Superheroes aren't the only ones with secret identities. Sometimes plastics processors have them, too.
This trend surfaced at a Benchmarking Conference hosted by Mid-America Plastic Partners Inc., an Indianapolis-based trade group. The event was held April 19 in Akron.
At the conference, officials with MAPP and with Plante & Moran PLLC - an accounting and consulting firm in Southfield, Mich. - made it clear that having a secret identity isn't always a good thing for a plastics processor.
``Each company has to decide if it wants to be a hunter or a nurturer or take some other approach,'' said Jeff Mengel, a P&M partner who heads the firm's plastics industry team.
``Companies also have to understand how many partners you can design yourself around,'' he added. ``For most companies, that number is between three and six. If it's too many, you've got no culture or defining ideas of your own. You become a me-too molder or an accidental molder.''
Mengel shared some results from his firm's 2005 North American Plastics Industry Study, which was released in October. The study took data from 2003 or 2004 for 162 molding firms. No company's data was used for both years, so that a ``rolling average'' of the market could be created.
The report 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. And although value-added work has started to increase within the industry, it's been challenged by irrational pricing from firms that Mengel described as ``companies that are almost out of business whose only goal is to stay alive for another day.''
Mengel added that big increases in resin prices have ``created significant havoc in the marketplace and affected some bankruptcies.'' In some cases, molders had their contract prices for polypropylene resin almost double from year to year.
MAPP executive director Troy Nix stressed the need for clear differentiation among molders.
``Companies that finished in the lower part of the [P&M] study showed a lack of strategy and a lack of ability to reinvent themselves,'' he said. ``Some of these companies started out with just a guy in a garage, and now that guy is running a $20 million-a-year business. You need to know what makes your company different.''
Those attending the conference said they found new ways to look at their businesses.
``Capacity utilization is something that we've struggled to understand,'' said Curtis Brown, chief financial officer of Steere Enterprises Inc., an injection molder based in Tallmadge, Ohio. ``Our customer demand can be irregular because of seasonality, so it was good to see some specific data on that topic.''
Ken Jenkins, president of Russells Point, Ohio-based World Class Plastics Inc., said he believes Mengel's contention that the industry is likely to undergo radical change in the next five years, and that North American processors better have a strategic plan in place if they intend to survive.
``What I took away is that we need to decide who we are now,'' Jenkins said. ``You can't hold on to low-margin customers. And you have to develop a strategic plan.''
Amy Jump, a strategic sourcing official with the Jones-Zylon Co. design firm in West Lafayette, Ohio, said some of the conference data will help her evaluate vendors and match up molders with customers.
David Sinkhorn left the conference impressed by data showing that plastics processors are making money regardless of size, material or end market.
``You have opportunities at all levels,'' said Sinkhorn, executive vice president of Aurora, Ohio-based Automation Plastics Corp. ``[Profitability] has to take place in process and operational efficiencies.''