Resin Technology Inc. is pretty clear on how plastics processors should handle their resin buying: Control your resin costs or they're going to control you.
``With fewer suppliers, you need more pricing discipline,'' RTi's Bill Bowie said at the Plastics News Executive Forum, held March 10-12 in Tampa, Fla. ``And the weak U.S. dollar has made the U.S. the low-cost supplier - people thought that would never happen again.''
At the forum, Bowie quizzed a panel of resin buyers that included Kathy Watson of Nailite International Inc., John Roggow of Marshall Plastic Film Inc. and Eric Hausserman of Rowmark LLC.
Watson is product manager and vice president of supply-chain management with Miami-based Nailite. Nailite injection molds high-end siding systems from polypropylene. The firm was paying ``a ridiculous amount'' for its material, Watson said.
``We just placed an order and paid the bill,'' she said of Nailite's previous resin-buying methods. ``It took two years to convince our organization that we really had to look at resin. It's not a short-term project. It's a long-term project that we live with every day.''
At Marshall Plastic Film, a maker of polyethylene blown film and bags in Martin, Mich., resin is the firm's biggest challenge, said Roggow, a 30-year industry veteran who has been Marshall's president since 2000.
``We're a made-to-order shop and we work without contracts,'' Roggow said. ``A customer may want to buy a truckload or 250 pounds. Resin is 60-70 percent of our total cost,'' he added. ``How we buy, inventory and use resin determines if we're successful in any given month.
``Knowing what the market is doing on a daily basis is absolutely critical to me. Knowing not to spend a day beating up a guy for a penny or penny and a half when it's not there allows me to go on to other things.''
For Rowmark, a thin-gauge sheet extruder that makes decorative products, signage and awards in Findlay, Ohio, resin became a much bigger deal four years ago, when the firm began doing custom work. That move increased the number of resins used by the firm from two to 30, according to Hausserman, Rowmark's vice president of manufacturing and technology.
``Resin affects every person in our company,'' Hausserman said. ``It affects our production schedule and transportation and quality. If we don't make the right choice, we lose business.''
Rowmark ``makes sure everyone is involved in resin buying,'' he added. ``We meet every Monday morning after our production meeting, and all departments are represented. We have to know where the [resin] market is because we may have to react midstream.''
Complexity and volume also are issues at Nailite. The firm buys three different types of resin across seven product models. The remoteness of Miami as a manufacturing location also presents a challenge.
``Part of resin buying is opening doors as wide as you can to take advantage of every opportunity,'' Watson said. ``Right now, we've got three or four projects where we're looking at changing formulations. Instead of just pounding on a purchasing agent to get a better price, we're looking at other ways to take advantage of the market. We've even installed new nozzles on our equipment to reduce scrap.
``We didn't have [resin] supplier competition and we were leaving money on table. You need to keep competition out there.''
Bringing in different elements of a firm to look at resin buying prevents one view from taking over.
``Our [vice president] of operations has been here since we opened in '72, but if it was up to him, we'd have twice as much resin as we need so we wouldn't run out,'' Marshall's Roggow said. ``But then our [chief financial officer] would say he couldn't have all that resin hanging around and driving up our inventory costs.''
Roggow credited the secondary resin market, where unbranded resin is sold by brokers and distributors, for helping his company survive.
``If not for the secondary market, we probably wouldn't exist today,'' he said. ``With consolidation in the resin markets, resin makers said they weren't going to sell direct to us. They told us to talk to a broker.''
Marshall saved by buying an unfilled version of one material - and supplying its own additives - when the material saw a 50 percent price hike after Hurricane Katrina.
Flexibility in resin buying also helped Rowmark deal with Dow Chemical Co.'s sudden exit from nonautomotive ABS markets earlier this year.
``When Dow exited the market, we had another supplier qualified,'' he said. ``We were shocked, but could place orders with the other supplier. That's a real-world example of how having other sources and other options has given us a competitive advantage.''
Bowie - chief operating officer of RTi, a Fort Worth, Texas-based consulting firm - encourages processors to see themselves ``as being in the resin business.''
``The swing between the low end of a price range and the high end can be huge,'' said Bowie, whose firm represents more than 6 billion pounds in materials purchases for about 100 clients. ``And with resin being on average 65 percent of cost economics, it's the most important thing you can spend your money on.''