Industry Market Trends
U.S. Plastics Molding Industry Showing Newshoring-Based Revival
July 1, 2014
U.S. plastics manufacturing, especially for commodity goods, seemed destined for the same fate of the dinosaurs just a few years ago. However, newshoring has brought fresh production, and injection molders have transformed their businesses and operations to compete again. A small, rapidly growing toy manufacturer in New England is pulling tools from China and is establishing manufacturing for the first time in a new building in the United States. A major global electronics contract manufacturer with no U.S. production footprint is now establishing its first American molding plant at the request of a Fortune 500 retailer that wants to expand its "Made in the USA" branding. They are signs of renewed life and competitiveness of the American molding industry, which withered and seemed close to extinction after the one-two punch of outsourcing in the late 1990s and then the Great Recession of 2008 and 2009. Bankruptcy auctions of molding equipment were being announced weekly at the height of the downturn. Quarterly sales of primary plastics manufacturing machinery as reported by the U.S.-based Society of the Plastics Industry, now known as SPI, dipped to around $75 million in 2009 compared to around $280 million in 2005. Levels rebounded in 2011 and 2012 and then surprised even the industry experts by continuing to grow to $300 million and above in the last three quarters. "The industry has remained highly competitive by finding innovative solutions and efficiencies, as well as by expanding its international reach to new markets," SPI President and CEO William R. Carteaux noted. There are several encouraging signs that the growth and newshoring trends will continue, offering a domestic manufacturing option for plastic goods buyers no longer enamored with all of the issues involved with Chinese sourcing that range from rising costs to lack of supply chain accountability. One example is OYO Sportstoys of Acton, Mass., which is now its installing first injection molding equipment from Wittmann Battenfeld because it needs to respond faster to customer demand for its licensed sports figurines that are produced in season. One problem with Chinese manufacturing is that many Chinese national holidays coincide with major sporting events such as the World Series and the Super Bowl, which trigger demand for the company's products. Increased demand for domestic production and sourcing from companies like OYO is triggering a chain reaction in the molding industry. Wittmann Battenfeld recently opened a 20,000 sq ft addition to its existing assembly center and warehousing site in Torrington, Conn. "We definitely see a trend toward more plastic molding in the United States," said Wittmann Battenfled CEO Georg Tinshcert in an interview with My Purchasing Center. At one time, there were close to a dozen U.S. manufacturers of injection molding machinery. They included now-defunct companies such as Egan Machinery, Somerville, N.J.; HPM, Mount Gilead, Ohio; New Britain Machine Co., New Britain, Conn.; National Automatic Tool Co. (Natco), Richmond, Ind.; Van Dorn, Strongsville, Ohio; Waldron-Hartig, New Brunswick, N.J.; Reed-Prentice, East Longmeadow, Mass.; and Newbury Industries, Newbury, Ohio. Cincinnati Milacron became a major player in the plastics machinery business and later was spun out under the Milacron banner. Milacron went bankrupt in 2009 but is now growing again under the ownership of a major global private equity firm. Milacron manufactures molding machinery in Ohio, while major competitors Engel does so in Pennsylvania and Husky in Ontario. A new player, Athena Automation, also manufactures machinery in Ontario. Three Asian manufacturers are also considering at least some U.S. assembly of injection molding machinery in response to the growing market. The new influx of equipment is helping to make U.S. molders more competitive, according to recent interviews with industry experts. There are improvements in the following areas: Automation. Increased use of robots, in particular, substantially reduces manpower required to remove and stack parts and even perform some secondary operations. Specialization. American molders used to compete on a machine hourly rates business. That was a losing strategy when low-cost-country sourcing emerged. Now molders are focused on higher-value-added operations and markets. Medical is one of the fastest growing. Quality. The "shoot-and-ship" molders are the ones whose equipment was sold in the bankruptcy auctions. The survivors are learning scientific molding practices that lead to greater repeatability and dimensional stability. One example of an injection molder that typifies the trend is Sterling Manufacturing, of Lancaster, Mass. "Investing in the right technology allows us to increase operational efficiency, improve quality, reduce waste, and boost profits" said CEO John Gravelle. "Perhaps most important, it allows us to control and shift the direction of our company and is crucial for our success as a high-end manufacturer." Gravelle bought the company in 2011 and then closed the plant to retool, dramatically improving the secondary operations center, building clean rooms for medical molding, and adding new machinery. Sterling has invested $2.2 million in infrastructure improvements, new Engel equipment, and other new technologies over the past three years, with more new machinery additions planned in the near future. NPE2015 will be a showcase of the new American plastics industry, including injection molding. It's the triennial plastics exposition held by the SPI, and sales of booth space are running significantly higher than levels seen during the recession. The trade show will be held March 23-27 in Orlando. Top photo credit: SPI
Doug Smock is a former chief editor of several industry magazines and currently writes a plastics blog called TheMoldingBlog.com. He is co-author of two leading books in supply management: Straight to the Bottom Line (2005, J. Ross Publishing) and On-Demand Supply Management (2007, J. Ross Publishing). Straight to the Bottom Line is now in its second printing. Doug has a bachelor's degree from Case Western Reserve University, in Cleveland, Ohio.This article was originally published at My Purchasing Center and has been republished with permission. For more stories, visit MyPurchasingCenter.com.