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Plastics Business

Strategies for Today’s Plastics Processors

Contents

profile

8

solutions

product

15

28

features profile Falcon Plastics: Customer-Driven Growth Guides Expansion, Profitability .........................................................................8 solutions Mold Cleaning Technologies Save Time, Money and Aggravation ................................................................................. 15

departments director’s letter ..................6 product ............................28

trends Material Trends to Watch ..................................................................... 20

association .......................30

strategies Cliff Notes and Other Tax Changes ..................................................... 32

advertisers .......................46

outlook Planning for Profitability and Stability in 2013 ..................................... 36 industry Legislative Outlook: Uncertainties Mean Plastics Industry Must Remain Engaged on National Issues ............................. 40 production Analysis of the Sales Management Process ......................................... 45

plasticsbusinessmag.com

4 | plastics business • winter 2013


director’s letter

Revenue Goals for 2013 – Prospects Will Make or Break You! How did you greet the new year? Did you utter a glorious “ahhhh” at the start of 2013, or was your greeting more of a “blahhh”? For many, the start of a new year means discarding bad habits, setting new goals and wiping the slate clean. If you are a sales professional or responsible for top line revenue in your organization, the outlook when starting a brand new year often depends on the quality of your previous year. Depending on how sales goals went in 2012, you may have had a positive feeling or a negative feeling about January 1, 2013. If the goals were met, that is fortunate, but now you have to start all over again. If you were not fortunate enough to reach your goals, it might be a relief to start fresh while putting the year’s disappointments far behind. I elected to focus on the sales professional in this editorial because I’ve personally experienced both sides of entering into a new year. Meeting and exceeding established sales goals truly is a process, and one that should not be left up to happenstance. Yet, after spending hours and hours analyzing and cranking through the massive amounts of survey data we’ve gathered on the Sales Management Process, I found that “happenstance” too often is the plan. However, I also found reinforcement illustrating that reaching sales goals routinely can happen if your sales management process is robust and efficient. The initial stage of the sales process – locating qualified prospects – is the basic building block of a successful sales effort. Document and track those that meet the sales criteria. I know this sounds a bit basic, but data collected from nearly 120 business leaders uncovered these facts: • •

25 percent of processors do not have or maintain a database of prospects. For those that do, 43 percent fail to routinely update and manage their information.

In addition, nearly two-thirds of the plastics manufacturing industry respondents rely on “word of mouth or customer referrals” to locate the majority of its new business, yet fewer than six percent are using web technology to track prospects hitting the company’s website. 94 percent of processors responding to the survey are completely ignoring a source of new business leads. I frequently pull up MAPP’s specialized tracking system and view the companies that visit our website. I know the search terms they used to find us, the pages they visited and, in some cases, a list of names associated with the visiting company. We allocate time, energy and human resources to track down and communicate with those website visitors, because prospects are the building blocks of meeting sales goals! Oh – and not to forget – our staff has added 17 new prospects to our database this week using LinkedIn, industry-related publications and member referrals. We use data mining and set goals for data mining activities because we know that locating quality prospects is essential to beginning the sales process. This is one technique we use to ensure we end each year with a resounding “AHHH!”

Executive Director

6 | plastics business • winter 2013

For more information on the MAPP Sales Management Process survey, read the article on page 45.

Manufacturers Association for Plastics Processors, Inc. (MAPP) 7321 Shadeland Station Way, Suite 285 Indianapolis, IN 46256 phone 317.913.2440 • fax 317.913.2445 www.mappinc.com MAPP Board of Directors President Kelly Goodsel, Viking Plastics Bill Bartlett, First American Plastics/Quad, Inc. Tom Boyd, Blow Molded Specialties Dan Cunningham, Parish Manufacturing Norm Forest, Dymotek Molding Technologies Matt Groleau, RJG, Inc. Lindsey Hahn, Metro Plastics Technologies Laurie Harbour, Harbour Results, Inc. Ben Harp, Polymer Conversions, Inc. Bob Holbrook, Viking Plastics James Krause, Microplastics, Inc. John Passanisi, PRD, Inc. Eric Paules, Crescent Industries Jeff Randa, PolyOne Distribution Alan Rothenbuecher, ICE Miller LLP Scott Titzer, Infinity CleanRoom Solutions Mike Walter, MET Plastics, Inc. Rick Walters, DeKalb Molded Plastics Roger Williams, Royer Corp. Wendy Wloszek, Industrial Mold & Machine

