ACS Group officials said decisions made over the past eight years to invest in international sourcing and expand into new markets have strengthened the auxiliary equipment company to face plummeting North American demand.
It's been a very, very difficult market, said Thomas Breslin, president and CEO, at a May 5 news conference at the company's factory in New Berlin, a suburb of Milwaukee.
Breslin presented statistics from the Society of the Plastics Industry Inc. in Washington. The data shows a 40 percent decline in sales in four main categories of auxiliary equipment chillers, materials-handling, granulators and robots from 2000, when the machinery downturn started, through 2008. When adjusted for inflation, the decline is 58 percent, he said.
Last year, sales of those types of auxiliaries fell 14 percent from 2007 levels, and the economic weakness has continued in 2009.
We don't believe manufacturing is leaving the United States. We think that high-quality, strong companies will stay and will be able to compete worldwide in the marketplace. And that's what we're focused on, Breslin said.
Most observers say the U.S. plastics machinery market collapsed in the second half of 2000, shortly after the NPE trade show that year. Machinery still has not recovered, and now is getting slammed by the worldwide economic slowdown.
ACS announced in March it was pulling out of the NPE2009 trade show, joining several other equipment suppliers. Some others have since returned to the show, but Breslin said ACS just didn't see the payback on exhibiting at NPE this time.
Instead, he said ACS will invest in new products, including three that were unveiled at the news conference. Breslin also said ACS equipment will be on display as part of the booths of seven other companies at the show.
Breslin and other ACS leaders painted a picture of ACS as a stable company with a long-term strategy. ACS has been owned since 1995 by Harbour Group, a $1.2 billion St. Louis industrial holding company. We have a lot of financial backing for our company. They're not a short-term company at all, Breslin said.
ACS opened the 180,000-square-foot New Berlin factory in 2006. The machinery maker consolidated the Sterling operation from Milwaukee and the former headquarters plant in Wood Dale, Ill., into the New Berlin factory, closing both of the others. The executive offices were moved from Wood Dale to an office building in Schaumburg, Ill.
This year, ACS closed its plant in Attleboro, Mass., that made Cumberland-brand granulators and shredders, and moved that work to New Berlin as well.
Breslin said more than 200 people work at New Berlin.
The company continues to run facilities in Wabash, Ind., making Wabash-brand injection and compression molding machines and Carver laboratory presses; and an operation in Flint, Mich., that serves as an ACS technical center and the headquarters of Colortronic North America Inc.
In personnel news, Keith Larson has been promoted from Colortronic's manager of sales and marketing to vice president of sales and marketing for all of ACS. Larson replaces Kevin Chudyk, who left the company.
For ACS Group, 2006 was a big year. First came the New Berlin opening. Later that year, the company opened a wholly owned factory in Suzhou, China, measuring 100,000 square feet.
Last year ACS opened an operation in Pune, India, that sources components such as motors, pumps and electrical items from that country for the other assembly plants. The strategic partner is Larsen & Toubro Ltd., a large conglomerate in India.
Breslin said ACS has invested heavily in international operations, which now make up nearly 20 percent of overall business.
In the past year, ACS has signed up 18 new sales agencies outside North America, said Bill Desrosiers, who has been promoted to vice president of international sales and marketing.
You must play in all the markets to be successful, Breslin said. You must be able to compete in China. You must be able to compete in India. You must be able to compete in South America, as well as all of North America. And you must be starting to compete in Africa and the Mediterranean countries.
Historically, ASC officials have been tight-lipped about global moves. Breslin explained that the company wanted to go slow to avoid problems faced by competitors, which he said jumped on the bandwagon of sourcing components from China, India or Brazil and got burned with parts that did not fit.
You've got to get through that learning curve, but you have to do it in a very controlled fashion. We've seen a lot of companies go in, and come back out, he said.
Breslin acknowledged that ACS, which created a low-cost sourcing group in 2001, also experienced some problems in the early days. After several years, he said, we decided we're going to set up our own manufacturing facilities and do it all ourselves.
By keeping engineering, design and a major assembly operation in the U.S., ACS can cut costs by sourcing some components from around the world, to get a global-cost position. Breslin said ACS has taken a conservative approach in China, introducing one product at a time.
So far, ACS has invested more than $6 million into its Suzhou operation, he said. It employs 80.
Manufacturing, inventory and purchasing are linked through all the facilities worldwide, and a common telephone system.
During a plant tour, Breslin pointed to blenders as an example of ACS' global manufacturing footprint. Boxes of components come to New Berlin, where workers assemble the complete blender for local customers.
Some other products without many options such as beside-the-press granulators can be sourced fully assembled in China, he said.
The do-it-yourself philosophy is a core strength of ACS, Breslin said. Over 90 percent of what the company sells is built by our company, he added.
Breslin declined to give companywide sales, but said sales are split about 50-50 between plastics machinery and equipment for industrial markets such as paper, rubber, food, soap and pharmaceuticals. ACS sells chillers to those non-plastics processing companies, he said.
ACS executives unveiled three new pieces of auxiliary equipment at the media-day event:
* The GP line of green portable chillers that was launched April 30. ACS claims this is the first portable chiller to use R410A refrigerant, which meets a Jan. 1, 2010 regulation for greenhouse gas reductions. ACS started to redesign its chillers two years ago, and the company is updating every one. R410A improves a chiller's efficiency and produces higher capacity rates, the company said.
GP chillers come in air- and water-cooled versions. A portable controller linked by a cable to a chiller can be removed for use remotely, or the unit can be controlled wirelessly.
* The AccuMeter loss-in-weight feeding system. Larson said the feeder is designed for anything that's continuous like extrusion, extrusion blow molding and compounding. Most pellets, regrind, powders or liquids can be metered into the process, even at very low levels. The AccuMeter series features a modular, compact design. It can feed up to 16,500 pounds an hour, and can accommodate up to eight feeders per extruder.
Larson said the AccuMeter replaces the AEC OL line of blenders.
* The T500 granulator, a midsized machine with a twin-shear rotor for handling large, bulky parts from blow molding, thermoforming, rotational molding or big injection molded items. The T500 allows total access to the cutting area and knives through two drop-down doors in front and back, for easy cleanout. The rear-hopper door gives access to the back bed knife, said John Farney, national sales manager for Cumberland. It can be converted from tangential cutting to offset cutting. A mechanical rotor lock restricts movement of the rotor during maintenance.