During periods of turmoil in business - like today - forward-thinking plastics companies can grow quickly, said former Nypro Inc. President Brian Jones. But first, they need to break out of the ``plastic molder'' mentality.
``You can't think just like plastics people, plastics processors, and win. You can't. No matter how good you are,'' Jones said in a Sept. 13 address to kick off Plastics News' Survival Boot Camp in Rosemont.
The key to success for U.S. plastics manufacturing these days, Jones said, is to fit into your customers' supply chain and offer a full-service solution.
``There's unlimited growth without ever going overseas,'' Jones said, pointing out that the U.S. is home to the world's biggest consumer market.
``If you see it as an opportunity whenever there's a disruption and change going on in a global market, or a particular market like the plastics industry, there's a huge opportunity. But it isn't just molding as usual,'' he said.
Jones left Nypro, the renowned custom molder based in Clinton, Mass., in early 2006. He now runs his own management consulting firm, Coral Equity Partners, and is chairman of Marietta Corp., a contract manufacturer and packer of personal-care products in Cortland, N.Y.
Jones started at Nypro in 1987, and he was promoted through a series of executive posts until becoming president of Nypro North America in 1999. He became Nypro president in 2002.
The years 2000 through 2005 were a difficult time for the U.S. plastics industry. Dot-com stocks crashed, then the economy suffered, and work moved offshore. But Nypro exploded, to corporate sales of $1.1 billion in 2005.
Nypro was largely a U.S.-centric company in 2000, with 80 percent of its sales coming from plants in North America, Jones said. A few years before that, Nypro leaders had crafted a list of 10 major forces reshaping the plastics industry. Two big ones: offshore competition and the aggressive outsourcing that was creating electronics giant Flextronics International Ltd. and other huge contract manufacturers.
Nypro aggressively expanded into China. ``But kind of hidden in that was a lot of growth in the United States,'' he told people at the Boot Camp, which focused on keeping U.S. manufacturing healthy despite the global onslaught. ``We decided that if we did not respond ... within five years the company would be bankrupt,'' Jones said.
And that did end up happening for many plastics companies, as some major molders shut down or showed huge declines.
``It wasn't that they were bad companies, or run by bad people. It's a change in the marketplace that you must respond to with a different strategy,'' he said.
Today, customers expect their plastics suppliers to have good technology, Six Sigma and high-quality tools. You have to do more, Jones said. ``A plastic part, by itself, is the loneliest thing in the world. Because nobody wants it anymore,'' he said.
Corporations are studying their supply chains, and finding parts moving huge distances, sometimes around the world. Shorter product life cycles also make a far-flung supply chain unwieldy.
``The parts are on this journey of waste and cost. If you're able to take that waste out, you can command a higher margin,'' he said.
He gave an example from Nypro, which did the design work for a new plug-in room air freshener. The customer then asked if Nypro wanted the molding, but, Jones said the company said no because it was a fairly simple job that many molders could handle. Instead, Nypro offered to do it all - mold, assemble, fill, package and ship to retailers - and the customer accepted.
``If we got the molding, it was about $3 million of molding at less than 10 percent margin. If we got the entire, supply-chain solution, it was $25 million in business a year, at significantly more than 10 points. It turns out that the value is simplifying the complexity in an integrated supply chain,'' Jones said.
In a world full of talented molders, the value is not in the molding, he said.