Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Videos
    • Podcasts
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Notable Leaders in Sustainability
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics Caps + Closures: A Global Online Event
    • Women Breaking the Mold Networking Forum
    • Bioplastics Live
    • Numbers that Matter Live
    • PFAS Live
    • Plastics in Politics Live
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Resin Prices Overview
    • Commodity Thermoplastics
    • High Temperature Thermoplastics
    • Engineering Thermoplastics
    • Recycled Plastics
    • Thermosets
    • Europe - Virgin
    • Europe - Recycled
    • Europe - Feedstock
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
October 26, 2015 02:00 AM

Survey: Productivity increasing, but investments still needed

Catherine Kavanaugh
Senior Reporter
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Jeff Mengel

    Indianapolis — Productivity for injection molders has been skyrocketing — it's up 17 percent in the last 10 years — but press utilization decreased for the first time in five years, and the industry needs to be careful about maintaining prices with customers.

    So says “data geek” Jeff Mengel, a partner at Plante & Moran, who studied survey results of 108 businesses with 160 facilities and $4.4 billion in sales in the United States, Canada and Mexico for the North American Plastics Industry Study.

    Mengel presented the survey results Oct. 22 at the 2015 Benchmarking and Best Practices Conference put on by the Manufacturers Association for Plastics Processors in Indianapolis.

    “Here's the harbinger. Here's the omen we have to deal with,” Mengel told a sold-out conference crowd. “Let's not go back to 2004-05 quoting practices. We've had four to five good years in the industry. Let's keep that discipline where we're not bidding on just getting our presses fully utilized.”

    Although thoughts of the recession linger, Mengel cautioned, “Press utilization does matter but it doesn't trump good discipline. Bad discipline in quoting will kill you. It will drain you out.”

    He suggested company officials turn their attention to equipment that is aging, labor that could use some training and highly-complex customers that should probably get the boot.

    In 2014, molding presses less than 100 tons were 14 years old on average and cost $25 an hour to run without an operator, Mengel said. That compares to an average of 8 years old and $21 an hour in 2004, he added.

    “Our presses are old,” Mengel said. “We're not investing as much as I thought. If someone asked me what's the biggest take away in our survey, it's the fact that I thought we were buying a lot more presses. … We have to start investing in new equipment.”

    The good news is that plastics processors did increase what they charged customers so they did get more money from the same presses. Gross profit margins inched up for the first time in four years, the study says, and customers are not shy about asking for price reductions in exchange for continued growth.

    However, it's time to tell some customers their prices are going up, Mengel said. He singled out customers who make up the bottom 20 percent of sales yet require short-run molds or little-used resins.

    “Good utilization with crappy contracts does nothing but frustrate you,” Mengel said.

    Those customers make if difficult to manage production and they also disrupt organizational alignment and employees' focus.

    “There's nothing more gratifying than going to a customer that's generating very little income, very little sales, and has a fair amount of complexity and telling them they have a price increase,” Mengel said. “And, there's nothing more depressing than for them to say I was wondering when you were going to do that.”

    Undertaking such an exercise also helps a business go after the customers of their choice. Companies that can choose their customers do better than those taking on customers to fill capacity, Mengel said.

    “You won't get profitable that way,” he said of filling machines. “Hopefully it takes you to the next stage where you can start culling those customers and then start making money with customers of focus that you want to have.”

    When it comes to profitability, materials and labor are the biggest cost components in the four walls of a business. Yet, “purposeful labor” is one of a company's greatest assets, Mengel said. These workers easily deal with shift handoffs and manage technical requirements.

    “What are we doing to develop our staff?” he asked.

    Companies also should take a hard look at where they stand in the competitive landscape and then seek competitive differentiation through product development and design as well as proprietary manufacturing processes.

    Businesses that filled out the survey rated their uniqueness as 6-7 points on a 10-point scale when theoretically the average should be 5.

    “Our customers may have a greater perspective of our difference from our competitors than we do — a scary proposition,” the study says.

    Mengel put it this way: “I've gone into facilities where they say they're unique and no, they're not. Look at your competitors and see where you are. That's how you get the competitive differentiation to have fewer competitors. And, when you have fewer competitors, you make higher margins.”

    RECOMMENDED FOR YOU
    Tennessee-based insulation maker adding equipment, jobs
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    National bottle bill ‘could make sense,' senator says
    2
    An 8,000-ton dream for Milacron, 20/20 Custom Molded Plastics
    3
    PS resin prices continue their climb
    4
    Play Mart expanding in Kentucky, adding jobs
    5
    Resin Prices - North America
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Find more newsletters at plasticsnews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Notable Leaders in Sustainability
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Videos
      • Podcasts
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics Caps + Closures: A Global Online Event
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
      • Editorial Livestreams
        • Bioplastics Live
        • Numbers that Matter Live
        • PFAS Live
        • Plastics in Politics Live
        • PN Live: Mergers and Acquisitions
        • Polymer Points Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Resin Prices Overview
      • Commodity Thermoplastics
      • High Temperature Thermoplastics
      • Engineering Thermoplastics
      • Recycled Plastics
      • Thermosets
      • Europe - Virgin
      • Europe - Recycled
      • Europe - Feedstock
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified