Business is booming at Los Angeles-area-based Universal Plastic Mold Inc., a small, family-run custom molder operating in one of the country's least business-friendly states. And its response may be symptomatic of today's so-called ``jobless'' economic recovery.
Spurred by the recent securing of a pair of major, long-term contracts, the Baldwin Park, Calif., injection molder is embarking on the biggest expansion in its 41-year history. The firm is investing $4 million - or roughly a quarter of its annual sales - to add seven new injection presses, including five Husky machines that have 800 tons or more of clamping force, and two smaller, all-electric Milacrons.
The investment also includes various robotics and other equipment necessary to run each press as its own, automated production cell. As a result, the 170-employee UPM expects to hire fewer than 10 shop-floor workers to handle the new business, according to President Steve Dowling.
The contract driving the biggest chunk of new business is for a European customer - Schoeller Wavin Systems NV of Hardenberg, the Netherlands.
UPM will mold collapsible polypropylene shipping crates for SWS that measure about 24 by 16 inches and are to be used by a major U.S. retailer, according to Rene Wolfkamp, chief executive officer of the Dutch firm. He said Schoeller Wavin is providing seven molds, technical know-how and automation equipment, including assembly robots.
UPM will use the five new Huskys - three 800-ton and two 1,100-ton Hylectric-brand hybrid injection molding machines - along with one existing, 1,100-ton Husky and an existing 1,100-ton, two-platen Milacron Maxima press, in seven separate manufacturing cells to churn out the crates. Husky also is providing six parts-removal robots, Dowling noted.
The new Husky presses are not due to be delivered until sometime between April and June, but Dowling said UPM took delivery Nov. 12 of the first SWS mold, and planned to begin running mold trials the week of Nov. 17. The second mold is to arrive in mid-December, with the balance timed to arrive with the new presses in the second quarter of 2004.
In an interview at the recent SPI Western Region conference in Coronado, Dowling said UPM will squeeze the new equipment into its 25-year-old, 100,000-square-foot headquarters site, which sits on 71/2 acres. It will be tight, but the only structural changes to the facility will involve adding some covered outside storage space.
He explained that today's challenging business dynamics are prompting UPM to seek long-term production arrangements with customers. The demand for full automation, lean manufacturing and just-in-time deliveries requires investment that simply can't be justified for piecemeal business.
``I need an agreed business level,'' he said. And that is just what he got in his last two deals. Schoeller Wavin has signed a production deal with UPM for a minimum of five years, and Wolfkamp hopes it works out to be longer than that.
The two firms began working together in April, when UPM took over some work from a Los Angeles molder that quit the business. Dowling said the parties worked very well together, so UPM bid on a long-term contract and won it. Having a long-term contract in hand also made it much easier to secure financing to buy the capital equipment.
``This will fundamentally change the way we do business,'' Dowling said of the arrangement. ``Though we are custom molders, we're treating this like it's our product.''
UPM has had other long-term customer contracts, he said, but ``we've never bought presses for a single product before.''
Schoeller Wavin, which specializes in making plastics systems for logistics and materials handling, also makes preforms and caps for the beverage industry as well as some automotive products.
The company employs about 800, said Wolfkamp, speaking in a Nov. 13 telephone interview from a trade show in Nuremburg, Germany.
This type of long-term production arrangement is a first for SWS, but Wolfkamp appears very comfortable with it. He described UPM as a ``a very motivated team'' populated with ``good entrepreneurs.''
UPM's other recent business win was driven by the firm's current focus on securing a rigorous quality certification. The molder, which already is ISO 9002-certified, also is pursuing ISO/TS 16949 certification, a technical specification that aligns many existing global automotive quality requirements. UPM expects to receive its first TS audit Nov. 17, and hopes to gain certification by next March.
Dowling said the fact that UPM is pursuing this helped it to secure a three-year contract to mold tight-tolerance parts for a new customer that he declined to identify. For that program, UPM will use the two all-electric, 330-ton Roboshot presses. Milacron delivered one machine a few weeks ago, and is due to deliver the other in January.
The new purchases will boost UPM's total number of presses to 32, including 18 with clamp tonnages between 700 and 2,000 tons.
``Five-hundred-ton presses and up is our niche,'' noted Dowling, explaining that focusing on making very large parts that are expensive to ship has helped protect the company against Chinese competition.
Meantime, UPM is employing other strategies to maintain a competitive edge. It aggressively has adopted newer molding technologies, including coinjection and gas-assisted molding, while offering insert molding and structural foam processes as well. The shop also offers distribution, project management, mold making, tool design and maintenance, hot stamping, sonic welding, bonding and custom packaging.
Steve Dowling's father, Ray, and two partners founded the company in 1962 with one machine in a garage.
After launching some proprietary product lines in the late 1970s, UPM sold those businesses to concentrate on custom molding, eventually focusing on large parts.
Today the firm's one plant processes more than 25 million pounds per year of engineering and commodity resins to make parts for markets ranging from medical and electronics to containers/closures and lawn and garden.
Despite the current economic malaise, Steve Dowling claims UPM has received more high-quality requests for quotations in the past nine months than he can ever recall.
``There has never been anything even close to this level,'' he said.