Plastics Business

Strategies for Today’s Plastics Processors

Published by:

Peterson Publications, Inc. 2150 SW Westport Dr., Suite 101 Topeka, KS 66614 phone 785.271.5801 www.plasticsbusinessmag.com Editor in Chief Jeff Peterson

Advertising/Sales Janet Dunnichay

Managing Editor Dianna Brodine

Contributing Editor Jen Clark Gayla Peterson

Art Director Becky Arensdorf

Circulation Manager Brenda Schell


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Falcon PlastIcs:

Customer-Driven Growth Guides Expansion, Profitability Many processors talk about going the distance to ensure customer satisfaction. Falcon Plastics, Brookings, SD, has proven it over the past 37 years by expanding into four US facilities, adding cutting-edge equipment and collaborating in an injection molding facility in China to meet the manufacturing needs of its OEM partners, large and small. This customer-driven growth has been undertaken with appropriate caution, concentrated research and more than a touch of entrepreneurial spirit. Growing with Intention Founded in 1975 by Don Bender, the father of current president Jay Bender, Falcon Plastics performs custom injection molding and blow molding within a variety of industries, including medical, office products, industrial, electronics, recreation/sporting goods, consumer products, toys, agricultural, transportation and custom-built machinery. Volume can run from 100 pieces per run (and less) to millions of parts per year on injection molding machines ranging from 45 to 1,000 tons.

8 | plastics business • winter 2013

by Dianna Brodine

Originally located within a 5,000-sq.ft. facility in Brookings, Falcon Plastics moved into an 18,000-sq.ft. building in 1978. By 1986, growth required relocation into a 30,000sq.ft. building which still operates as the current corporate headquarters. In 2007, a second Brookings facility was built. Dedicated to production, the 75,000-sq.ft. building already has gone through two expansions and, as it is located on 14 acres of land, has the ability to expand further. In 1990, Falcon Plastics opened its first satellite facility in Madison, SD, to meet the need for a project for Toshiba. Toshiba was running such large volumes on a toner cartridge project that multiple tools had been created. However, all of the tooling was located in Brookings and, in case of disaster, Toshiba wanted to split the tooling among more than one facility. Rather than absorb the business loss were Toshiba to take the tooling elsewhere, Falcon Plastics opened a second facility instead. “We became used to running a remote facility,” explained Bender, “but it was only 45 minutes from our headquarters.” In 1995, when another customer closed its South Dakota facility and moved to Tennessee, to a location only 20 miles


profile

from a Falcon Plastics’ sales representative and another big customer, Falcon considered expanding into a third location. “We thought, ‘We know how to do this!’,” laughed Bender. “We opened that plant in November of 1995, and we struggled tremendously for six or seven years. If we were a public company, that plant would have closed.” The management mix wasn’t working, and Bender knew it, even going so far as to ask his brother-in-law to run the plant for a couple of years. Finally, the right plant manager was hired and the Tennessee facility now is one of Falcon’s best performing plants.

facility, he invited his customer to visit as well. “The customer liked what they saw, and in August of 2011, we struck a deal.”

Even with the early struggles in Tennessee, Falcon Plastics has an extraordinary reputation of profitability. Bender said, “We’ve been in business since 1975 and have never had a fiscal year where we’ve lost money.” That’s a trend he is anxious to continue. With a focused effort to spread its business mix across customers and product lines, Falcon Plastics has been motivated to find customers in new areas.

Now, as China develops a market for higher-end product within its own country, Bender and his partners see an opportunity to penetrate that market with product manufactured in China to US standards. Bender is insistent that the integrity and quality that Falcon Plastics is known for not be compromised. “We’re

The process hasn’t been quick, but tooling now is in production and the China facility will be shipping product in January of this year. In addition, other opportunities have developed, including new customers who appreciate an American company with on-the-ground expertise in China and those that are reshoring tools to Falcon’s South Dakota facilities.

