Western Roundup: New Directions at Spm Calgary

Sometimes change is self-imposed, sometimes change is thrust upon you. In the case of SPM Calgary, see the latter. The sale of the facility’s parent company, Dynacast, to the European equity investment firm Cinven was finalized in April. Additionally, SPM Calgary’s main customer, Nortel, is looking at new manufacturing strategies and business objectives, says the company’s general manager and Nortel global account manager Mike Flynn. This in turn will inevitably mandate adjustments to the facility’s core business and marketing focus. Flynn, who previously managed SPM operations in Wales, has been charged with managing the Calgary operations through this phase of change.

Flynn believes the desire of telecommunications and electronics companies like Nortel to cut costs will continue to drive more manufacturing capacity to Mexico, where labor costs are significantly cheaper. Flynn notes that over 300 new plants will open in Monterey, Mexico this year. The overall strategy of the SPM Precision Engineering Group, of which SPM Calgary is a part, is to follow and support Nortel and its other large customers, says Flynn. In the long term, Flynn says Nortel has indicated this may mean that SPM Calgary assume less of a role as a custom molder and Tier 1 supplier to the company and more of a role as a technical research and development resource.

For the time being, SPM Calgary’s highly automated injection molding and manufacturing operation, as well as the Canadian dollar, provide the competitive cost structure the company needs to remain a major supplier of telephone handsets for Nortel. As well, with 20 Toshiba and Van Dorn injection molding machines ranging from 28 to 1000 tons in clamping force, SPM Calgary has no intention of pulling up its stakes as a custom molder any time soon.

“Diversification is still a goal for us,” says Flynn. “Our ability to diversify will greatly decide what we will be able to do here in Calgary.”

Trying to penetrate the automotive market, a strategy the company once considered, is not realistic given the company’s location, says Flynn. “To be in automotive, you have to be close to your customer,” Flynn says. He also observes that the differing processing and volume requirements of the electronics and the automotive markets almost dictates that a company choose one or the other. Instead SPM intends to stay primarily focused in the electronics market. SPM’s technology and competitive cost structure should allow it to capitalize on lower margin opportunities and develop custom molding niche markets in western Canada, the northwest U.S and elsewhere, says Flynn.

SPM Calgary has been in the fore front of applying newer technologies such as vacuum metalization and in-mold decorating to the telecommunications and electronics markets. SPM is currently using a type of in-mold decorating involving an applique to make the keypad of an interactive pager. The applique is placed in the mold and resin is injected behind it. In another example of cutting edge technology and product-line diversification, SPM is overmolding a TPE around a magnesium, Thixomolded instrument-panel frame, which is part of a measuring device. Flynn sees the number of applications for Thixomolded magnesium in electronics continuing to grow. SPM Dynacast is also doing development work in thin-wall plastics molding out of its Anaheim facility using a Husky press, says Flynn.

“The amount of injection molding over-capacity in North America is frightening,” Flynn says. “We can’t just be a Nortel shop anymore.”