Plastikos Inc. is run by a group of young engineers and it shows — they scrutinize everything from successful mold startups to on-time delivery to the life span of screws, barrels and tip assemblies.
Leaders of the Erie injection molder never rest, as they analyze data to determine areas that need improvement, fix them, then measure the results. That approach is critical to Plastikos' longtime connector market and the more-recent move into medical molding. Those two demanding sectors require precision tooling and molding.
“We have continuous improvement and that's a huge part of the culture here, in all areas, not just on the manufacturing floor but in materials, in the front office, in engineering, in shipping,” said Philip Katen, president and general manager. “Continuous improvement is a core element of the culture.”
That game plan has paid off for Plastikos, which runs 27 small-tonnage injection molding machines and employs 100 people — nine of them degreed engineers, including the ownership group.
Sales jumped sharply from the recession, rising 45 percent from $11.6 million in 2009 to $16.8 million in fiscal 2010, ended Oct. 31.
Katen attributed the sales gain to new medical work and the economic rebound that fueled more business from existing connector customers.
Plastikos has been consistently profitable, thanks to many of the ongoing operational improvements. A conservative approach to expansion means Plastikos carries no debt, officials said. The company funded $800,000 worth of capital investments last year out of cash flow.
Now Plastikos has another accomplishment — winning Plastics News' Processor of the Year Award. Plastikos was a finalist last year, but did not win. This year Plastikos prevailed over the two other finalists: Atek Plastics of Kerrville, Texas, and Steinwall Inc. of Coon Rapids, Minn.
This year, the finalists are small custom injection molders, all with sales under $20 million for 2010. Steinwall generated $18.3 million in sales. Atek's sales were $14 million.
Plastics News presented Plastikos with the award and honored all the finalists March 8 at its Executive Forum in Summerlin, Nev. (The newspaper also recognized three winners of the first-ever PN Excellence Awards. See story Page 10.)
The judges — Plastics News reporters and editors — gave Plastikos strong marks on all seven of the award criteria: financial performance, quality, customer relations, employee relations, environmental performance, industry and public service, and technological innovation.
For its 22 years as a molder, Plastikos has been laser-focused on electrical connectors molded from liquid crystal polymers. But 2010 will go down as a significant year in company history. Plastikos added six customers and 50 molds, all of it in medical. The molder also built a Class 10,000 clean room. A new center dedicated to research and development is housed a few miles away at sister company Micro Mold Co. Inc.
An Erie tale
Micro Mold was founded in 1978. The mold-building operation developed strong working relationships with customers in medical, electronics, defense and aerospace. Several of those long-term customers remain with Micro Mold and with Plastikos, which was founded in 1989 by Timothy Katen and David Mead, the co-owners of Micro Mold, and Gary McConnell. Bill Fogleboch joined as an owner two years later.
In 1995, Plastikos moved into a newly constructed building, designed to house eight presses. It was expanded two times. The owners designed a well-lit, orderly factory. Resin and utilities run underground in trenches to the molding presses. Several of the machines are equipped with camera vision systems.
The current ownership team consists of Timothy Katen's sons, Phil Katen and Ryan Katen, who is engineering manager and runs the R&D center; treasurer Matthew Mead, son of David Mead; and Robert Cooney, manufacturing manager. Their ages range from 29-34.
The four became junior partners in late 2007, as they took on management roles. After a transition period of about two years, the second generation took over the business.
Sales grew consistently from Plastikos' founding, to a high of $20.9 million in 2006, before declining to $18.7 million in 2007 and again to $15.8 million in 2008. Company officials explained that Plastikos accepted a large amount of transfer molding from a customer that was consolidating its manufacturing into a single building. Once the facility was finished, Plastikos moved the molds, and molding work that peaked at around $2 million in 2006, back to the customer.
The recession hit the plastics industry hard. Plastikos was no exception. However, during the downtime, Cooney worked on a special assignment to study, and then develop, a proprietary method to reduce resin consumption. Savings to the company: nearly $500,000 the first year. Plastikos invested that money back into a new Arburg press, other equipment and training.