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overseas Growth through china Partnership In 2011, Falcon Plastics grew again, partnering with two other members of the Manufacturers Association of Plastics Processors (MAPP) in an injection molding facility in China. “Our biggest customer is an international company, and they had opened a sales office in Shanghai,” explained Bender. “They found that competing in Asia can be difficult when the product is made elsewhere and shipped in for distribution, and finally came to the conclusion that if they wanted to be serious about the market, they had to have a manufacturing presence.” Bender discussed his concern that his customer’s production may be moving overseas with Troy Nix, executive director of MAPP. Nix introduced Bender to Kelly Goodsel, president of Viking Plastics, at a MAPP Benchmarking Conference in Indianapolis. “Kelly was giving a presentation on doing business in China at the conference,” said Bender. “We started talking afterward, and Kelly already partnered with Dan Leedom, president of Poly-Cast, Inc., in a plant in Suzhou, which essentially is a suburb of Shanghai where my customer was located.” With a desire to further spread the financial risk and create a mix of products at the China facility – Viking Plastics is involved with the automotive industry, Poly-Cast with heavy transportation and the Falcon Plastics customer with electronics – entering into a partnership agreement appeared to make sense. “By entering into a facility that already existed and was operating, it reduced my risk and made my customer feel a lot better,” Bender explained. After Bender toured the Suzhou

Falcon Plastics offers value-added services to its customers, including ultrasonic welding, foam-in-place gasketing and hot stamping.

www.plasticsbusinessmag.com | 9


profile t page 9

Custom injection molding and blow molding capabilities allow Falcon Plastics to serve a wide range of industries, including medical, office products, electronics, toys and more.

a supplier that customers can count on to use the type of practices they’re used to in production on American shores,” he said, citing ISO-certification, implementation of solid manufacturing standards and the use of engineered materials. “Again, this growth was customer-driven,” reminded Bender. “We didn’t go to China to mold product and ship it back to the US. Rather, we invested in the facility to gain more business from one of our largest customers, and I don’t know if they would have trusted us to do this without an established presence in China.”

machines were purchased and upgraded. Similarly, another customer required foam-in-place gasketing and, while Falcon was currently running the job at its Tennessee plant, the customer was located in Brookings. To reduce shipping costs and bring the work back to South Dakota, Falcon invested in a new foam-in-place gasketing machine and kept the older machine to provide redundancy to protect the customer. The shift required a nearly $500,000 investment on the part of Falcon Plastics, but the transition has been completed and the customer is happy.

Growth through Value-added services Falcon Plastics has grown aggressively in its physical locations, and also has met customer needs with additions in equipment and processes. Beyond molding, Falcon offers foam-in-place gasketing, ultrasonic welding, hot stamping, assembly, mold making, CAD design, rapid prototyping (FDM), material analysis, in-mold labeling, decorating, assembly and packaging.

“On the ultrasonic welding side, I would venture there’s no one doing anything more technical than what we’re doing,” stated Bender. “We have machines linked to weld one part – extremely difficult parts – and the parts aren’t just mechanically connected, but also sealed all the way around.” With more than 20 ultrasonic welding machines, Falcon Plastics worked with its suppliers to develop unique ways to use the equipment to create the desired weld. In addition, the company completes a great deal of assembly that is automated with 6-axis robots. “These are value-added processes that we’re very proud of,” said Bender. “These aren’t things that our customers can get off-the-shelf from other molders.”

Recent equipment purchases include two blow molding machines, several injection molding machines, several presstop robots, a corrugated extrusion line, a foam-in-place gasket machine, a thermoforming machine and a sophisticated measuring machine. These purchases have been driven by a desire to satisfy the needs of its customers. For instance, one of Falcon’s existing customers had blow molding work spread across several molders. In order to consolidate that work to Falcon, additional capacity had to be added, so two used blow molding

10 | plastics business • winter 2013

Rapid prototyping is a more recent development. “One of our clients needed $4,000 in prototyping, and once we researched it, we realized we could buy an entry level machine and set it up for approximately $20,000. It was a low risk way for us to get into the process and see what we could do with it,” said Bender. Once the first order was completed, another customer asked about using the equipment to complete low-volume


production. That business quickly grew, leading Falcon to purchase second and third machines for use in production. Recently, a fourth machine was purchased that allows the use of a greater materials range, is faster and has a bigger envelope. “That was a bigger risk for us,” Bender explained, “because the machine was much more expensive. The jury still is out on whether that was a good idea or Four rapid prototyping machines enable low-volume production and not, but we’ve only had it four or five functional prototype creation. months.” The new FDM machine has been used to create functional prototypes, and Bender believes it has helped to drive business Growth by Encouraging other Entrepreneurs to Falcon. “It’s been a growing area of business for us, even On the home page of the Falcon Plastics website, a bright though we haven’t marketed it much,” he said. “Now, that’s yellow light bulb asks, “Have a Great Idea?” The text changing since we’ve invested some real money into rapid continues, “We help entrepreneurs realize their vision with prototyping – the machines aren’t toys anymore!” our affordable design and rapid prototyping, so you can show

