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April 07, 2008 02:00 AM

Engel exec: carmakers squeezing suppliers

Bill Bregar
Senior Staff Reporter
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    U.S. automakers are squeezing suppliers, which in turn hurts the ability of that important sector of the American economy to invest in new technology. This worries Engel Machinery Inc.'s Stephan Braig.

    ``With the rate of change and churn here among suppliers, it's very difficult for Tier 1, even Tier 2 suppliers to make a significant capital investment,'' said Braig, president and chief executive officer of the injection press maker's North American operations.

    A wave of auto supplier plant shutdowns, bankruptcy filings and used machinery auctions continues to hit suppliers to Detroit's Big Three carmakers. A Feb. 1 Chapter 11 filing by Plastech Engineered Products Inc. made national news when it forced Chrysler LLC to temporarily close four assembly plants.

    For Engel, the malaise hits home. Automotive is its largest market in North America.

    But Braig fears the problem is cascading through the supply base to weaken the long-term competitiveness of automotive molders.

    ``As long as that dynamic in the supply chain of the U.S. car manufacturers doesn't change, nothing is going to change from a technology development, from upgrading old and aging facilities,'' he said. ``People just are trying to get by with the minimum. And by doing that, you fall further and further behind.''

    Braig cited older equipment, lower cycle times, higher maintenance costs and volatile prices for resin and energy.

    ``It's a vicious cycle. And at some point, we need to break out of that cycle. We need to have an automotive supply chain, where, at every step, suppliers are allowed to make a reasonable profit,'' Braig said. ``Without that, it's a very short-lived cycle.''

    Braig, 47, is a new face in the fraternity of injection molding machinery executives. Engel hired him in mid-2007. Then in late January, Braig made a major announcement: Engel will end more than 30 years of press manufacturing in Canada by closing its factory in Guelph, Ontario, by the end of May.

    About 220 people work at Guelph making presses with clamping forces smaller than 500 tons, and robots.

    Engel will move some of the Guelph assembly work to its North American headquarters in York. Up until now, employees at York had built only larger machines, of 500 tons or more - following a two-plant strategy the Austrian parent, Engel Holding GmbH, has used in Europe and Asia. York now will be Engel's only assembly factory in North America.

    The Guelph closing reflects weaker demand for injection molding machines in North America. In 2007, U.S. shipments of injection presses totaled 2,862 units, sinking below the landmark 3,000-press level. That is less than half the size of the late 1990s boom years.

    Braig said a single plant in York cuts overhead and duplication, while improving the ability to ship the specialized machines with complete automation quickly.

    ``Strategically, it's the right place to be for us, in North America,'' he said.

    In recent years, Engel officials had sent mixed messages about Guelph - on the one hand, making layoffs, while, on the other, announcing plans to invest several million dollars on new machining equipment. The plan was a smaller, more-efficient plant that could turn a profit in the downsized market.

    ``The problem with that is, we still wouldn't have been at a utilization rate where we could have absorbed the overhead that really would have allowed us to manufacture in a cost-effective way,'' Braig said.

    Engel will keep a Canadian operation for sales, parts and service, plus a team that designs automation cells, at a smaller facility in the Guelph area.

    Engel will be adding about 80 employees in York, but the company can absorb the Guelph production within its existing 180,000-square-foot York factory. Braig said the company does plan an expansion of about 20,000- 30,000 square feet for more office space.

    After the move, York will be assembling Engel's smaller-tonnage machines. That includes the Speed line for packaging, the all-electric E-motion, and some larger models of the global-platform Victory. Engel will make Victory machines under 100 tons in South Korea and Austria, Braig said.

    The Schwertberg, Austria-based Engel is profitable in North America, he said.

    New Engel exec has plastics background

    Although Braig is a newcomer to injection molding machinery, the mechanical engineer has a background in flexible packaging, robots and pad-printing equipment.

    Braig, a native of Switzerland, graduated from the Federal Technical Institute in Switzerland. He worked as a design engineer for SIG, the Swiss packaging machinery group, and another company that makes extrusion equipment for specialty film.

    Braig was first exposed to injection molding in 1986, when he became engineering manager for Teca-Print AG, a Thayngen, Switzerland, manufacturer of CD printing, inspecting and packaging equipment; and pad-printing machines. Three years later, he started Teca-Print USA Corp. in Billerica, Mass., and moved to the United States.

    Braig is a U.S. citizen. He earned a certificate in marketing management from Harvard University.

    In 2002, Braig was hired as president and CEO of robot maker Automated Assemblies Corp. in Clinton, Mass. When Nypro Inc. merged Automated Assemblies into its in-house robot unit in 2006, he went to Euro Packaging LLC, the film and bag maker in Salem, N.H.

    Engel recruited him last year. Braig said he knew Engel's reputation as a solid, family-owned company. ``With all the changes going on in the plastics industry, I always looked at Engel as being a rock,'' he said. ``I was very excited to become part of this very successful organization.''

    Braig replaced Walter Jungwirth, who returned to Austria to lead Engel's global packaging business unit.

    Meanwhile, Engel continues to push its technology. The company recently hosted a two-day technical symposium, with Trexel Inc., on the MuCell microcellular molding process. Engel touts its innovations in a 55-page booklet.

    The next big event in York is set for May, when Engel will introduce the lower-priced all-electric press, the E-max, to North American customers. Engel makes the E-max in South Korea.

    Braig said Engel also will focus on a range of markets, including packaging with in-mold labeling, automotive glazing and technologies such as the Dolphin process, which molds car interior parts with a soft-touch surface bonded to a structural substrate.

    The company will open several regional technical centers this year to get closer to customers.

    Engel needs to keep its customer focus, Braig said.

    ``It's more than just the metal that we sell you. We want to be known, and we're working hard in developing these technologies to provide the solutions to our customers,'' he said.

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