What The Cards Reveal
Seems like every time the Canadian Plastics staff compiles the results of our annual injection molders' survey, we have to preface it by mentioning all of the difficulties -- high Canadian dollar, soa...
Seems like every time the Canadian Plastics staff compiles the results of our annual injection molders’ survey, we have to preface it by mentioning all of the difficulties — high Canadian dollar, soaring resin prices, downturns in the auto sector — the industry had to face during the 12 months since the previous survey. If you think it’ll be different this time around, you’re wrong. 2009 was a true annus horribilus — the most terrible economic year in a long time, in fact — and the survey results you’re about to read will reflect that in many ways. And yet…
Don’t be surprised if you come away thinking the industry resembles a cork in the ocean: push it down and it bobs right back up again. Aside from reflecting all the bad stuff, the 2009 survey results paint a picture of versatility, perseverance and bedrock optimism about better days ahead.
A LITTLE BACKGROUND INFO
Almost 20% of respondents this year said that they worked in a shop with 50 or more employees, compared to 26% last year. This could reflect the slight downtick in the number of respondents this year, or the downsizing and consolidation that has occurred over the past 12 months, or both. Eight per cent of respondents worked in shops with more than 250 workers, compared to zero respondents working in such large shops in 2008. Obviously, then, at least some of the heavy hitters are still out there.
In 2009, 38.5% of respondents worked in a facility with one to nine employees, compared to 34% in 2008 and 21% in 2007. Meanwhile, approximately 30% worked in mid-sized shops with 10 to 49 workers. On average, the number of employees per shop was 46 — much higher than last year’s average of 30. Since it’s unlikely that the industry has seen a hiring boom in the past 12 months, we can safely conclude that more of the larger shops were represented this time around.
Compared to previous surveys, respondents had more molding machines at their facilities, too. Over 30 % reported having 16 or more machines at their plant, compared with only 12% with 16 or more in 2008. More respondents this time around reported 16 or more units, in fact, than reported five machines or less (27%); a very different result than last year, when by far more respondents had five or fewer. Again, it would be nice to think that this represents evidence of a lot of machine purchases over the past 12 months — nice, but almost certainly wrong. Given the difficult year just passed, it’s more likely further evidence of some new heavy hitters responding to this year’s survey.
Fifty per cent of respondents were with plants that had either an ISO or QS9000 standard, with another 5% reporting that one or the other certification was in process.
And as always, the majority of this year’s respondents were from Ontario (76%); the remainder were from Quebec. This begs the question: is anyone else out there?
SERVING THE MARKETS
Last year’s survey was the first in a long time in which automotive was not the main market served by the respondents. Consumer goods were, with 28%. Either because of a resurgence of auto parts activ-ity (possible, but unlikely) or a slightly different set of molders responding this year (more likely), automotive is back on top, with 27% of respondents saying they worked mainly in auto parts. Con-sumer goods came next (22%), followed by construction (18%), medical (18%), electronic (10%) and packaging (5%). The 18% of respondents working mainly in medical parts represents quite a bump, by the way: last year, less than half that many were serious medical parts molders. The anecdotal evidence that we all hear about the rise of medical parts molding seems bang on.
To the surprise of probably no one, the number of exclusive captive molders continues its steady decline, according to the survey results; this probably reflects a decline in component requirements large enough to make captive manufacturing economical. This year, only 12% of respondents are doing primarily captive molding work — dead last. The largest number (40%) identified themselves as custom molders with some proprietary molding, followed by exclusive custom molding (24%) and exclusive proprietary molding (24%).
Here’s a surprise, though: almost 50% of respondents added new production lines to their operation in 2009, compared to only 28% in 2008. This time around, two thirds of these added between one and three new lines and the rest added between four and 10.
A DROP IN UTILIZATION RATES
For respondents looking for a silver lining in their machine utilization rates, here it is: on average, there was no fall off from last year. In 2008, 34% of molders said their average utilization rate was at 39% or lower. Twelve months and one reces-sion later, 31% reported a utilization rate of 39% or lower. Lest you think there hasn’t been a decline over the long term, however, less than 10% had utilization rates below 39% in 2006. Cut to the pres-ent again and just over 22% of respon-dents had a utilization rate between 40% and 59%, 21% utilized between 60% and 79% and a mere 4% utilized above 80% of their machines.