page 12 u

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www.plasticsbusinessmag.com | 11


profile t page 11 your product to investors and more easily secure funding.” Six years ago, Falcon Plastics spun its tooling work into a separate company named Premier Source. At that time, Falcon’s tooling shop was focused on maintenance and repair, but the mold building equipment was not seeing much use. “We either needed to get out of the mold making business and sell off our equipment,” said Bender, “or we needed to do something with it.” With a soft spot for the tooling side of the business, Bender set up Premier Source with the idea that it might be possible to begin selling tooling to other molders. What has evolved, however, has been more fun.

The ownership at Falcon Plastics is comprised of Jay Bender, president; Shaun Riedesel, vice president of engineering and Guy Bender, CEO.

“There were times at our molding facilities where the smaller customers were lost in the hustle to satisfy the big customers,” Bender explained. “We moved those smaller customers and low-volume production work to Premier Source, where

they could get more attention.” Once the facility had been established as a boutique molder and tooling designer, the company’s entrepreneurial spirit attracted a new type of customer. “Like a lot of custom molders, we had people with great ideas and people with goofy ideas knocking on the door,” Bender laughed. “We didn’t want to devote time to that at our highproduction facilities, but we figured out a different business model for Premier Source.” Now, entrepreneurs with product ideas have a place to go. Engineers at Premier Source work with individuals and small companies, assisting with design, creating prototypes, developing functional parts and even easing them into production. Bender explained, “We’re in a college town, and Brookings is trying to build an entrepreneurial spirit. We need to help people grow their business ideas here, so we’re providing the encouragement for that to happen.” Success comes to those who open the door to opportunity. One of the projects created with the assistance of Premier Source is the Glif, an iPhone accessory that is the brainchild of Studio Neat. After working with the creators to bring the Glif to production, Premier Source has become a go-to resource for the entrepreneurial community, in part because of a book written by Studio Neat, entitled, It Will Be Exhilarating: Indie Capitalism and Design Entrepreneurship in the 21st Century. “We’re mentioned in the book,” said Bender, “and local papers have written the story. Other entrepreneurial people are coming to us, and it’s been fun.” Bender acknowledges that there is some risk involved, but says it’s minimized with

12 | plastics business • winter 2013

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profile t page 12 a dedicated staff that is capable of assessing each project before it goes too far. The business model is based on blocks of time that can be purchased by the project initiator, protecting them from a large upfront financial commitment as well. “We have fairly aggressive growth strategies for each of our facilities, and that includes Premier Source,” Bender explained. “We want to attract new customers, as well as develop more business with existing customers, and we can do that with these entrepreneurial projects. We have the equipment and talent to make a positive difference.” continued Growth on the Horizon Not every opportunity will be the right one, and not every path to success will be smooth. As with the Tennessee facility, patience and perseverance are required… and a willingness to roll the dice doesn’t hurt.

The company completes automated assembly with 6-axis robots.

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“We stand by our customers as partners,” said Bender. “We try to build very long-term relationships, and then use those relationships as a springboard for customer-driven growth. At the same time, we’re opportunists, and we’re not afraid to take a chance.” Pointing to the China partnership, Bender admits that it may be several years before he knows if the risk paid off. “Customers are savvy, and they’re shopping globally. In five or 10 years, we’re hoping we look back at the China facility and say it was a good opportunity.” Bender doesn’t rule out anything when it comes to future growth, and a marketing drive is underway to develop new customers and industries. One of the first steps included a redesigned website, where the talents of Falcon’s 242-person workforce and its close relationships with customers are featured, in addition to the diverse capabilities offered by the molder. “We were growing somewhat organically,” Bender explained, “and then the recession hit, so all available manpower went to sales. The marketing side suffered, and now we’re moving forward with a consistent and intentional effort.” As the third generation of the family enters the business as young professionals, Bender sees many possibilities as Falcon Plastics moves forward. He believes the company will continue to grow in an educated fashion and with awareness of the risks involved, but without losing the spark that makes business enjoyable. “Our company is full of people of high integrity who are driven to work hard and succeed,” he said, “but we try to have fun while we’re getting the job done.” n


solutions

Mold Cleaning Technologies Save Time, Money and Aggravation by Steve Johnson, ToolingDocs As noted in “The Cleaning Culture for Molds” (Plastics Business Fall 2012), the most popular method of cleaning plastic injection molds remains rooted in the antiquated process of scrubbing tooling and plates, one piece at a time. Ask why and the answer will be some form of “This is the way we have always done it,” “We cannot cost-justify other methods,” “Other methods do not clean as well” or “We’re too busy, and there’s no time to experiment or investigate other methods.” These excuses cost companies thousands of dollars a day in wasted time, inconsistent results and worn tooling. This article addresses three examples of cleaning technologies that fit perfectly with specific aspects of cleaning typical molds and tooling components.

