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March 30, 2009 02:00 AM

Cracking new markets breathes life into firms

Bill Bregar
Senior Staff Reporter
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    Cracking into a new market takes time, effort and focus, according to consultant Brian Jones and Brenan Riehl, president and chief executive officer of GW Plastics Inc.

    The tough economy has prompted many processors to look for new direction — often in the more recession-resistant markets of medical and packaging.

    “It's a time of turbulence in the plastics industry,” Jones said. But he added: “If you do things right, this is a great industry to make money.”

    Riehl said the $6 billion U.S. medical plastics market offers “a big, big opportunity,” but is difficult to enter.

    Jones, the former top executive at Nypro Inc., joined Riehl to talk about breaking into new markets in a March 3 presentations during Plastics News' Executive Forum in Summerlin.

    Jones, who left Nypro three years ago, outlined his former firm's move into packaging. Jones was named president of Nypro North America in 1999, then became president and CEO. Now a consultant and investor, he lives in Las Vegas.

    Clinton, Mass.-based Nypro had 16 U.S. factories. “When I took over the U.S. operations, 13 of the 16 were losing money,” Jones said. New packaging jobs were a key to turning it around.

    “We created a new $100 million consumer packaging plastics company in less than three years,” he said.

    Contacted after the Executive Forum, current Nypro spokesman Al Cotton said the U.S. plants were underutilized during that time because the company's consumer electronics molding work followed customers that moved manufacturing to China.

    Jones said Nypro officials created an overview of packaging, including a detailed profile of market leaders in each category. Nypro was a major player in the medical products field, and they had to convince a skeptical board of directors to add packaging, Jones said.

    There was no sense directly taking on powerhouse packaging companies like Berry Plastics Corp. and Seaquist Closures. But Jones noted packaging is a huge market with lots of subsegments.

    Nypro visited packaging customers to gauge their unmet needs. Consumer convenience is a market driver, he said.

    “The world is full of people with unmet needs. Las Vegas proves that. This is a city build on unmet needs,” Jones said, drawing laughs.

    Members of Nypro's packaging team visited CVS drug stores to pick up samples of plastic packaging. Nypro engineers came up with ideas and developed models to improve the packages — all proactively — and then showed them to customers.

    “Go have a dialogue with the customer,” he said. “They don't need another molder, they need new ideas. They need innovation. You come in there with a better product and you give them a working sample, you will get their attention.”

    Jones showed examples of high-volume packaging products — a scoop for laundry detergent, a tub to hold wipes — that he said generated more sales, per injection press, than medical parts, and at a profit.

    Change is hard, Jones said. “You're talking about changing every single person in the company's viewpoint, their attitude and their job. That's a really big change.”

    GW Plastics, based in Bethel, Vt., has flipped its core business from the automotive sector to health-care products. Today, Riehl said, medical accounts for 75 percent of sales, compared with 20 percent from automotive components for safety applications such as seat belts and air-bag systems.

    Medical is highly regulated by the Food and Drug Administration. Riehl called health care a “long-term play” that requires dedication and a major investment in technology and people skills. And it takes patience, since the average new-product introduction cycle runs for two to five years, and the product can end up getting dropped, according to Riehl.

    “This market is not for the faint of heart. The medical market is very risk-averse and there's a big reluctance to doing business with a company that is not already in the business,” Riehl said.

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