'Knowledge is power' in resin buying.

Substantial savings in resin costs are ripe for picking by plastics processors, and Resin Technologies Inc. claims it has the know-how to help them harvest the crop. RTI says it has assembled a database of price/volume relationships that can help a small- or medium-sized resin buyer garner big dollar gains in a short time.

"RTI is all about providing accurate information on how resin markets function, which empowers processors' purchasing agents," states Bill Bowie, chief operating officer. He and president Garland Strong, along with a dozen colleagues, all have experience gained from careers at resin suppliers.

RTI currently assists about 60 clients who collectively purchase several billion lb/yr of a broad range of resins. RTI's software tracks and analyzes "shift points" in resin-price trends for its clients in real time. RTI also e-mails a weekly report to clients that interprets trends in resin prices.

RTI draws on information developed by its staff and collaborators like Mid-America Plastics Partners, an association of 160 plastics processors in 20 states. Nine of them have enrolled in the MAPP "user group" for RTI services. They estimate their joint savings are now about $1.4 million/yr.

Be an informed customer

Materials constitute between 30% and 80% of total operating costs for domestic processors, by Bowie's estimate. The lower number applies more to injection molders and the higher figure to film extrusion. He says U.S. suppliers of some engineering resins have been so successful in branding their materials and getting them specified for particular end products that these resin prices can be surprisingly resistant to competitive pressure.

RTI's solution is to make its clients better-informed resin buyers. Armed with timely, accurate data on market prices, they are more able to negotiate a better deal. RTI helps them pick lower-cost alternative resins. Clients also learn how to time their purchases to take advantage of price trends.

RTI begins with a confidential analysis of a client's buying patterns and practices. RTI almost always identifies ways to cut purchasing costs. The parties then sign a two-year contract providing for a 50:50 split of savings the processor realizes from RTI's advice. No upfront payment is required.

Next, RTI develops an action plan detailing specific steps to capture savings. Typically, RTI identifies lower-priced equivalents to grades currently used for an application. It then helps get the new candidates specified.

Bowie says most clients initially are reluctant to switch suppliers and material grades. Yet RTI's comparative materials data and market information ultimately embolden these buyers to use the leverage this knowledge provides.

Positive experiences

Three MAPP members indicate that RTI's approach brings results. A year after signing up with RTI, initial resin savings are starting to trickle in for DeKalb Molded Plastics in Butler, Ind. DeKalb, a molder of large structural foam and gas-assist parts, has kept most of its prior supply relationships intact. But RTI's data on market prices and alternative grades has given DeKalb leverage in buying engineering resins and color concentrates.

RTI also prompted Elkhart Plastics, a rotomolder in Middlebury, Ind., to take a more informed approach to resin buying, says Mark Szabo, purchasing director. He says RTI's data gives him a "solid basis" for negotiating LLDPE contract prices--especially during periods when the outcome of an announced price increase is uncertain.

Rick Green, operations v.p. at Bourbon Plastics, an injection molder in Bourbon, Ind., says his company is saving around $12,000 a year in contract costs for nylon 66. RTI's information gives the company's busy purchasing agent more confidence in negotiating with suppliers.

NEED TO KNOW MORE?

Mid-America Plastics Partners, Indianapolis [phone], www.mappinc.com

Resin Technologies Inc., Ft. Worth, Texas [phone], www.resinpros.com