The Blue Wave ultrasonic cleaning tank is used to remove residue.

Ultrasonic Cleaning

Ultrasonic cleaning involves the use of high-frequency sound waves to clean mold residues and fouling from tooling and plates that are immersed in a heated (usually 160 to 180°F) aqueous solution. How It Works An ultrasonic electric generator is used to convert standard line frequency current (60Hz or 50Hz) into high-frequency electrical energy (20,000Hz or more). The generator is connected to small transducers that are mounted to the bottom or sides of a wash tank. These transducers vibrate at ultrasonic frequencies (20kHz and above) when the current passes through, causing the bottom or sides of the tank to vibrate like the diaphragm in a speaker. This creates microscopic bubbles (a phenomenon known as cavitation) in the tank to scrub and loosen vent residue and grime. The energy released from these microscopic scrubbing bubbles produces forces at 10,000°F at 7,500psi, which is powerful enough to loosen contaminates without damaging critical edges or surface finishes.

Key Considerations for an Ultrasonic Cleaning System Cleaning Solution.The process and type of resin being run help determine the type of detergent required because of specific types of off-gassing residue that resins leave behind. Highly alkaline solutions – such as sodium hydroxide (considered “caustic” in raw form) – do the best job of removing stubborn contaminates, light rust and heavy grease on most tooling and plates, with no harm to most applied plating and coatings. Mild alkaline solutions also are available that perform well on many residues without the caustic issues. But, in general, the friendlier the detergent, the less effective it will be on stubborn contaminates. Slightly acidic solutions – such as those containing low concentrations of citric acid – excel at rust and oxide removal, but need to be used with caution on some tool steels because they can react with the iron in the steel, turning it gray. This normally does not cause a problem, but doesn’t sit well with toolmakers. Alkaline or acidic water-based solutions usually are completely biodegradable (environmentally friendly), but may require neutralization prior to disposal. This is an easy page 16 u

www.plasticsbusinessmag.com | 15


solutions t page 15 process and requires adding either acidity to an alkaline solution or alkalinity to an acidic solution. The detergent manufacturers will be able to provide information on how to properly neutralize their detergents. There also are neutral pH-safe detergents being used that do a fair job removing most contaminants left from resins in use today. Combined with a minimal amount of hand scrubbing on heavily contaminated areas, these user-friendly solutions are gaining popularity with companies simply because of the ease of disposal, less mess and safer working conditions. Ultrasonic Power and Frequency. Cleaning heavy mold plates and tooling requires the use of heavy-duty equipment and not your typical ultrasonic jewelry cleaner. The amount of power (wattage) required is dependent upon the tank size and the type of load to be cleaned. From my experience, a tank of 70 gallons (approx. 24” x 30” x 25” deep), 3000 watts @ 30kHz performs well on molds and plates up to 6,000 lbs. Transducer Type and Construction. The heart of the system, transducers, come in two types: magnetostrictive and piezoelectric. Magnetostrictive transducers typically are more rugged and create the most aggressive cavitation action. Transducers may be specifically placed in the tank to correlate with the size and configuration of plates being cleaned. Tank Design and Construction. Buy a 12-gauge stainless steel tank large enough to totally immerse the largest mold plates being worked with in the facility. Getting a smaller tank that will require someone to flip the mold plates over for total coverage just to save a few bucks up front is a move that soon will be regretted. Tanks can be found sized 10’ x 6’ x 4’ deep and even larger. In the real world, mold plates will be slammed into the sides of the wash tank and baskets full of tooling will be dropped in too fast. Exposed knobs will be ripped off. The tank will run

16 | plastics business • winter 2013

The Cold Jet dry ice blasting system is a non-abrasive cleaning method.

24/7 because everyone suddenly will have something that needs to be ultrasonically cleaned, as evidenced by the grass clippings and paint residue floating on the surface. Heavy-duty, bullet-proof, robust, solid and big enough for the molds in use – all of these descriptions should apply when shopping for an ultrasonic system that will provide the value needed in a busy mold repair shop. Invest in all of these features before spending money on automatic loaders, washers, conveyors, dryers and fancy cabinetry – unless, of course, shop space and budget allow it!