Plastikos has standardized on Arburgs moving forward. The company now has seven, after buying four in 2010. Other presses running in the Erie plant include Demag Ergotechs and Sumitomos.
Cooney said the company buys two or three injection presses a year, to upgrade its fleet and replace older machines. Each machine has a robot — the plant has the brands of Yushin, Star and Weimo.
Judges were impressed by the high degree of detail and extensive quantification in Plastikos' submission for the Processor of the Year Award. That is evidence of the engineering mindset that remains a major strength.
Customers notice, too. “They take continuous improvement seriously and they execute,” said a supply-chain manager at one connector customer. Customers contacted by Plastics News judges praised Plastikos for on-time delivery, excellent technical molding and mold making, and being proactive to head off problems.
Give an assist to Penn State Erie's Behrend College. Plastikos hires graduates of the school's Plastics Engineering Technology program. One recent hire, Nick Schroeck, is a process engineer in the new R&D center.
Cooney, a Penn State Erie graduate, is a member the college's Alumni Advisory Board and serves as president of the Society of Plastics Engineers' Northwest Pennsylvania Section. Penn State plays a key role in one of the most concentrated plastics regions in the United States, he said.
Other Plastikos executives are also involved in industry and community affairs, including the Manufacturers Association for Plastics Processors and northwestern Pennsylvania's Advanced Diversified Manufacturing Partnership.
The Young Erie Professionals picked Plastikos as its 2009 Green Company of the Year. In environmental news from the past year, the company wrapped up the second phase of two energy-savings projects, replacing desiccant dryers with more-efficient compressed-air dryers and adding fluorescent lights in the warehouse, regrind room and loading docks, plus motion sensors to turn off the lights. Plastikos officials also are looking into ISO 14001 certification for an environmental management system.
New initiatives
Erie is home to lots of plastics processors, so retaining good employees is important. Plastikos offers two forms of profit sharing, both tied to performance metrics. A 401(k) retirement plan is linked to four key goals of order reject rate, startup success, on-time delivery and on-hold product. The company matches a set amount of money for each of the four goals that are met.
New in 2010 was a $250,000 employee bonus pool, paid out for meeting the prior year's sales, gross profit margin and net profit margin. (To calculate this first bonus, Plastikos went back to compare 2010 with 2008, throwing out the recession-hit 2009.)
Financial incentives are good, but it's important to communicate them to employees. Management meets with all three shifts once a month. “We show performance with respect to goals. So everybody's aware how we're doing,” Cooney said.
Another new program last year was employee-generated ideas for continuous improvement. Employees drafted proposals, detailing the expected benefits and return on investment. They could spend up to $2,500 per project.
“They voted on them in their respective shifts and then we awarded one person per shift a $500 bonus for the winning idea, and they got help from the engineering staff to implement it,” Cooney said.
Plastikos also has beefed up its employee training. The company helped pioneer Global Standards for Plastics Certification in the United States, working with MAPP and the Pennsylvania College of Technology.
Also, Susan Henry, who joined as human resources manager in early 2010, worked with the quality team to develop a weeklong training course that is mandatory for all operators. Two results: a dramatic decrease in operator turnover and a reduction in the percentage of on-hold products.
Plastikos found another way to reduce turnover. Historically, the molder hired temporary help through staffing agencies. But the detail-oriented work of molding and checking small connectors is a challenge, and Cooney said temp workers often quit, in what became a “revolving door.”
So Plastikos began working with a local social services organization to hire about 15 refugees from countries such as Haiti, Kenya, Sudan, Bhutan and Nepal living in Erie. The refugees, who go through a screening process, become permanent employees. Cooney said the company no longer hires temporary help.
Henry said the new employees include people who in their home country were bankers, teachers and an electrical engineer. Their work ethic is great. “I think it's changed a lot of the attitudes of our other employees,” she said. “I think they're more willing to help each other.”
