Actionable Steps Plastic Professionals can Take to Achieve Profit Goals For some plastic processors, improving…
The State of the Plastics Manufacturing Industry 2013
Each year the accounting and management consulting firm of Plante Moran releases a study titled “North American Plastics Industry Study”. The 2013 edition of this study was released recently and highlights where the plastics industry is, past trends and projected future trends.
Download your own copy of the 2013 North American Plastics Industry StudyReport
A few highlights from the report… A total of 84 plastics manufacturing companies representing 131 plastics production facilities with total sales for the group at $3 billion participated in the survey. This includes injection molders, extruders, blow molders and thermoformers. Industries represented include automotive, electronics/electrical, medical, construction, packaging, consumer and others. So all in all, it presents a pretty robust snapshot of the state of the plastics industry.
The report reflects improvements in 3 key metrics for the plastics industry – higher productivity, higher profits, and higher plastics processing machine utilization rates. Reasons given for improvements in each category…
Higher Productivity: Injection Molders, Extruders, Blow Molders and other plastics processors learned a hard lesson in the 2008 meltdown. They had to figure out how to do more with less. The companies that achieved that goal and survived are learning to stay lean and productive. Nothing focuses the mind on the bottom line like a good recession.
Higher Profits: In the industry as a whole, the two largest cost drivers for plastic processors are raw material and labor. Resin prices have been relatively stable (as you would expect looking at the oil market). On the labor front, processors are doing more with fewer employees. No doubt training is playing a big role in their ability to achieve this. There is simply no room for untrained employees. They can cost huge amounts of money and eat into profits quickly.
Higher Utilization: Machine utilization has increased for the 3rd straight year. Again, the secret is doing more with less. If you can generate the same output using 9 injection molding machines on jobs that used to require 10 molding machines, the savings is pure profit!
The gap between the cost of operating machines in the US versus Mexico or China, for example, is decreasing. The result? Re-shoring is picking up steam. Also, this reshoring is not a pure financial decision. Things like part quality, delivery lead times, transportation issues and customs requirements are all forcing US companies with overseas operations to re-examine the economics.
If you download this report, take a look at the table on page 15. It compares Injection Molding Machine Hours Rates between Indiana (representing the US) against Mexico East, Mexico Interior, China Interior and Shanghai. The bottom line is that the US is very competitive. This trend will likely continue due to the United States having an advantage in energy costs that is expected to continue for some time.
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