For some of the respondents, it seems safe to say that this overcapacity is made more striking by troubles bringing in new business: for example, 31% said that less than 10% of the projects they quote on results in new work. It also seems true, though, that success can breed success: a higher percentage — 37% — said that 50% or more of quotes turn into new business.
If you expected lower utilization and sometimes lower levels of new business to hurt resin consumption, you’re right. Based on averaging the survey responses — 14 respondents answered the question — Canadian molders ran through 729,709.52 lbs. of resin in 2009, a significant falloff from the 4.57 million lbs. consumed on average in 2008. Can the level really have dropped that much, or do we have a different set of respondents this year? The truth is probably a convergence of the two.
PURCHASES: GLIMMERS OF HOPE
The increase in production lines hints at an uptick in manufacturing. Will this necessitate purchasing new equipment? In a word…maybe. Only 25% of respondents said their shops plan on purchasing injection molding machines in 2010 — exactly the same percentage as answered “yes” to this question last year. For equipment manufacturers, the silver lining is that 80% of those shops splurging for machines this year are planning on buying new, not used.
The markets for both new linear and new articulated robots don’t bode particularly well, either: sixty-nine per cent of respondents said they aren’t planning on buying new linear units, and a whopping
82% have no plans to buy new articulated units. The picture for auxiliary suppliers, by comparison, looks positively rosy: sixty-five per cent of respondents plan on buying new auxiliary equipment within the next year.
So, will all the money that won’t be going into new equipment wind up being invested in other ways, such as research and development (R&D), for example, or employee training? Compared to last year’s results, yes. Almost 13% of respondents this year said that their shops had put more than 4% of annual budgeted expenses in 2009 towards employee training, compared with 3% who invested that much in 2008.
The pattern also holds true for product R&D: exactly 50% of this year’s respondents invested 4% or more of annual budgeted expenses on product R&D in 2009 — a higher number than in 2008 (28% of respondents) and 2007 (43% of respondents).
There’s a whole wide world outside Canada, and more survey respondents seem to be aware of that this year. Almost 20% said they send more than 75% of their product beyond the Canadian border — a significantly higher figure than in the 2008 survey — while 22% shipped between 50% and 75% outside Canada; the rest shipped from 49% to zero of their product out
The number of respondents with a sales presence abroad seems to have grown, too. Fifty-five per cent don’t have an international presence, which sounds high — but fully 75% of respondents didn’t have an international presence in 2008. This year, 35% have a presence in the U.S., 15% in China, 10% in India (none of the respondents in 2008 had a Chinese or an Indian connection) and the rest in such disparate countries as England, Spain, Mexico and Italy.
Of those who do have an international presence, almost 18% have a manufacturing plant, 12% have a sales office and 6% are involved in a joint venture with a local firm.
Okay, here’s where the other shoe drops. Seventy-seven per cent of this year’s respondents experienced a “significant” business slowdown in 2009. This comes as a shock to no one, of course, but it’s still a piece of very bad news. Here’s some good news, though: sixty-six per cent of the molders anticipate a recovery in 2010.
Wishful thinking? Next year’s survey should tell the tale.
BY THE NUMBERS
Average number of employees
Average hourly rate paid to machine operator, excluding benefits
Average amount of resin consumed at plant (lbs.)
Average total revenue in 2009
Raw Data On Raw Materials
Our 2009 survey asked injection molders what kinds of polymers they currently process at their facilities.
No surprise here: engineering and commodity resins make up the bulk of what’s processed at Canadian plants — 82% and 77% respectively.
Sixty per cent are using specialty resins in their processes, an uptick from the 56% in 2008 and a big jump overall from the 39% in 2007. Moreover, almost 14% are processing bio-based and/or biodegradable resins; again, slightly more than last year (9%) and a lot more than two years ago (zero).
VIEW SURVEY RESULTS ONLINE
The complete 2009 Injection Molders’ Benchmark Survey is available at: www.canplastics.com/survey/archives/IMSurvey2009.pdf