North American injection molders remain a substantial market presence but have plenty of room to improve on an individual basis.
That's the basic conclusion drawn from the 2005 ``North American Plastics Industry Study,'' released in October by Plante & Moran PLLC, an accounting and consulting firm in Southfield, Mich.
The study took data from 2003 or 2004 for 162 molding firms. No company's data was used for both years, so a ``rolling average'' of the market could be created, according to P&M partner and plastics industry team leader Jeff Mengel. He spoke at the Plastics News Executive Forum, held March 5-8 in Tampa.
The report also compiled government data showing that from 2003-04, North America had more than 7,000 injection molding firms, with average annual sales of between $10 million and $12 million. By comparison, China has 40,000 injection molders, although those firms are using much smaller presses than their North American counterparts. North America's operating rate for injection molding machinery was less than 40 percent, even though an estimated 15,000 machines have been retired in the past five years.
Other conclusions from the P&M study include:
* North American resin consumption is expected to grow 3 percent annually through 2010. Globally, the annual growth rate will be 7 percent in that period.
* Margins remain compressed, but productivity is increasing. Value added per employee also is rising in North America after several years of decline.
* Sales growth does not correlate with return on sales or assets. ``You can't grow into profitability,'' Mengel said.
* Firms with fewer active molding tools have higher profit and greater savings from lean manufacturing efforts.
* Successful molding companies have more total labor in skilled positions vs. direct labor. That is true even for commercial molders, Mengel added.
* Smaller companies tend to take on more transfer work from other molders.
* Median two-year sales growth for companies in the study was 4.2 percent.
* Their median two-year pretax profit margin was 4.7 percent.
* Median annual spending on employee training was about $150 per year.
* Two-year employee turnover reported by companies in the study was 33 percent - the lowest figure cited in eight years.