Adapting to the Market

This year’s survey shows an increase in the number of larger molding facilities among respondents. Twenty-eight per cent indicated they work at a facility with more than 250 employees. However, the number of respondents in the 100-249 employees category is lower than last year, so that overall, the percentage of respondents at plants with more than 100 employees is similar to that in the 2005 survey.

Looking at the data over the past four years, there is a definite trend toward more respondents from larger companies with more molding machines. The number of respondents with less than ten employees and less than five molding machines is dwindling. The method of gathering responses to this survey has not changed during that time period, so one possible conclusion is that there are fewer small molders operating in Canada.

The higher number of respondents engaging in proprietary molding suggests that a strategy of diversification is at work among molders. Over a span of several years, the data indicate that fewer survey respondents engage in custom molding exclusively, and fewer perform proprietary molding exclusively. The number who combine custom molding and proprietary molding is growing, reaching 48% this year.

OVERSEAS INITIATIVES GROWING

Almost one-third of respondents (31%) have a business venture in India or China, or both. This is similar to the results for last year, except that a few more people are reporting a presence in India. Asked to elaborate on what type of presence they have in these foreign markets, the majority (63%) said they have manufacturing facilities. Five per cent said they have a sales office, and 21% are involved in a joint venture with a local firm. In addition, 17% of respondents said they plan to enter the China or India market in the next year or two. Coupled with the 31% who already have a business in these areas, this shows that almost half of the molders in this survey have a strong interest in doing business offshore.

If you examine the characteristics of those who have offshore business ventures, you find they predominantly serve the automotive and consumer markets and they devote higher than average amounts to research and development.

PURCHASING INTENTIONS DIP SLIGHTLY

Optimism seems to be not as high among respondents as it was last year at this time. In 2005, 54% were planning to buy new injection molding machines. This year, only 47% are planning to invest. The amount of respondents planning to purchase auxiliary equipment is also less this year than last.

It seems that most of those who were planning an injection molding machine purchase at the time of the 2005 survey did follow through on those plans, which indicates perhaps that business in 2006 unfolded as expected. In the 2005 survey, 54% of respondents were planning to purchase new injection molding equipment within the next year. One year later, 57% of respondents say they did purchase an injection molding machine in the past year. Correlation on the auxiliary equipment purchase plans is not quite as close, with 84% planning to purchase, and 75% reporting that they did purchase some auxiliary equipment.

Interest in automation appears to be rising. Linear (3-axis) robots were purchased within the past year by 31% of respondents, while another 11% purchased articulated (6-axis) robots. The number of respondents planning to invest in robots within the next 12 months is slightly higher, at 41% for linear robots and 15% for articulated models.

Digging more deeply into the data, it is clear that among 2006 respondents who plan to purchase a new injection molding machine, almost all also plan to purchase auxiliary equipment. Seventy per cent of those shopping for an injection molding machine also plan to purchase a robot.

DIVERSIFICATION AT WORK

The concept of a full service molder is firmly entrenched among Canadian manufacturers. More respondents in 2006 offered each of the value-added services on our list. Assembly is almost a universal offering, with 94% listing it as a capability of their plant. The number of respondents performing assembly has grown from 69% in 2002. Welding/bonding and printing/decorating have remained fairly steady, with about 40% and 45% (respectively) offering these services. CAD design also came in significantly higher this year than in previous years, at 67%.

MID-SIZE MACHINES MOST POPULAR

The distribution of plant size, as determined by the number of injection molding machines per plant, remains similar to that of 2005. Forty-four per cent of respondents say they have more than 16 injection molding machines at their plant.

Some general conclusions can be drawn from the data collected regarding the tonnage range of machines in each plant. Plants are likely to have only a few high tonnage injection molding machines. Very few respondents had more than five machines in either the 750-1499 ton range, or the 1500+ ton range. In contrast, it is not unusual for respondents to have 8-12 machines in the 100-249 ton category or the 250-499 ton category. The majority of respondents have 1-5 machines of the less than 500 ton caliber.

With the emphasis on tight tolerances and precision molding that we now see in the industry, it is not surprising that there is more new equipment reported now than in previous surveys. In 2003 for example, 48% of respondents said more than three-quarters of their equipment was more than five years old. In 2006, that figure dropped to 32%.

TRAINING AND R&D ESCAPE COST CUTTING

There seems to be a growing emphasis on training in the industry. The percentage of respondents who spent more than 4% of the plant’s budgeted expenses on training has grown from 9% in 2002 to 19% this year. As well, fewer respondents are spending nothing on training this year.

Similarly, a larger number of respondents (43%) are spending more than 4% of the plant’s budgeted expenses on product research and development.

There was a noticeable jump this year in the number of respondents who have formal cost reduction programs. In 2005, 66% had cost reduction programs; in 2006, 86%. Coupled with the fact that purchasing intentions are somewhat lower than in 2005, this would seem to indicate molders have tightened the belt in 2006 and are aggressively seeking efficiencies within the plant.

However, production improvements are not reflected in the 2006 survey. Measures of reject rate and machine utilization are very similar to the figures for 2005. Almost one-third of respondents (31%) report utilization in the 70-79% range. Another 21% are in the 80-90% range.

ABOUT AVERAGES

Average operator wage remains fairly steady, coming in at $13.28 this year. For the past few years it has hovered in the mid- to high-$13 range.

Average number of employees among respondents is higher than in previous years, no doubt reflective of the increased presence of larger companies among the respondents. This year’s average was 159 employees. Also likely influenced by the higher weighting of large companies among respondents, the average total revenue is significantly higher this year than in the past. Average revenue estimated for 2006 was $31million.

Resin consumption estimates however, were less than those of most previous years.

Cindy Macdonald is a former associate editor of Canadian Plastics magazine

The survey was emailed in November 2006, to 979 people at injection molding facilities in Canada. There were 90 respondents, giving a response rate of 9%. Because not everyone answers each question, the percentage values in the charts and tables are given as a percentage of respondents to that question, with the number of respondents provided in parentheses, for example (n=88).