Demag Plastics Group has dumped most of its U.S. manufacturers' representatives, to adopt more of a direct sales approach - in a process that began in late June when DPG announced it would stop assembling injection molding machines in Strongsville, Ohio.
In addition, several top executives have left the company in recent months. The biggest happened on Oct. 11, the last day for Brian Bishop, president of DPG's U.S. operations.
Bishop and Demag Plastics Group ``have entered into a mutually agreed separation,'' the company said in a statement about the management changes.
Bishop declined to comment.
Klaus Erkes, president and chief executive officer of Schwaig, Germany-based DPG, said a three-person team will run the Strongsville operation, which is now dedicated to sales, service and technical support. They are: Christian Renners, DPG vice president of global sales; William Thornton, VP and chief financial officer of U.S. operations; and John Martich, VP of aftermarket sales for the U.S.
``We will go direct for technologically demanding applications, but we have reps which open the door and which work for us,'' Erkes said in a telephone interview. He was in Strongsville on Oct. 11, when Bishop departed.
Renners temporarily will be responsible for all activities related to machinery sales out of the Strongsville operation. Erkes said the firm will name a sales director in Strongsville in the future.
For now, DPG has retained a handful of reps and four direct sales people in Strongsville, Erkes said. He pointed out that sales to some accounts with North American plants - like European companies - are handled out of DPG in Germany.
Several reps contacted for this story said DPG will have problems covering North America with the small staff and outside reps - plus now, no U.S. manufacturing operation. Several said it appears that DPG is scaling back to focus on its existing U.S. customers for service, parts and sales of new machines, but will not aggressively push new accounts.
But Erkes disputed that. He said Demag is winning new U.S. customers through its ``cluster'' strategy of teams focused on packaging, electrical/electronics, medical and automotive.
Of course the company wants to retain existing customers, he said. ``But the clear focus is to enlarge our customer base in the clusters.''
Erkes said: ``But we will win the right customers. Customers who have a future and are adequately the target for our products.''
In late June, when DPG's Germany-based executives announced the Strongsville assembly side was closing, they said the company would shift production of the large, Titan injection presses that had been a core Strongsville product to its plant in Ningbo, China.
But reps and several former executives said DPG's U.S. operation has not sourced any presses yet from China, or from its Chennai, India, plant.
``They've repeatedly said, as of today, there are no plans to continue building the Titan,'' said a former DPG executive.
Erkes acknowledged the company is no longer making the Titan, but he said DPG still plans to make the press in Asia.
Meanwhile, Erkes said the machinery maker will follow through on a previously announced plan to ship China-made all-electric injection presses to U.S. customers. The press will be launched in China in early 2008, and should be ready for the North American market by the end of 2008, he said.
Once the China electric press comes over, Demag Plastics Group will restock its stable of reps. ``As soon as we have the more commodity-type machine, we will use reps again,'' Erkes said.
But DPG has left a bad taste in the mouth of most of the reps contacted for this story - although they did say they were fairly paid commissions and other money owed.
Plastics News contacted five rep firms, including two that are still working with DPG.
A few of the longer-term reps were asked to remain with Demag, but most were dropped. Things are tough for an American machinery rep selling injection presses these days, since the market is about half the size it used to be in the 1990s and 2000.
When it's your business to sell machines, closing the Strongsville factory didn't help, several reps said.
``From a business standpoint it makes perfect sense for them, but it makes it real tough to sell their equipment in the U.S. market,'' said one ex-DPG rep.
Tom Tomaszek, president of D&A Associates of Blackstone, Mass., agreed. ``Obviously the manufacturing in Strongsville was a very strong selling point for us,'' he said.
Demag Plastics Group dropped D&A about three months ago. ``We were told that they decided that, in many areas of the country, they would go direct and make a distribution change,'' Tomaszek said.
He said his firm has picked up another injection press line, selling Mitsubishi machines in six New England states.
One firm retained was LaBelle Industrial Sales in El Paso, Texas. ``We were one of the few reps that they maintained, I understand,'' said David Crain, sales vice president an owner of LaBelle.
Bishop is the latest executive to leave the Strongsville operation. Dave Karpinski, DPG's former director of engineering, left in May to become vice president of technology innovation for the manufacturing and electronics sectors at the Northeast Ohio Technology Coalition in Cleveland.
Larry Alvey left DPG, where he was North American sales manager, to join competing injection press maker Engel North America as a regional sales manager for the Ohio Valley and Michigan.