Here in sunny Arizona - and at plants around the world - Tech Group Inc. churns out large-volume, highly engineered medical parts used to test blood and do cardiac surgery, and consumer products such as inkjet printer cartridges, smart cards and two-shot ink pens.
Those things get used up, then replaced, which has helped Tech weather the storm now slamming so many custom injection molders in the United States.
``The vast majority of what you see when you go through one of our facilities is that high-volume, disposable-type market,'' said Mike Treadaway, vice president of operations for the Americas.
The firm also enjoys low debt, after owners Steve Uhlmann and Hal Tashman scotched a plan, hatched in the late 1990s, to grow rapidly by expansion and add proprietary products.
Since then, Tech has returned to its roots as a closely held custom molder.
``We're conservative-natured people,'' Tashman said in a December interview at Tech's Scottsdale headquarters.
Still, Tech Group lives up to its name, employing leading-edge technology that makes many of those demanding parts in clean rooms using multicavity molds with fully automated production and testing.
Uhlmann and Tashman share a vision that goes beyond a single year. The company invested $10.7 million in 2002 - about 9 percent of its $120 million in sales. Among their recent investments is a $10 million, cutting-edge project called Super-Cell that will make molds at fully automated duplicate plants in Scottsdale and Singapore beginning in 2004. Tech also has spent about $7 million to set up an 80-employee plant in Tempe, Ariz., that, when production begins, will mold and assemble an inhaler that will allow diabetics to inhale, rather than inject, their daily doses of insulin.
But technology isn't the only reason Plastics News named Tech as a co-winner of the 2002 Processor of the Year Award. Tech also scored high marks in the categories of employee relations and quality performance, thanks to industry-leading Six Sigma training and other programs, such as a goal-oriented bonus given to employees four times a year. Tech also is active in public service, setting up a $500,000 foundation and supporting the National Plastics Center and Museum.
Customers praised Tech Group when the award judges called seeking comments. They described a fleet-footed, flexible supplier and praised Tech's commitment to quality. Tech has won supplier awards from some of the biggest names in its markets: Medtronic Inc. for cardiac surgery components, Wesley Jessen Corp. for plastic molds to make disposable contact lenses, and Hewlett-Packard Co. for printer cartridges.
Embracing Six Sigma
``Six Sigma brought Tech Group to world-class status. ... They are faultless,'' said one customer.
Six Sigma. The management philosophy shows how to collect and analyze information to correct problems, with a goal of 3.4 defects per million. Much has been said about the process, but mostly at big resin companies, not at custom molders.
Tech Group is different. Since it began in 2001, the company's Six Sigma program has turned out 10 certified black belts and 16 green belts. Another 15 green belts are in training now, with 15 more set to begin next month. This year Tech expects to have its first master black belt, a designation that allows a worker to train other black- and green-belt candidates.
So far the company has invested about $800,000 in Six Sigma. Treadaway said the payback in 2002 was $1.4 million in savings and a 55 percent scrap reduction. Production charts show steadily falling scrap rates since the program started.
Mike Kobashi held up his own Six Sigma project, a 3-inch-thick report, as he stood in his office at Tech's Tempe plant that makes blood-testing and diagnostic products. Kobashi's title explains why he loves Six Sigma: director of process excellence. But he said the program is reaching all levels of the company.
``It's the entire enterprise. We have our financial analyst going through black-belt training. Our human resource manager here for this plant is going through green-belt training, as are some of the warehouse people,'' he said.
A tour of the Tempe plant shows there is little room for error. The factory molds millions of two-piece plastic tips used to test donated blood. The barrel part is molded on hydraulic Netstal presses, while all-electric Netstals mold the plunger. The plungers automatically are inserted into the barrels, and then they move to a custom-made machine that performs several tests before they are packaged at an operator station.
Another press does two-shot molding of easy-grip Sanford pen barrels.