Rx for growth
For Plastikos, connectors will remain the main business, but Katen said medical could grow to 25-33 percent of sales in the next several years. A couple of good-sized new projects could do it.
Medical growth happened in a big way last year. Thirty-five of the 50 medical molds Plastikos added in 2010 were transferred from a large medical customer.
Medical parts have included those for fluid dispensing, eye care, blood filtration, as well as diaphragm pumps.
The large number of inherited molds prompted the company to launch a formal mold-transfer procedure. Plastikos checks the condition of the incoming mold and studies the entire molding job. “Not only do you inherit the mold, but you inherit the design of the part,” Cooney said. “There have been some challenges we worked through, especially on the transfer project, where we've made suggestions on the material and/or geometry changes to help yield a flatter part and also reduce the material costs and the weight of the part.”
Plastikos has also refined its mold-qualification procedures for new molds awarded to Plastikos and Micro Mold. Included is a new-product risk assessment, included free with the quote. The form lists various scores for material selection and product design, tooling design and fabrication, and the molding para- meters. Both sides have to sign off, eliminating any surprises later on, according to Cooney.
Katen said Plastikos leaders studied the medical-molding market for about five years before taking the leap. One of Micro Mold's first customers was a medical company, so Plastikos can get through the door via mold-making experience.
Cooney said several of the medical molds Micro Mold has built new within the past year were successful right out of the gate.
Plastikos does not publicly identify its customers.
Katen said the main molding area is considered a white room, making it suitable for some medical molding. The new Class 10,000 clean room will produce Class 2 medical devices.
Located outside the clean room is an 88-ton, all-electric Arburg press, equipped with a HEPA clean-air module above the clamping area. Molded parts are moved though a sealed conveyor into the clean room, where gown-wearing employees inspect, assemble and package the parts. The clean room area has room for a second Arburg.
Cooney said Plastikos wanted to start with a small clean room, to perfect the medical sector's formal, rigorous process for documentation and clean-room routines. Medical molding demands accountability and part traceability, he noted.
Still, Cooney said that, from the technical side, Plastikos already is well-suited to mold precision medical parts. Plastikos is seeing some extremely complex connectors that stretch the limits of LCPs, which are difficult resins to mold anyway, he said. One example is a connector that contained more than 2,000 circuits on a surface area measuring just 5 inches.
Plastikos has hired a few people with a background in medical, most recently Gerry Avery for the new position of Western technical sales manager.
Two years ago, Plastikos picked up veteran quality engineer Lynette Berkey, who had worked for 25 years at Erie Plastics Corp. before the plant closed in nearby Corry, Pa. She had handled Erie Plastics' customers in pharmaceuticals and packaging.
Also, Ryan Katen was an industrial engineer at Boston Scientific Corp.
The company will add more medical expertise as the medical business grows, Phil Katen said.
Zeroing in
Plastikos gets lots of data by monitoring equipment such as RJG Inc.'s eDart in-mold measurement system, which the company has used in production for about two years. Available on eight injection presses at Plastikos and the two presses at the Micro Mold R&D center, eDart has reduced the number of short shots and allowed the automated inspection of some parts.
The plant has an extensive quality-control laboratory, including a ShapeGrabber laser shape scanner that measures parts against a computer-aided-design model of a good part, reducing lead times and improving part quality. Plastikos also uses Moldflow mold-filling simulation for design.
For the past decade, Plastikos has used an IQMS enterprise-resource-planning system to tie all the data together.
The data-driven approach has enabled Plastikos to raise the bar on performance goals and hone in on ways to improve, officials said. Here is one example from the company's Process of the Year submission: After scrutinizing quality data over a period of five years, officials learned that the leading cause of rejects was incorrect mold setups. So they added training for setup technicians and invested in new inspection equipment. Problem solved: Setup performance has improved by more than 60 percent.
First-time startup success reached a record high of 78.4 percent in 2010. The rigorous improvement effort led to a record-low order reject rate of 0.45 percent of total orders.
That kind of performance gets you noticed, even in a plastics-intensive area like Erie.