Canadian Plastics

Electronics — the untapped market?

Call it what you will -- the e-revolution, the digital age, convergence, gadget mania -- the technological twister that is re-shaping society and the market's landscape is confronting processors with ...

March 1, 2000   By Michael LeGault, editor



Call it what you will — the e-revolution, the digital age, convergence, gadget mania — the technological twister that is re-shaping society and the market’s landscape is confronting processors with both new challenges and unprecedented opportunities.

As this market matures, the growth potential for new plastics-related business is of course huge. This is because plastics is one of the main mediums through which the message of the information age is being spread. Whether it is a pager or cell phone, cable or mouse, hardware or software, plastic has played and will continue to play an integral part in the design and manufacturing of electronic devices.

This is good news to suppliers at all levels in the plastics industry. However there are signs that Canada’s processor community may not be prepared, at least from a strategic business standpoint, to tap the full potential of the growing electronics market.

In our latest Injection Molders’ Survey (Jan. ’00) only thirteen percent of molders responding said their main market was electronics. While this is three percent more than two years ago, it is still an indication that electronics, for most molders, is second fiddle to the automotive, general consumer and other markets.

In light of the acknowledged need of many custom molders to diversify, especially on the automotive side, where the expectation is that margins will continue to be squeezed, I question whether Canadian processors are fully exploiting the opportunities in the booming electronics market.

Electronics OEMs such as IBM and Nortel are now outsourcing nearly all of their manufacturing. Mega contract manufacturers such as Toronto-based Celestica have seen their sales grow exponentially over the last three years. Even before this growth spurt, at a government-sponsored networking event for electronics suppliers and buyers which I attended, Celestica was out in full-force looking to find promising suppliers. Yet, despite all these developments, growth in electronics molding in Canada has been effectively nil.

This may be explained in part by geography — a lot of electronics molding is being done offshore, where many electronics OEMs are located. However, it is also clear that molding for electronics requires different capabilities than molding for, say, the household consumer or construction markets. Many molders have had small chance of capturing electronics-related business simply because they haven’t made the adjustments in their business infrastructures in order to serve this market.

Parts going into electronic gizmos tend to have tighter tolerances, higher appearance standards and more complex designs than other types of commodity components and products. Additionally, the runs may be shorter than, say, a run typical of an automotive part. Electric machines and/or machines able to mold thinwall parts may be required. Manufacturers of electronic products are looking for suppliers with the right combination of design, tooling, prototyping and production capabilities to support these needs.

There is no reason Canadian molders can’t compete in this arena, especially as many of you have been meeting the rigorous standards set by the automotive boys for years. If you have never molded for this market, an investment without a certain amount of risk seems unlikely. You can minimize that risk with research. As a starter I would suggest attending the yearly Consumer Electronics Show (see article, page 17) or other trade show geared for this market. Perkwise, the CES show rates high, as it is held each January in Las Vegas. We weren’t lucky enough to get there this year, but someone who did tells us that virtually everything on display had some amount of injection molded plastic.

e-mail: mlegault@corporate.southam.ca


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