Those injection molders who believe the grass is greener elsewhere evidently have not been to Europe.
The region's processors now face many of the same economic pressures experienced by North American molders during the past year, said John Jones, president of Applied Market Information LLC.
Jones, based in Wyomissing, Pa., spoke May 16 at the 2002 Injection Molding Financial Symposium in Chicago. He said the number of European molders overall has declined 12 percent since 1980. Consolidation and a shift to lower-cost regions have changed the complexion of European molding, he said.
``The globalization phenomenon has had its economic effects,'' Jones said. ``And cost pressures have driven many older managers from the business.''
European molders continue to take on challenging projects for product development, Jones said. But after six months in production, some of those projects move to Asia, where the work is significantly cheaper, he said. ``Profit is more difficult to obtain by a [European molder],'' he said.
Jones' research and consulting firm conducted a study of injection molding profits from 1978-2001, sampling as many as 50 firms a year from Western Europe. The result shows a profit slide. In 1978, molders made close to 13 percent profit as a percentage of sales. In 2001, that figure was down to less than 6 percent, Jones said.
Cost pressures throughout the supply chain have shrunk those margins, he said. The impact of contract manufacturing, where molders play a smaller role, and Internet reverse auctions have hurt, he said.
While Europe faces its pricing battles, some North American molders are moving steadily to Asia for growth. Nypro Inc. of Clinton, Mass., has shifted some of its work from North America to other continents since 1990, Chief Financial Officer Ted Lapres said at the symposium.
In 1990, its North American molding operations accounted for 78 percent of sales, Lapres said. By next year, for the first time, North America will account for less than half of Nypro's sales, he said.
Nypro's manufacturing presence in China and India is generating the bulk of its growth. By next year, 27 percent of Nypro's business - more than a quarter of its molding sales - will come from those Asian countries, Lapres said. That includes a new joint venture in plastic decorative services to start later this year in Suzhou, China.
``We want to be a $2 billion company very quickly,'' Lapres said of Nypro, with sales approaching $725 million this year. ``We've followed our North American customers by spending capital in the international sphere. That is where our growth has been recently.''