Automotive custom molders tool up for the '90s.

Automotive Custom Molders Tool Up for the '90s

If, as is widely expected, the 1990s bring greater use of plastic in cars, what role will custom processors play in that market growth? What plans are they making today to prepare for that role? More specifically, what capital expenditures are they planning to invest in processing equipment, processing R&D, CAD/CAM, and secondary value-added processes such as finishing and assembly? And perhaps most interesting of all, what do their capital spending plans reveal about where they expect automotive plastics to go in terms of materials and processing types? To answer these and other questions about one of the most dynamic plastics sectors, we mailed a questionnaire to all of the more than 1400 plastics processors in the U.S. doing some custom automotive work, and received back 129 usable responses, representing 9% of the "universe."

Injection molding of thermoplastics is by far the most common process used at these plants. Eighty-one percent of the survey participants do some TP injection molding, while the next most prevalent is thermoset injection molding, performed by 12% of the sample. Extrusion of profiles or tubes is performed by 9% of the processors, the same amount that does some thermo-forming. RIM/RTM is performed by 7% of the group, blow molding and urethane foam processing by 6%, sheet extrusion by 3%, and 2% each do FRP hand lay-up/spray-up, SMC, and thermoplastic sheet stamping.

Seventy percent of these processors rely on automotive for at least 50% of their business. Of the entire sample, 27% plan to increase the automotive share of their custom business in the next decade, while 40% plan to maintain it at the current proportion, and 33% plan to decrease their reliance on automotive.

AUTOMOTIVE IS DEMANDING

When we consider only those processors who currently get at least 50% of their business from automotive, only 10% plan to increase their reliance on the industry, while 50% plan to maintain their current mix of business, and 40% say they will decrease their reliance on automotive.

The reasons why some processors want to lessen their dependence on the automotive industry vary. One says simply that the company "would like to add non-automotive to improve the mix of business," much like a cautious investor would diversify a portfolio. Several other molders are clearly distressed, speaking of automotive as a "bad experience" full of "pressures and demands" for special services like Just-in-Time (JIT) delivery, statistical process and quality control (SPC, SQC), and razor-sharp cost control. A displeased processor relates that "the auto companies expect us to open our books and put on expensive product design and development teams, without direct compensation for these services. Then they expect a decrease in each year's part costs. We are being squeezed severely." Although this particular processor plans to decrease its reliance on automotive, it still expects to get as much as 80% of its business from the industry in 1999.

While this provides a picture of how custom processors expect their automotive business to fare in relation to their other work, we also asked the survey participants to indicate what they foresee happening specifically to the dollar volume of their automotive business in the '90s. As a whole group, 31% predict a big increase in their automotive revenues, 55% foresee a small-to-moderate increase, and 14% expect either a decrease or no change.

Even among the processors planning to decrease their reliance on automotive, 21% predict a big increase in dollar volume from this market sector, while 59% foresee a small-to-moderate increase, and only 20% expect a decrease in their custom automotive business. One reason cited by many processors is that EPA Corporate Average Fuel Economy (CAFE) regulations will continue to provide a spur to new metal-replacing plastics applications.

For thermoplastic injection molding, a sufficient number of responses was obtained to provide a more detailed picture of business growth estimates for the next decade. For injection machines under 1000 tons clamp capacity, 42% of the respondents predict dollar value growth of their custom automotive business to be in the 1-to-25% range, while 36% predict greater than 25% growth, 13% predict no change, and 9% predict a decrease.

Confirming widely held expectations of a trend toward larger molded parts, the growth estimates for users of large injection machines (over 1000 tons) are more optimistic: 64% predicting greater than 25% growth, 29% predicting growth of 1-25%, and only 7% predicting no change. None of these processors expect a decrease in business for large machines, and 25% predict growth to be greater than 50% (as compared to only 18% who predict greater than 50% growth for small-to-medium-size machines).

WHERE THE DOLLARS WILL GO

When we asked the survey participants about their top investment priority for their automotive custom business in the next 10 years, 68% said their biggest area of investment would be in processing equipment. Process R&D came in as the solid second-highest priority, with design close behind in third place.

Some of the processors surveyed were willing to share their future machinery purchasing plans for meeting anticipated automotive custom plastics growth. A total of 84 injection molders said they plan to buy an average of 10.3 injection machines apiece in the under-1000-ton clamp range for automotive work during the next decade. In the over-1000-ton injection machine range, 28 processors plan to purchase an average of 6.9 machines apiece. Thirteen blow molders in the sample also figure to purchase 6.9 machines each, while 13 thermoset injection molders plan an average of 2.8 new machines each. Nine profile/tube extrusion processors expect to buy an average of 8.4 machines each, while nine thermo-formers plan an average of 1.8 new machines for customs automotive work.

