Canadian Plastics

Injection Molders Survey: New numbers

This year's Injection Molders Benchmark Survey sheds light on a number of new trends in the industry; as usual provides our largest segment of readers with a comprehensive variety of benchmark data on...

January 1, 2003   By Michael Legault



This year’s Injection Molders Benchmark Survey sheds light on a number of new trends in the industry; as usual provides our largest segment of readers with a comprehensive variety of benchmark data on equipment usage, management practices and service capabilities.

As with past surveys, raw response data for each question were broken down both as a total percentage (where applicable) and as a response percentage grouped according to plant size (number of employees) and main market. Responses broken down by plant size and market, however, are presented here only when these factors reveal significant or interesting trends. For convenience sake, we have refrained from including the few non-responses for each question — so readers, please note, not every response percentage for a given question will add up to 100. Additionally, not all the information contained in the survey can be presented in the confines of this space. If interested, readers can purchase a copy of the survey’s raw data for a nominal fee.

RESPONDENT PROFILE

The respondent profile by plant size showed no major changes in comparison to the surveys of the previous two years. Basically, the profile of our industry based on plant size could be pictured as a Bell Curve with fewer very small and very large companies at the tails of the curve; and the majority of molders, comprised of medium-size shops with 20 to 100 employees, packed together near the curve’s middle, forming the characteristic high-distribution peak.

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A comparison of respondents’ types of business for this year’s survey with results from three years earlier (Table 2) reveals one new, perhaps significant trend: fewer molders are doing exclusively custom molding (down 11%), while more are devoting all of their business to proprietary molding (up 13%). Analysis of market breakdown data (not shown), reveals the trend is mainly due to more proprietary molding being done by molders serving the household, packaging, construction and “other” markets. Molders who mainly supply the automotive and electronics markets, however, are still largely exclusively custom molders, or customer molders doing some proprietary molding.

Another notable statistic is the 12% decline of molders calling automotive their main market in comparison to last year’s results. This decline is apparently being offset by an increase in shops molding mainly for the packaging and “other” market.

EQUIPMENT BENCHMARK

Two things stand out with respect to injection molders’ buying intentions captured by this survey (Table 3). First, 48% of the shops responding to this year’s survey said they plan to purchase injection molding machines this year, compared with only 35% of respondents last year. This represents a relative net increase of 37%, in comparison to the previous survey, of respondents who say they plan to buy a machine in the upcoming year.

Second, 42% of the plants surveyed actually did buy machines in 2002, compared with 35% surveyed in late 2001 who said they planned to buy machines in 2002. This represents a net 20% increase in real purchases for 2002 versus planned purchases. Obviously both of these statistics are indicative of greater than expected buoyancy in the Canadian market, which especially noteworthy in contrast to the recent dismal performance of U.S. market.

Another indication that molders are optimistic about the upcoming year is that nearly 60% of those planning to buy would do so to add capacity, rather than replace old machines. The greatest concentration of buyers, according to the market breakdown data, will be found among molders serving the automotive and packaging markets.

Forty-three percent of respondents said 75% or more of their machines were more than five years old, suggesting the downturn has forced many molders to delay or postpone purchasing new machines.

Machine utilization data (Table 4) provides another insight into recent market conditions among the Canadian injection molding community. Machine utilization among smaller-sized companies from one to 49 employees has dropped markedly during the past year; while utilization of capacity has remained steady or grown for medium- and larger-sized firms. Apparently, the lingering economic downturn has had a greater negative effect on the business of smaller companies. This is not surprising given that smaller shops have a smaller customer base and generally rely more on “walk in” business that accompanies an economic expansion.

BUSINESS/MARKET BENCHMARK

Analysis of the survey responses and data in this section first needs to be qualified by noting the business sensitivity of this information and its affect on the response rate. Indeed, even though confidentiality of the survey is assured, as many as one-quarter to one-half of the total number of respondents declined to provide information related to resin consumption, revenues and wages. Nonetheless, despite the resulting increase in the uncertainty of the data, the responses to these question provide a unique and valuable snap-shot of critical performance indicators for the injection molding industry.

Average resin consumption has increased in comparison to last year. Most of this increase can be accounted for by several large packaging firms which, most likely, did not participate in last year’s survey. Still, even factoring out this sector, resin consumption has grown across all markets; most substantially for the automotive, construction and “other” segments

Average revenues have dropped, but this appears to be an anomaly caused by the elevated sales of a few large companies which participated in last year’s survey. Factoring out this anomaly, average revenues appear to be on par with, or better than last year’s results. Indeed the revenues of survey respondents serving the electronics packaging and construction markets are significantly higher than the revenues reported by molders serving those same markets in last year’s survey.

The average hourly rate for a machine operator follows the expected trend of increasing with a larger company. Internet usage, both for retrieval of business information and for purchasing, shows little difference from last year and would appear to have reached a plateau.

MANAGEMENT BENCHMARK

Average reject rates (Figure, p. 23) mirror the results of previous surveys, suggesting that many molders have made little progress in applying continuous improvement methods to their production floors. At present, it appears that only about one-third of the Canadian injection molding industry possesses the team, problem-solving skills necessary to de-bug their systems and achieve an acceptable, present-day scrap rate below 1%.

