In recent months, there have been several important articles regarding the custom plastic injection molding industry and, very notably, news on the U.S political front that could change the direction of all American industry.
The discussion in this piece summarizes some relevant custom plastic injection molding articles while exploring the industry impact of the possible repatriation of manufacturing that has departed the United States in recent decades.
What to Consider When Evaluating a Plastic Injection Molding Company
In a June blog, GreenLeaf Industries presented an important instructional mapping of how to select a high-quality plastic injection molding company to meet your needs. The article defined seven important aspects that any sourcing manager should address when making their decision. These are:
- Strategic Fit: Will you be able to communicate and create a long-term relationship?
- Available Plastics: Is the right material always available for your production?
- Production Capabilities: Does the company have sufficient capacity for your business?
- Expanded Services: Does the company have the flexibility and ability to fulfill other projects as they occur?
- Quality Standards: Does the company stress quality assurance standards and are the able to meet industry standards?
- Customer Service: Relationships in the plastics molding industry are meant to be long-term. Are the communications honest, effective, and timely?
- Previous Work: How has the company performed with similar types of projects.
Energizing American Manufacturing
While quality and value will continue to be the drivers of business and individual purchasing choices, political and economic changes seem to be redirecting production back to the United States.
The quality of U.S. production has been the beacon for the rest of the world for over a century. While a major percentage of the market still resides within North America, encouraging manufacturing to return to the United States makes sense (re-shoring).
The most significant political factor driving this change seems to be the recent presidential campaign that has placed a spotlight on the number of companies that have moved some operations offshore.
Similarly, many U.S.-based businesses have adopted global sourcing practices in recent decades to lower their operating costs. While these strategies may have been intended to create a positive global presence, this activity often came at the expense of the American manufacturing infrastructure.
One economic dynamic that makes reshoring of American manufacturing a logical development is that China and other developing nations are not the low-cost proposition that they once were. In coastal production areas like Shenzhen and Tianjin, China, the cost of living and demand for higher wages have risen to the extent that Chinese production costs (plus ocean freight) are nearly on par with U.S. production when individual productivity is factored into the total cost (see more below).
Plastics Today Highlight:
Purchasing Leaders Do Not Have a Seat at the Leadership Table for Many Companies
One of Plastics Today’s Top Articles for 2016, deals with the secondary role of the purchasing and supply chain functions in setting the corporate direction for many of the world’s largest companies. When the decision makers are usually the CEO, Finance and Accounting heads, Engineering, Marketing, and Human Resources, the mandate to cut costs becomes the primary driver of the business. According to the article, 53% of CEOs do not believe that the purchasing function creates value.
This attitude is remarkable when you consider that material and supply chain costs are often as much as 70% of total sales. One unfortunate outcome of this approach has been to award business to the lowest bidder. The least-cost bidder for custom plastic injection molding may, in some cases, be inconsistent in quality and raw material or lack the necessary communications and staffing to control their costs. Moreover, the company may be approaching insolvency.
Total Cost of Ownership for Custom Plastic Injection Molding
By addressing the Total Cost of Ownership, a GreenLeaf Industry’s article highlights the particular advantages that locating a custom plastic injection molding facility in the United States will have versus off-shore production.
Included in the considerations are the elimination of significant freight costs and lead times, the advantage of the proximity to your customer, and the U.S. Government encouragement to produce in this country.
The crux of the article is to debunk the automatic assumption that offshore production is less expensive than domestic. The fact is that assumption may not be valid when all costs have been calculated.
Moreover, the growing preference for domestically produced goods seems to be a significant competitive factor as we see “Made in America” marketing strategies continue to expand.
Plastic Injection Molding Terms You Should Know
Can you explain what LIM or notch sensitivity is?
If you are not directly involved in the production of custom plastic injection molding, GreenLeaf provides a glossary of terms to help you sound knowledgeable in any situation. Their current list of 10 somewhat obscure custom injection molding terms is a part of their more extensive plastics industry eBook of technical terminology. Add to your knowledge by downloading the free GreenLeaf’s Resource Guide to converse intelligently about injection molded plastics issues with engineers, project managers, and technicians.
Resin Pricing vs. Recycling
As with any recycled materials, pricing is dependent on the cost of producing virgin material. When petroleum pricing is relatively cheap, as it is now, the resin used for producing plastics is also low.
Therefore, creating new plastic products from recycled raw materials loses some of its previous appeal when recycling is as expensive as producing new plastic components.
A blog in the Plastics News last year depicts the challenges for recyclers to remain profitable even in light of increasing recycled material availability.
Also, many recyclers have either closed down due to shortages of material, acquisitions by larger companies, or simply a lack of profitability. While resin costs and recycled material costs are cyclical in nature, the current outlook seems to be for relatively low material costs to continue in the coming year and beyond.
About GreenLeaf: GreenLeaf Industries is an ISO 9001 registered manufacturer that consistently adheres to all its standards to provide our clients with consistent, reliable, quality automotive and industrial plastic parts.
We are an American injection molding company, unafraid to compete in the world market and determined to succeed. Established in 1999, we take pride in our high-quality craftsmanship and superior customer service. Contact us to discuss whether your injection molding project may be a candidate for reshoring.
310 Bussell Ferry Road
Lenoir City, TN 37771