In another part of the plant, medical parts for intravenous bags and glucose blood testers for diabetic patients are molded in a class 100,000 clean room on Netstal, Van Dorn and Milacron presses. Several presses are tented off, creating portable, class 25,000 spaces. The blood-testing devices, molded on a 300-ton Van Dorn HT, are removed by a Yushin robot and placed on a conveyor, where they move to a six-axis Motoman robot that moves the parts to a packaging area where they are sealed inside stretch film.
Across the street at another Tempe plant, a dedicated operation with 20 Milacron all-electric Roboshots makes only two-piece plastic molds, which are used to fashion disposable contacts. Steve Aldrich, manufacturing cell manager, describes the project that earned his black belt last April. He led a team of six employees that shaved one second off the cycle time on the multicavity molds - netting savings of $340,000 a year.
Talk about quality: Last year the plant made tens of millions of the tight-tolerance contact lens molds without a single returned part.
The Six Sigma way of thinking has helped plant workers embrace another Tech goal: measuring the mold cavity pressure at all Tech facilities. Determining cavity pressure while parts are being molded can help an injection press correct itself, and can tell if a part will be bad even before the mold opens.
Under Six Sigma, employees make decisions based on data. Black- and green-belt holders ``crave, they need data,'' Treadaway said. ``The first thing they do is go out on the floor and say, `We've got data on the molding machine, but we don't have data about what's going on inside the mold. We need to put on cavity-pressure transducers. We can't do our job without this tool.'
``[Six Sigma] is creating a culture. It's creating an environment where people say, `I need data to make a decision. I need to exhaust all resources,' '' Treadaway said.
Tech leaders point to another benefit of transducers. By recording the optimal pressure curve to mold good parts in Scottsdale, starting new projects around the world takes just a few hours, instead of days.
``It's a lot easier to match the curve on the press by adjusting temperatures and pressures than it is to try and match the [part] dimensions after the fact,'' Treadaway said.
Leading Tech Group's ambitious plans for cavity pressure is a 21-year company veteran, Bill Cowart, based out of the firm's customer/engineering center at Tech headquarters. Tech uses pressure-monitoring equipment from RJG Inc. Four employees from the center have journeyed to RJG in Traverse City, Mich., to gain Master Molder One status. Cowart is a Master Molder Two, and he's getting ready to try for the third level.
That type of talent is concentrated at the center, which used to be a full-scale molding plant but evolved during the past decade, as molding work moved to Tech's overseas plants. Now, the customer engineering center is dedicated to staging machines and automation for specific jobs and doing test runs before the equipment is disassembled and the job gets shipped out.
Tech Group is patenting its radical, automated mold-manufacturing operation, even though director Len Graham now is saying the Super-Cell won't become commercial until 2004. Super-Cell Scottsdale originally was slated to open this year, but the recession has held it up, Graham said.
The Super-Cell way
Tech Group, which sold its 50 percent share in Tempe-based Tech Mold Inc. four years ago, uses the Super-Cell facility as its mold shop.
A second Super-Cell operation is being set up at Omni Mold Ltd. in Singapore to mirror the Scottsdale facility. Tech is the largest shareholder in publicly traded Omni Mold.
Despite the delays, Super-Cell is creating a buzz in U.S. mold-making circles. When it finally gets launched, after six years of development, Super-Cell will run automatically, day and night, with little direct labor. A central robot will run on an electronic track down a middle aisle, between two rows of metalworking machines. Each mold insert will be loaded onto a pallet with an embedded computer chip containing details about the part and the order of machining steps needed, be it a grinder, wire electric discharge machine or turning machine.
The central robot will pull mold inserts from inventory and take them to the proper machine, where carousel loaders will hold several hours' worth of production. When one operation is done, the central robot will take the part to the next machine for the next step.
Electrodes are cut on the same automated machines. Bill Gerard, vice president of engineering for the Americas, said other high-level mold shops also have the carousel loaders, but have trouble running lights-out since the machines can fly through their work in a few hours.
``Then you have to wait till the next morning for someone else to load up the electrodes. ... The Super-Cell will keep going all night,'' he said.
