Gregory Vincent, who owns industrial blow molder Partners in Plastics Inc. in Sharon Center, Ohio, delivered a sober outlook for U.S. accumulator-head molding: Processors have lost control of their markets, hammered down by high resin prices and customers moving work offshore.
Vincent spoke Oct. 12 during the Blow Molding Conference in Toledo. The Society of Plastics Engineers' Blow Molding Division sponsored the event.
For accumulator-head, custom blow molding, Vincent was not optimistic that new technology will come to the rescue. He said major innovations, such as parison programming for extrusion blow molding, are more than 40 years old. Machines today are not that different from the first accumulator-head machine in the early 1960s, he said.
Vincent said that, so far this year, machinery makers have sold just nine single-layer accumulator-head machines in the United States. In a good year the sales count used to be 60 presses or more, so it's no surprise equipment innovation has slowed, he said.
``The reason is there's no money to pay for real research,'' said Vincent, who does not see any major machinery innovations coming in the next five years.
Two of the biggest problems are resin prices and the loss of U.S. manufacturing, Vincent said. He said Wal-Mart and other big retailers have buying power: ``If you say, well I'm going to raise my prices, they say, we're sorry, we'll take it to China, we'll take it to Vietnam, we'll take it to Indonesia,'' he told fellow blow molders.
``As a molder, we have less options of who we're going to sell to,'' Vincent said.
At the same time, consolidation among resin suppliers means fewer players and less price competition, he said.
It all boils down to a profit squeeze for industrial blow molders. Vincent said high resin prices will lead to the failure of 5-10 percent of U.S. industrial blow molders in the next few years. He also thinks one or two of the four current makers of accumulator-head machines will close down or be consolidated. Equipment makers will outsource some production overseas, he said.
To survive, industrial blow molders have to take action, Vincent said. For Partners in Plastics, that means becoming an integral partner to customers by doing engineering work and in some cases direct-shipping final products to their end-customers, he said. Other goals are reducing response time, and using quick mold changes and quick color changes. The company has added a new computer system, and officials are looking at in-mold labeling and boosting the use of robots.
To reduce costs, Partners in Plastics is consolidating two plants down to one, Vincent said. The company is building a 35,000-square-foot expansion at Sharon Center to accommodate the operations of Allied Custom Plastics LLC, which will move there from its location in Twinsburg, Ohio.
Meanwhile, Vincent is making industry predictions.
``Resin prices will moderate by the end of the year, but not at pre-hurricane levels,'' he said, adding that the resin business itself will change. ``I think that nonpetroleum-based resins will become common in the next 10 years,'' he said, as high resin prices make new materials more economically feasible.
But customers will be harder to find, Vincent said: ``More manufacturing will exit the United States, leading to fewer and fewer customers.''