Does your perception match reality?
Several indicators in the survey suggest that the business activity in 2003 was down slightly from the previous year. Utilization rate has declined somewhat and buying intentions are lower than in our...
Several indicators in the survey suggest that the business activity in 2003 was down slightly from the previous year. Utilization rate has declined somewhat and buying intentions are lower than in our previous survey.
However, continued investment in training and R&D are positive signs for the future. Having come through a few lean years, injection molders are ready to face the competition and profit as the economy turns around.
2003 ESTIMATED REVENUE
|10-19||1.25 million||3 million||500,000|
|20-49||3 million||16 million||1.5 million|
|50-99||8 million||60 million||3.5 million|
|100-249||12 million||54 million||3 million|
|Over 250||100 million||200 million||12 million|
The structure of our survey allows us to analyze data according to plant size, as determined by number of employees, and by the main market served. Due to space limitations, not all of that detailed data is presented here, but trends or marked differences between the various sectors are noted in the text.
The difference between automotive molders and all others is striking. It shows up in almost all facets of the survey. Automotive molders are the most likely segment to be buying new injection molding machines next year, and are more likely to have a higher proportion of new machines. Comparing service capabilities, such as assembly, JIT delivery and design capability, automotive molders outshine all other respondents. Ninety-two percent of automotive molders are ISO certified; only 26% of consumer market molders are.
The characteristics of the respondents are similar to last year, although there is a tendency toward fewer molders in the “exclusively proprietary” category, and more claiming “custom molding with some proprietary.” It is safe to say the majority of our respondents perform at least some custom molding. Only 1% are strictly captive operations, and another 18% are proprietary molders. (See chart “Type of business”.)
There are differences in the prevalence of custom, proprietary and captive molding with various markets. There is much less “exclusively custom” molding seen in the packaging industry than in consumer goods or automotive. In construction markets, a large number of the respondents are proprietary molders.
More than 50% of respondents have less than 50 employees, and another 20% have fewer than 100. Bearing in mind that each respondent represents a particular plant location, not necessarily an entire company, this data still suggests the Canadian industry is made up of smaller enterprises (see chart “Plant size”).
Among our respondents, the consumer goods segment appears to have more small companies (< 20 employees) than other markets.
It is abundantly clear from our data that smaller companies tend to have more old equipment (see chart “Smaller companies have more old equipment”). There also seems to be a directional shift in the data; more respondents say that a higher proportion of their equipment is more than five years old. In the 2003 survey, 18% said 0-30% of their machinery was less than five years old. This year, 13% fall into that category. In 2003, only 42% claimed more than 75% of their machinery was more than five years old. Now, that number is 48%.
Coupled with that trend is the fact that buying intentions are lower this year than last (see table “Buying intentions”). Only 43% of respondents intend to buy a new injection molding machine this year, compared with 48% last year. On the positive side, the statements of intent to buy seem to be fairly accurate. Almost 48% intended to buy in 2003; this year, 48% responded that they did buy new machines last year.
The probability that a company will invest in new machinery seems to correlate to company size. So the best chance for of a machinery sale lies with larger companies, preferably those serving the automotive sector. Buying intentions are less among the smaller companies surveyed.
By asking respondents how many machines they have of each size, we are able to get an impression of the relative popularity of the various sizes, at least within our sample. Small and mid-tonnage machines (to 750 tons) are the most prevalent, accounting for 90% of the reported sample (see chart “Size of machinery”, page 21).
Responses concerning machine utilization during 2003 indicate a slightly slower year than 2002 (see chart “Utilization rate”). More respondents are in the 70-79% category (24.8% in 2003 vs. 16.5% in 2002) and fewer respondents fall into the 80-89% category (17.7% in 2003 vs. 25.9% in 2002).
The data collected on resin consumption and revenue covered a wide range of values, so it seemed best to present the median value, the highest value and the lowest (see tables “Resin consumption”, page 19, and “Revenue”, page 15). The median represents the midpoint of all responses in that category, thus there are an equal number of responses above and below the median value. The median value is generally considered more reflective of reality than an average value when the data are so widely spread.
Likely due to the high-volume nature of the parts, the packaging market emerges as the highest consumer of resin.
Revenue data are presented by plant size so that readers can more accurately benchmark their own position.
Looking at the data on adoption of ISO 9000 as a quality standard, it is evident that not all markets require this certification (see chart “Adoption of quality standards”). Adoption among automotive suppliers is almost universal, while it is less so in other markets, such as packaging. One underlying reason may be that other segments have their own standards and certifications.
Perhaps it’s the increased competition, or perhaps shops are able to manage better when they’re not running at 110% as they were in the late ’90s. Whatever the reason, this year’s respondents are showing a slightly higher level of service capabilities, and a slightly higher implementation of policies and programs for non-production functions, such as training, safety, preventive maintenance, etc.
While year-to-year comparisons show only slight deviations, comparing policies in 2004 with those reported in 1998 shows some significant differences (see chart “Formal policies”, page 19). Programs for recycling and waste management are more prevalent now, and so are safety programs.
Training and R&D expenses, which can be considered investments in the future of the company, are fairly similar to last year’s figures. The majority of respondents (68%) are planning to invest 1% or 2% of their 2004 budget in training. Thirteen percent will not invest in training at all. For R&D, a significant number of respondents (34%) have budgeted 4% or more. Nineteen percent will invest nothing, and 38% will spend 1% to 2%.
Regarding reject rate, more smaller and mid-sized shops than larger shops claim a reject rate of 2% or less (see chart “Reject rate”).