Graham, a master mold maker with 36 years on the job, was general manager at Tech Mold. He said he jumped at the chance to run Super-Cell, as a way to redefine how molds are made. U.S. mold makers are struggling right now.
``We have to redefine it. Remove the most expensive thing there is, or minimize it, and that's labor,'' he said. Labor can account for 50 percent of the cost of making a mold, he said.
``We are not going to have mold makers with that much talent make less than $20-$30 an hour. It's not going to happen. So what you need is to figure out how to make those guys produce more in a 24-hour day, when they're not there being paid. And it just makes perfect sense to me that it should be robotic,'' Graham said as he walked through the plant amid the whir of metal-cutting.
While Super-Cell and Six Sigma are leading-edge, Tech Group's beginnings were more modest. Uhlmann worked as an apprentice mold maker while going to college. He dropped out his junior year and, with a partner, started a mold shop in 1967. They soon got into blow molding, then switched to injection molding.
Tech's first customer, Hewlett-Packard, remains a major customer today. Tech also got into medical molding early on, serving companies in the West. Uhlmann said there weren't many big molders in Phoenix, except for a Pixley Richards plant.
Tashman joined as Tech's controller in 1972. A native of Turkey, he earned a master's degree in business administration from Columbia University as a Fulbright scholar majoring in corporate finance. He worked a few years as a Wall Street accountant before joining the fledgling plastics firm.
Tech continued to grow. In the early 1980s the company decided to diversify into packaging, creating Top Seal Corp. to injection mold closures and Star Container Co. to blow mold stock PET bottles. The move was seen as a hedge against custom molding's volatile profit swings.
Tech Group made its first global move in 1990, opening a plant in Cidra, Puerto Rico, to serve Baxter Healthcare. ``It broke the distance barrier,'' Tashman said. ``That was an important leap, that broke a psychological barrier.'' After that, the company added a new international operation every few years, always in response to customer requests.
In addition to locations in Arizona and Michigan, Tech today runs 12 plants in Puerto Rico, China, Singapore, the Philippines, Ireland and England. The company employs about 2,000 and runs 325 injection molding machines worldwide.
The firm initiated another big move in 1997 - to bulk up quickly through acquisition, then go public - but that effort was not successful. Uhlmann said he and Tashman, with input from the company's advisory board, decided on that approach as a long-term exit strategy. Both men are in their late 50s, and neither has children involved in the business.
They put a new man in charge as president and chief executive officer, Charles Stroupe, who had a medical company background. Uhlmann withdrew from day-to-day control.
Tech embarked on an expansion path, buying American Precision Plastics and Vollrath Group, makers of proprietary medical products such as bedpans, wash basins and petri dishes.
But a few years into it, the owners reversed course. Tech was much bigger as sales topped $180 million in 2000. That year the packaging and proprietary products units contributed more than half of sales, but less than 20 percent of profit.
Uhlmann and Tashman were uncomfortable with the growth-by-acquisition strategy, and growing debt. Uhlmann said some long-time customers worried that Tech would start ignoring their special needs.
So in mid-2000, Tech announced that Uhlmann had returned to hands-on ownership and put Stroupe in charge of the proprietary medical business. Stroupe and other managers later acquired the proprietary business from Tech and named it Medegen Holdings LLC. Tech sold the stock packaging operations.
The move looks good in hindsight, given the sharp downturn in U.S. manufacturing.
``Our balance sheet's pretty fit right now because of decisions they made a couple of years ago,'' Treadaway said. ``If you're going to have cash in the bank and no debt, now's the time to have it.''
And Tech has picked up two operations since then, buying a Medtronic Inc. molding plant in Grand Rapids, Mich., and a majority stake of Detail Plastics Ltd. of Padiham, England.
So what's the exit strategy for Uhlmann and Tashman now? Uhlmann made one thing clear: When Tech Group does change hands, the new owners should be from the plastics industry, or even from within the company itself.
``Our industry requires a certain love for it, a certain experience level. So what we're clear about is, we know our transition has to come from within,'' he said. ``One thing Hal and I believe is that the transition of the company is more important than the dollars involved.''