per square foot. Toys just died.''
The market for housewares has become equally ruthless. One large maker, Tucker Housewares Inc. of Leominster, Mass., went out of business in 2000.
Custom molders are feeling the same pinch. Custom-Pak Inc., a blow molder in Clinton, Iowa, has reduced orders dramatically, said president and chief executive officer Richard Olsen. The company has pursued new applications in such areas as lawn and garden offerings and carrying cases to balance the evaporation of other areas, Olsen said.
Still, he expects sales to be down about 15 percent in 2001. Using existing equipment wisely is a key, Olsen said.
``If it weren't for new business, we'd be off even more,'' he said. ``We build machinery that's more flexible and can do so many different products. We've been fortunate that whatever market we've lucked into has helped us grow.''
Versatile equipment also has been the byword at Western Industries Plastics Group, the Winfield, Kan.-based owner of blow molders Chilton Products and KSQ Inc. While the year has been flat, the company has prospects for new work in outdoor products, said group Vice President Joe Messina.
``We can't be pigeonholed into one market,'' Messina said.
The automotive market faces other threats. Blow molded fuel tanks have captured about 65 percent of the North American automotive market, according to the PCRS report.
But new standards are on the way that could threaten blow molding advances. The California Air Resources Board has issued new partial-zero emission standards, starting to roll out in 2003, that reduce total fuel-system hydrocarbon emissions to less than 54 milligrams a day.
Auto suppliers are taking note, because current blow molded tanks might not meet those requirements. Typical fuel systems today release about 350-400 milligrams, said Chris Quick, director of research and development in advanced fuel systems for London-based TI Group plc.
``It's going to be much more interesting,'' said Quick, based in Windsor, Ontario. ``Legislation drives our activity.''
TI has gotten busy. One new project, called its complete vapor recovery system, would weld a cover over the top and sides of the tank to capture more emissions. Another more-complex plan is coined ``ship in a bottle,'' or SIB. It would add a carrier system, inserted inside the parison during the blow molding process, that features electronic sensing devices, a filter and pumps to control vapor output.
Both could be in mass production by the 2004 model year, Quick said. ``We're really enhancing existing capabilities,'' said Quick, whose company has prototype systems on test vehicles.
TI and other blow molders face competition from other processes. Dearborn, Mich.-based Visteon Corp., for example, is looking at twin-sheet thermoformed tanks. Visteon is worth paying attention to: The company has the capacity to make about 3 million blow molded fuel tanks annually, said Dave Frey, project manager for powertrain systems.
Visteon is testing a system that adds components inside an open tank shell before the two halves are sealed together. Frey said the thermoformed tank would be cheaper than a more-sophisticated blow molded tank, Frey said.
``We're in a pretty good position,'' Frey said. ``A couple of [original equipment manufacturers] agree with us that twin-sheet thermforming should go ahead. We're going through development testing to prove it out, but we actually have been sourced for specific car programs in the 2004 time frame.''
Visteon started an Advanced Research Center at its Milan, Mich., blow molding plant in June. The center includes a twin-sheet thermoformer and a continuous extruder to test the thermoformed tanks. Customer development work has started there, Frey said.
Visteon has not ruled out sticking with blow molded tanks. Either way, the automotive market contains plenty of other challenges for blow molders, said Bill Flint, president of Baraboo, Wis.-based Flambeau Corp., a large producer of automotive blow molded parts. New models have been delayed, and customers are unwilling to absorb the resin price increases that have hiked expenses, he said.
``Every so often the economy takes a break,'' said Flint, whose company makes a variety of underhood parts. ``The scary thing is the expectation to cut costs every year. I'm not sure how we can do that every year going forward. We all went to business school and were taught to make a profit; somehow, we forget that lesson.''
Flambeau, which also makes lawn and garden and other consumer products, expects flat or mild decreases in sales for its current fiscal year, ending June 30, Flint said.
Industrial tank and drum producers also are feeling the hurt. Russell-Stanley Holdings Inc. of Bridgewater, N.J., began a restructuring plan in July to cut costs. Greif Bros. Corp., another maker of intermediate bulk containers, is watching its expenses closely but will continue to come out with new products in the next 12-18 months, said Jim Craig, plastic drum product manager for the Delaware, Ohio-based company.
``The 1990s was a great time for everyone,'' Craig said. ``But every company is watching costs these days. You have to plan for the long haul to weather the bad times.''
Not all is doom and gloom for blow molders. While business is down, new opportunities also present themselves, Mooney said. Blow molding could find new niches in such areas as business machines and appliances, he said.
In fact, he predicated that the market will rebound and grow again by 6-7 percent next year, a breath of life compared to the morass of 2001.
``I don't see fuel tanks going away,'' Mooney said. ``Other automotive and nonautomotive parts will come along to pick up the growth trend. Industrial blow molding business is one of the most highly concentrated areas of molding now, and that could suddenly change.''
Some smaller blow molders are waiting for that shift. Crocker Ltd., a producer of consumer and industrial products, expanded two years ago. The company still is working on filling its plant, but new product development is taking some time, said sales Vice President Ted Crocker.
Meanwhile, the company has cut several workers through attrition and given employees some extra days off during its annual July 4th plant shutdown, Crocker said. The company is searching for new ways to compete globally with other blow molders operating in a shrinking market.
``We find that it's getting tougher to compete both domestically and regionally,'' Crocker said of his Three Rivers, Mich.-based firm. ``We have to be smarter and better and put different technology in place. Hopefully, we'll see a payback for it.''
Change is coming, said Chuck Voelkel II, vice president of production for St. Louis-based Semco Plastic Co. Inc. Semco has new products in the pipeline, everything from medical-waste containers to trash-can liners to recreational items, Voelkel said.
Semco also is starting a major expansion that will bring its plant to more than 400,000 square feet and add more automated equipment.
``A lot of things in blow molding are changeable,'' Voelkel said. ``We're not pulling the ring and saying we quit. This is probably the slowest time we've ever had, but we see some light at the end of the tunnel.''