TARGETS FOR R&D SPENDING

In planned processing R&D expenditures, TP injection molding understandably leads the list of process types, cited as an area of expenditure by 81% of the processors who plan to conduct such R&D in the '90s. Next in line are R&D on thermoset injection molding (planned by 18% of the processors planning R&D), blow molding (17%), RIM/RTM (16%), profile/tube extrusion (15%), and thermoforming (14%). Also mentioned for R&D expenditures were thermoplastic structural foam (9% of respondents), urethane foam (7%), sheet extrusion (6%), SMC (3%), and thermoplastic sheet stamping (3%).

EXPLORING NEW

PROCESSES

Thirty-seven percent of the survey respondents plan to explore additional plastic processes for custom automotive work in the '90s. The most frequently mentioned "new" area of processing was large-parts injection molding (with over-1000-ton machines): 9% of all respondents plan to enter this field for the first time during the next decade. The next most often mentioned "new" process was blow molding, mentioned by 6% of the sample, while profile/tube extrusion, thermoset injection molding, and RIM/RTM will each be taken up by 5% of the plants surveyed. Only 3% plan to get into thermoplastic sheet stamping or thermoforming, and 2% or fewer plan to get into TP structural foam, TP injection molding with under-1000-ton presses, sheet extrusion, SMC, or urethane foam molding for the first time in the next decade.

As an indication of the growth rates of these processes, we tabulated the percent increase in the number of custom processors planning to use each process for automotive work in the 1990s (see process growth table). Relative to the number of custom automotive processors currently found in each field, the greatest percentage growth rates were anticipated by the survey group in thermoplastic sheet stamping, blow molding, and RIM/RTM, even though the absolute numbers are now and will remain relatively small.

GROWTH IN SECONDARY

OPERATIONS

Custom automotive processors appear to be performing more and more secondary operations and additional services such as parts decorating and finishing, subassembly, tool design, part design, and toolmaking. This trend should continue as the decade progresses.

Our survey participants indicate that at least 50% of custom automotive processors are already performing each of these operations or services, and many of those not currently performing them expect to begin to do so during the next decade (see secondary operations chart). With the exception of toolmaking, each operation will be performed by at least 70% of the responding processors by the end of the decade. Only 10% of the processors are not performing any secondary operations at the present time, and that number is expected to shrink to 6% by 1999.

Furthermore, the majority of the molders currently involved in secondary operations plan to increase the amount of time and effort they spend on them. A total of 83% of the processors who do parts decorating and finishing plan to do more during the '90s, followed by 80% for part design, 77% for subassembly, 69% for toolmaking, and 66% for tool design. One molder commented that the key to automotive success in the next decade is to "become a full-service supplier of complete assemblies."

INCREASING USE OF CAD/CAM

A surprising 13% of the survey participants picked design as their first investment priority for automotive, and 40% said that it is their second priority. A 74% majority of the survey participants currently employ design engineers, and 93% expect to do so by the end of the decade. In other words, 74% of the processors currently without in-house design engineers plan to hire some by 1999.

With increased investment in design services, CAD/CAM systems figure to become more prevalent among customs automotive molding shops during the next decade. Over half of the processors surveyed (52%) currently have an in-house CAD/CAM system. By the end of the decade, 87% expect to have such a system, as 74% of those currently without one plan to purchase one by 1999.

Of the molders who currently have CAD/CAM capability, the overall number of work stations or "seats" in their systems is expected to double by 1999, from an average of 3.5 per system today, to 7.3 by the end of the decade.

Of the processors planning to buy a CAD/CAM systems for the first time during the next 10 years, 48% expect to have a system with two seats, followed by 21% who plan three seats, 17% who plan our four or more, and 14% who plan only one seat by 1999.

PHOTO : Above, survey participants reveal their current and projected mix of custom automotive and other work. Although the single largest group expects no change, more molders plan to decrease than increase involvement in automative. At right, processors give the dollar-volume outlook for their automotive molding operations in the next decade.

PHOTO : Newer fields such as TP sheet stamping, blow molding, and RIM/RTM will see a greater percent increase in numbers of automotive processors than more mature, established fields like TP injection molding with machines under 1000 tons (left). Also in the next decade, custom molders will provide more value-added operations and services (bottom left).