CO2 Dry Ice Blasting

With the endless variety of resins, molds and processes being run today, there is no silver bullet for all types of mold fouling and corrosion. However, the dry ice cleaning system is extremely effective in performing certain duties that other systems do not accomplish. Ice blasting is a non-abrasive cleaning method popular among many automotive rubber molders because of its ability to clean molds in the press while the mold is hot and without causing any secondary waste stream of its own accord. Injection molders that periodically clean their tools in the press will appreciate the speed at which dry ice will accomplish this. When cleaning mold faces in the press, the mold tooling components are assembled at varying shut-off heights, forming nooks and crevices that are difficult to clean completely and without damage. Many times, the solvents used will migrate into the mold around the tooling and then leach out onto the part during production. With ice blasting, solid carbon dioxide pellets (about the size of a grain of rice) or shavings (about the size of a grain of sugar) are introduced into an air stream and shot out at high velocities through a variety of state-of-


the-art, aerodynamically designed nozzles to remove residue quickly and harmlessly from mold plates and tooling. How It Works Dry ice cleans using three criteria: • Kinetic Effect. Ice pellets exit the nozzle tip at 900 feet per second and are responsible for most of the cleaning power. If less cleaning power is needed – for instance, when cleaning hot runner electrical boxes – simply dial down the air pressure, thus reducing pellet velocity. Ice pellets are soft (1.5-2.0 Mohs) as compared to other media noted on page 18. Only talc (1.0 Mohs) is softer. • Thermal Effect. Dry ice is cold (-111 deg. F), and when it strikes contaminants that are hot, like on a 400°F mold face, the large delta-T between the two causes micro-cracks in the contaminant as it shrinks rapidly, thus breaking the bond with the mold substrate. • Sublimation Effect (gas expansion). The force generated by the ice turning into gas also aids in contaminant removal. Key Considerations for a Dry Ice Cleaning System Non-abrasive. Ice blasting is non-abrasive to all tool steels and hardened aluminum, even over an extended period of time. Companies can ice-blast molds several times per shift with no damage to parting lines, applied plating or surface finishes. It works on textured and polished cavity surfaces. Clean operation. Ice blasting creates no residual dust or waste stream through its own operation as all other media blasting units do. Air quality tests have been performed in cleanroom operations using ice blasting with no measurable effects from the sublimation of the carbon pellets. The residue blasted off the surface of the mold may collect over a period of weeks or months on surrounding equipment, but if it’s a problem, install air extraction hoods over the molds that generate heavy contamination. Portability. Small, lightweight units now are available that can be pushed right up to a mold on the bench or in the press, which results in a considerable cost savings over bringing the mold to the cleaner. Keep in mind that an air supply will be needed close by (within 20 feet) to tap into. Standard line pressures of 70 – 90 psi with a ¾-inch feed line will suffice. Versatile. Ice blasting systems can be used to clean a variety of molding equipment other than molds. They are effective cleaning press screws, barrels, internal mixers and other equipment when not in use on the mold. page 18 u


solutions t page 17 Low operational costs. Ice pellets for single line systems are about $0.20 cents a pound. It takes approximately 20 minutes to go through 30 pounds of ice pellets, which is about how long it takes to clean both halves of a plastic mold measuring 2’x3’. Plan on spending at least $25,000 for a single line portable unit and a couple of different nozzles. Ease of use. It only takes a few minutes to familiarize a operator with hooking up the hoses and nozzles and where to load the pellets. Non-abrasiveness eliminates the fear of surface degradation if the nozzle is moved too slowly. Mold safety. Mold plates can blow over and tooling launched from bores when proper precautions are not taken or the nozzle tip is misdirected. Plates must be securely braced or laying down. Tooling must be backed up or secured. Do not stack tooling in a basket and blast away.

necessary safety equipment must be worn, to include heavyduty gloves, full face mask, long sleeves, etc. Heavy rust/residue removal. The non-abrasive nature of ice blasting limits heavy stain and rust removal. Ice blasters also are a line-of-sight cleaning system, meaning operators can clean only what they can see. Ice blasting excels as an in-press cleaning system, reducing cleaning time and eliminating premature tooling wear when compared to the typical solvent-soaked rag and abrasive pad “wipe down” method. It also works great to remove LSR (liquid silicone rubber) colorant plate-out and when cleaning tooling with textured and polished surfaces.

