In spite of profit pressures, compounder Michael Day Enterprises plans to increase its capacity almost 50 percent by the end of 2007.
Michael Day, the firm's founder and chief executive officer, said MDE will make mechanical improvements to extrusion lines, rather than purchase new equipment. For example, a larger gearbox will increase productivity on a twin-screw line later this year.
``There are more economical ways of doing things that allow you to almost double your throughput,'' Day said in a March 11 interview at his firm's headquarters in Wadsworth. ``We've also done a lot internally in areas like bulk blending. There are steps where you can take labor out of the equation.''
MDE currently has annual capacity of about 40 million pounds on eight extrusion lines. More than 60 percent of compounds made by the 135-employee firm are based on nylon, with the remainder based on polycarbonate, PC/ABS, acetal and other engineering resins.
The firm rang up sales of $42 million in 2003, with roughly half of that total coming from the automotive market. Day said sales are expected to hit the $50 million mark in 2004.
New automotive work at MDE includes nylon-based under-the-hood projects with General Motors Corp. and PC/ABS-based instrument-panel projects, also with GM. Day declined to offer further details. The company has more than 100 automotive approvals for its materials from GM, Ford Motor Co. and DaimlerChrysler AG.
But Day is quick to point out that the automotive market is ``a double-edged sword,'' one that works when a firm has true partners to work with, but one that can be difficult because of ``the bullying tactics of some of the larger Tier 1 molders and domestic [original equipment manufacturers].''
As a result, MDE is continuing to develop other parts of its business in areas such as materials handling, construction and furniture.
An inability to pass on price increases for the resins and additives that it uses hampered MDE in 2003, which Day referred to as ``the toughest year in [MDE's] 23-year history.'' Although MDE's raw materials costs have climbed 10-15 percent in the past 18 months, the firm has run into ``the absolute refusal of the domestic automotive OEMs to accept a price increase, no matter how justified it might be,'' Day said.
Although MDE has not lost significant business to lower-priced Asian competition, Day said competitors from that region eventually could affect its customers.
For 2004, MDE will increase capacity 15 percent. Day estimates the firm has invested at least $1 million in capital improvements each year since 2000. He listed blow molding grades of nylon compounds as one of his firm's success stories in 2003.
Day worked for Celanese Corp. and A. Schulman Inc. before launching MDE in nearby Fairlawn, Ohio, in 1981. He moved the firm to Wadsworth in 1987.