The line graph which plots respondents’ value-added capabilities illustrates the problems faced by smaller-size molders trying to compete in a global market with larger and/or full-service oriented firms. Many of the shops, in some cases a majority, cannot offer customers design assistance, basic finishing operations, JIT delivery or e-procurement. Molders exporting the highest amount of product (Table 10) are those supplying the packaging and construction industries. Somewhat surprising, the results indicate an increasingly home-grown market for the automotive industry, with more than 60% of respondents in the automotive market saying they export less than 25% of their product.

Space limitation prevents us from presenting benchmark data on quote success, formal business policies and other management practices, however these results generally mirror the results of last year’s survey.

CONCLUSION

The survey shows that more molders are moving into some type of proprietary molding. This is a major shift in an industry in which the practice of custom molding has traditionally dominated. As a business strategy, proprietary molding can stabilize a shop’s work flow. Proprietary molding, in which a molder owns the rights to part or all of a product he is manufacturing, also allows a shop to control its own destiny and avoid losing work it has taken time to develop to off-shore firm
s with lower overhead.

A 37% increase, relative to last year, in molders’ plans to buy injection molding machines is a sign of a confident and robust Canadian industry and economy. Equally significant, of those that plan to buy, 60% will use the new machines for additional capacity, rather than to replace old machines.

Machine utilization has dropped to extremely low levels at some smaller shops. These shops, obviously, have been hit much harder by the downturn of the past two years than larger-size firms. Still, as is clear from the benchmark data on value-added capabilities, many small shops have failed to modernize and upgrade their skill sets in an increasingly global economy. Unfortunately, unless managers find the financial and intellectual wherewithal to address these deficiencies, business may continue to trickle away from many of these smaller firms.

Readers may purchase a printed or electronic copy of the complete Injection Molders Survey data for $59. E-mail Diane Moskal at dmoskal@businessinformationgroup.ca

Table 1 Plant size
Employees Percentage of respondents
1 to 9 10%
10 to 19 14%
20 to 49 27%
50 to 99 15%
100 to 249 18%
250 or more 7%
No answer 8%

Table 2 Type of business
Type 2000 2003
survey survey
Exclusively custom molding 43% 34%
Custom molding with some proprietary 28% 21%
Exclusively proprietary molding 14% 27%
Captive molding with some custom molding 9% 13%
Exclusively captive molding 6% 3%

Table 3 Injection molding machine sales
Planning Did Planned to
to purchase purchase purchase
in 2003 in 2002 in 2002
Yes 48% 42% 35%
No 50% 53% 60%
N/A 2% 5% 5%

Replacement Additional capacity Both
29% 59% 12%

Table 4 Average machine utilization above 70%
Percentage of respondents 2002 survey Percentage of respondents 2003 survey
Plant size
1 to 9 employees 28% 11%
10 to 19 employees 38% 35%
20 to 49 employees 43% 25%
50 to 99 employees 61% 78%
100 to 249 employees 64% 60%
Over 250 employees 53% 53%

Table 5 Annual resin consumption (by plant size)
Number of employees Average resin consumed in 2001, lb. Average resin consumed in 2002, lb.
1 to 9 114,000 405,000
10 to 19 676,000 167,000
20 to 49 1.8 million 902,000
50 to 99 1.7 million 1.3 million
100 to 249 4.4 million 11.4 million
250 and over 2.3 million 28.3 million
Average of all respondents 2.2 million 4.9 million

Table 6 Annual resin consumption (by resin market)
Market segment Average estimated total revenue for 2001, lb. Average estimated total revenue for 2002, lb.
Electronics 201,000 257,000
Consumer goods 1.9 million 1.9 million
Automotive 2.0 million 2.7 million
Construction 1.2 million 3.7 million
Other 1.8 million 4.9 million
Packaging 4.1 million 16.2 million
Average of all respondants 2.2 million 4.9 million

Table 7 Revenue (by plant size)
Number of Employees Average estimated total revenue for 2001 Average estimated total revenue for 2002
1 to 9 $1.1 million $979,000
10 to 19 $1.6 million $1.2 million
20 to 49 $5.2 million $5.1 million
50 to 99 $13.1 million $9.6 million
100 to 249 $24.8 million $35.2 million
250 and over $151.9 million $67.5 million
Average of all respondents $22.7 million $13.6 million

Table 8 Revenue (by market segment)
Market segment Average estimated total revenue for 2001 Average estimated total revenue for 2002
Automotive $18.1 million $4.9 million
Consumer goods $37 million $6.5 million
Other $16 million $12.8 million
Electronic $3.8 million $22.7 million
Packaging $23 million $28 million
Construction $15.2 million $29.7 million

Table 9 Internet use
Have you used the Internet in the past 4 weeks to access business information?
Yes No
86% 13%
In the past 4 weeks, have you used the Internet to buy any business-elated items (e.g. equipment, resins, shop supplies)?
Yes No
34% 63%

Table 10 Exports (by market)
Percent of product exported Automotive Consumer Electronic Packaging Construction Other
0 to 25% 61 25 37 22 40 36
26 to 50% 15 37 25 33 10 21
51 to 75% 15 21 12 33 20 28
Over 75% 8 12 12 11 30 11


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