Plastic Media Blasting

There will come a time when ultrasonic cleaning systems and ice blasting just don’t have the aggressiveness needed Personnel safety. As hunting dads always say, “Watch where to remove the heavy contaminants, rust and plate-out you point that thing, son.” This holds true in ice blasting. Flesh (colorants) that some molds suffer. The typical approach is FR-NPE-PlasticsAd-3-75x4-875-PostShow-outlines.pdf 1 4/5/12 4:04 PM is no match for ice pellets moving at 900 feet per second. All to use an aggressive (hard) media such as glass beads or sand in a standard blasting unit. It’s time to consider plastic. Most toolrooms are not aware that they can use plastic as a blasting/ cleaning media, but plastic is softer, lasts longer, is cleaner to use and will not harm mold steels. Friedrich Mohs developed a scale (Mohs) to measure hardness in minerals (media) from 1 (softest) to 10 (hardest) to determine what type of media is capable of scratching what type of surface. For instance, a fingernail is rated at 2.4, a copper penny is 3.2, window glass is 5.5 and a diamond is 10. There are literally dozens of different types of media used in blasting, so research thoroughly. Safely removing contaminants from molds requires an understanding of the hardness of the media to be sure it does not etch or erode the steel in any manner during cleaning. The three most commonly used medias found in tool rooms and their hardness scales are as follows:

18 | plastics business • winter 2013

Type Glass Beads Silica Sand Aluminum Oxide

Mohs Hardness 5.5 - 6.0 6.0 - 7.0 8.0 - 9.0

Plastic Media Polyester Soft Urea Medium Acrylic Medium Melamine Hard

Mohs Hardness 3.0 3.5 3.2 - 3.5 4.0


justify the ROI, track hand cleaning hours separately from other repairs made on molds. Technicians will see that 75 percent of their time will be spent on this stage of a typical mold repair, so why not consider investing in a more efficient system? In addition to the quick payback, there are major advantages over hand scrubbing in the form of increased speed, consistent A ToolingDocs certification trainee uses the Polyblaster, a plastic media results, eliminating tooling damage and blasting system from Polyblast, Inc. – just as important – a happier and more Not only is plastic media much softer (4 or less) than other productive group of repair technicians. n media, but it also does not break down as fast, nor does it produce the “dust” that seems to cover everything within 20 Steve Johnson is the operations manager for ToolingDocs, feet of the blast unit. The polyester media also will not harm a provider of mold maintenance training and consultation a polished surface on most tool steels, which makes it a good based in Ashland, OH. He designed and developed choice for removing heavy grime on cavity tooling and plates. MoldTrax™, a documentation software system for tracking mold performance and maintenance. To learn more, call 800.257.8369 or visit www.toolingdocs.com. The Bottom Line All three cleaning systems perform specific jobs with great speed, precision and results over hand cleaning. To help M Holland 2013 Calendar_FINAL 10/29/12 4:18 PM Page 1

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trends

Material Trends to Watch by Adam J. Wozniak, AMCO Polymers LLC

Looking back on 2012 for one recipe of success has been difficult. Instead, many varied scenarios with the same innovative roots seems to be a constant with plastic converting companies that are thriving and staged for more growth in the coming year. Utilization of creative supply chains remains an integral part of their innovation and differentiation from competition. Most, if not all, growing companies have made extensive efforts in bringing innovative solutions to OEMs and consumers alike. Focus on multi-layered, multi-component processes has increased sharply as the search for lower cost material solutions continues to be paramount. Advancements in new processes, specialized additive packages, improved blending technologies and reduction in supply chain bottlenecks will lead to improved processor-to-OEM relationships, as well as providing value-added services to the plastics community in 2013. Lighting Remains a Focus of Polycarbonate and Acrylic Multi-layer molding continues to be in high demand for lighting OEMs and producers. Multi-layer molding can allow clear parts to be thicker without warp and sink experienced in traditional converting processes. Requests for these technologies have been pronounced in LED lighting applications. Suppliers continue to identify materials that are suitable for this process with limited to no loss in transmittance and clarity, and suppliers have begun to implement technologies and processes which help to support the multi-layer molding trend. Polycarbonate and Acrylic continue to dominate this market and will continue due to their UV stability, light transmittance and ability to withstand temperatures associated with lighting applications. High demand for lower energy consumption and reduction in carbon emissions will fuel continued efforts to develop higher reflectivity, improved light dispersion and greater transmission of light through complex geometries. Demands of the lighting industry also have driven producers to develop innovative materials that can improve thermal conductivity in plastics. These polymers are being called upon to replace die-cast metals that traditionally are used in heat dissipaters and allow for complex design capability

