NASHVILLE, TENN. (April 20, 10 a.m. EDT) — After seeing much of its core business migrate offshore, 83-year-old Mack Molding Co. is re-engineering itself to compete in markets it believes have long-term viability for North American processors.
The strategy concedes that a lot of the high-volume computer and business-equipment work for which Mack is best known has been lost for good to China and elsewhere. Instead, the privately held, Arlington, Vt.-based company is developing new skills and applying its expertise to sectors that have higher barriers of entry. Those include the molding of precision medical products, style-conscious office furniture and very large parts such as truck components.
Two of the firm's divisional presidents elaborated on Mack's plans in recent interviews in Nashville at the Society of the Plastics Industry Inc.'s Structural Plastics Division conference. Mack entered 13 parts in the event's product-design contest and took home four awards. A Volvo truck bumper, a trendy suite of modular Knoll office furniture, and a Yamaha golf-cart canopy featuring gas-assist molded-in handle grips each won their categories, while the furniture components also tied for the "People´s Choice" award.
Raymond Burns, president of Mack's two-plant, 310-employee Southern Division, said the firm sees opportunities in larger molded parts, such as those made on the 2,500- and 3,000-ton Engel injection presses that Mack South runs at its 24-press Inman, S.C., plant. That is where the company is consolidating its large-part production. To that end, Burns said Mack plans to move out by year's end the nine molding machines at Inman that have clamping forces of less than 700 tons. Most likely, three of the newer presses will be shifted to Mack South's other location, at Statesville, N.C., and the balance either will be retired or sold. Statesville's press sizes will range from 150-1,000 tons.
The Inman facility currently has a footprint to accommodate two more large machines of anywhere from 2,500-4,400 tons. Its two largest presses there now are running flat out, according to Burns. He and his team are assessing capacity needs now to determine if the firm should purchase a third such press before June 30, the end of Mack's fiscal year. If they decide to make the investment, it will take another six months to acquire and install the huge machine.
Mack took its first steps in the redirection in late 2000, with the announcement of plans to invest $9 million during the next three years to expand large-part molding capabilities at Inman. Early in 2001 the firm completed a 20,000-square-foot addition to the facility, giving it 250,000 square feet under one roof. Burns said Mack twice has “refreshed” the plans first formulated more than two years ago. He now admits the original three-year time line for completing that overall capital expansion “might be a bit optimistic,” but said the company remains firmly committed to the course.
“We saw migration of business to Mexico and China,” he said, so Mack management “assessed … what we did best, created a laundry list of initiatives, and filtered those down to a handful.” Key to the strategy was the large-press focus in Inman; so was expanding the gas-assisted molding and finishing and painting capabilities at both Carolina plants.
“We had customers with programs that we couldn't handle because we didn't have the larger presses,” especially in the truck and agricultural equipment sectors. Burns noted that advancements in raw materials and process technologies such as gas assist have spurred conversion of some large parts to injection molding of polycarbonate/ABS blends and thermoplastic polyolefins from sheet molding compound and reaction injection molded polyurethane. Those changes have helped to satisfy customers' weight-reduction needs and to justify related tooling investments.
“It became obvious to us that everything that had relatively high volume and were smaller parts, were gone [to lower-cost competitors overseas]. The large-parts business is regional.” Still, he noted, “We're always going to be in the small-parts business, since small parts accompany the large parts we do.”
That includes a lot of assemblies. But the small parts that Mack South makes focus on low- to medium-volume jobs — the type where he said “it doesn't make sense to go to China.”
Similar thinking is reshaping Mack's operations in New England. Jeff Somple, a 14-year company veteran who in August was promoted from vice president of sales and engineering to president of Mack's Northern Division, notes that the firm “has completely turned around our customer base.” Not too long ago, Mack's three biggest customers were Sun Microsystems, Hewlett-Packard Co. and Xerox Corp. — computer and business-equipment makers for which it did vast amounts of high-volume contract manufacturing and assembly.
Tapping U.S. markets
Somple said Mack decided to dive into markets offering advantages to domestic molders and steeper barriers to entry. The move included serving customers such as those in the office furniture business that have a tendency, due to ever-shifting market preferences, to make late design changes while needing speed to market. To that end, Mack has installed an automated paint line to serve furniture customers such as Knoll Inc., and the molder continues to bolster its in-house design capabilities through subsidiaries Mack Design and Mack Prototype.
It also is targeting markets “where quality and delivery trumps price,” such as certain medical products, where Mack's overmolding and in-mold decorating services also come in handy. In 1999, Somple said, Mack had one medical customer; today it has nine. Many of these original equipment manufacturers are based in the Northeast, he said.
Mack has completed a rigorous, two-year process to get certified by the Food and Drug Administration to allow it to do turnkey molding and assembly of critical medical products such as the Uvar XTS blood-testing system for Johnson & Johnson's Therakos unit.
As a financially healthy firm with a D&B Corp. credit rating of 5A1, Mack, unlike many of its competitors, “can afford … to make an investment and wait a couple of years for a return,” Somple said.
He pulls no punches when assessing the future of U.S. manufacturing.
“Nobody wants to talk about it,” Somple said. “American manufacturing will shrink. The industry will be smaller, with fewer players.” He pointed out that he was critical at the time of the “merger mania” that led many U.S. plastics companies to acquire assets feverishly, simply to gain critical mass. He pointed to firms such as Moll Industries Inc., Morton Custom Plastics and the merger of Trend Technologies Inc. and Cowden Metal Specialties Inc. as cases in point. “That trend won't continue,” Somple predicted.
“Mack never chased the Texas triangle,” he said, referring to the cutthroat business in Texas from personal-computer makers Dell, Compaq and Hewlett-Packard that he said “put so many molders out of business. We never got involved in PCs or cell phones.” Mack limited its involvement in the computer sector primarily to large servers and the like.
“We'd be out of business if we had followed all of our customers all over the world, where they said we had to be.” In 1999, he said, “We were on the verge of signing a lease in northern California to serve Silicon Valley. But we got nervous and didn't go ahead. Thank God!”
That's not to say Mack won't continue to assess opportunities abroad.
“You don't ever want to say never,” Somple said, “but we have no plans to go to China. We want to develop space for ourselves, to serve North American suppliers.” He also does not rule out heading south eventually.
“We might end up in Mexico some day, as a low-cost alternative.” He added that the West Coast “could again become viable” for his firm, but the focus now is on developing sectors where Mack feels its full-service capabilities offer a competitive advantage.
The strategy is paying dividends. In the past year, Somple said, Mack has taken in 300 new and transferred injection tools. More work appears to be on the way.
“The last two months have been the busiest in the last 15 years for us,” he said. That's welcome news for a slimmed-down, 950-employee firm that saw corporate sales for its fiscal year ended June 30 drop nearly a third, to $255 million, from the previous year. “For me,” said the Mack North president, “this has been a rebirth. It's fun, from the manufacturing and design points of view.”