20 | plastics business • winter 2013

and reduced scrap. Advancements have allowed for creation of materials that continue to approach thermal conductivity levels of Aluminum. Modification of Polycarbonate with specialized thermally conductive additives has increased and has helped engineers to create seamless lighting structures. Incorporation of thermally conductive Polycarbonate materials that have been over-molded with LED grade clear Polycarbonate can offer all-in-one light transmission with built-in heat dissipation. This also can be incorporated through secondary welding and bonding operations. LED technologies will lead the way for many municipalities to reduce energy expenditures. Replacement of incandescent bulbs and florescent lighting has proven its worth in many studies and has shown great potential in energy cost reductions. Initial cost for implementation can be high, but in most if not all cases the initial cost of conversion has paid for itself in a short period of time and has paved the way for future conversion throughout communities. Producers and suppliers alike will be pushed to bring to the forefront improved optics and advantages geared towards improving design and function. Partnering with suppliers that have the ability to adapt to changing regulatory and environmental requirements will remain a crucial puzzle piece in this market segment. page 22 u


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trends t page 20

“Drive for antimicrobial and anti-counterfeiting technologies are widely discussed, but cost implementation continues to be a limiting factor. New advancements have allowed lower cost additives to be implemented into antimicrobial and anti-counterfeiting solutions, and systems now can be added in concentrate, blended and compounded formats.”

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Traditionally Compounded Materials Redesigned into Specialty Blends Market demands to be innovative and cost-effective continue to be challenging, but technological advances in materials offer creative solutions to traditionally high-cost compounded materials. Advances in material miscibility and modification processes have helped to bring creative blending formulations to the forefront.

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22 | plastics business • winter 2013

The combination of flexible and rigid materials into multicomponent products has increased to allow for elastic properties while maintaining a rigid structure. Utilization of these technologies has peaked due to increased consumer demand for cosmetic and aesthetic appeal, while also reducing part and application weight without sacrificing safety. Advanced processes have evolved to allow multiple functions to be incorporated and rotated into single work cells. Multi-shot molding is utilized in automotive interior components for weight reduction, increased durability and increased functionality. New breakthroughs continue to be developed to improve adhesion of elastomeric materials to most substrates. Innovations in polarized additive packages have shown promise in creating multi-component material blends that promote adhesion to a wide variety of substrates and offer significant cost savings over traditionally compounded product offerings. Formulations have been established to allow for hardness ranging from 60 to 90 Shore A and can be produced in most colors while maintaining tight tolerances for improved cosmetic appearance. Advancements in elastomeric modifiers have paved the way for new generations of blended Thermoplastic Olefins. Improved miscibility and compatibility have led to traditional reactor grade thermoplastic olefins being replaced by multicomponent blends. Processors have benefited by creating their own custom products and generating cost reductions over traditional material options. Many new formulations of blended thermoplastic olefins enter the marketplace without sacrificing cold temperature impact and ductility versus traditional reactor grade and compounded thermoplastic olefins. These blends also can be custom-formulated to tight color tolerances for all types of applications. Low cost, low specific gravity and improved durability continue to keep TPO


products in the forefront for automotive, electrical, consumer and industrial markets. Today, many of these products are found in interior trim and garnish components, as well as exterior applications such as mud flaps, splash guards and bumper fascia.

Polyethylene, Thermoplastic Vulcanizate, Thermoplastic Elastomers, ABS, Nylon, Styrene, Acetal and Polycarbonate. Utilization of all of the aforementioned technologies help to improve dimensional stability, lower part weight and create unique solutions to traditional high-cost, low-wear materials.

Specialty Additives in Blends and Masterbatches Incorporation of siloxane masterbatches has helped to solve and reduce high-cost solutions to improved coefficient of friction. When OEMs look for improved coefficient of friction and wear resistance, they typically incorporate Acetal (POM) or compounded materials that are modified with PTFE or Molybdenum Disulfide.

Drive for antimicrobial and anti-counterfeiting technologies are widely discussed, but cost implementation continues to be a limiting factor. New advancements have allowed lower cost additives to be implemented into antimicrobial and anticounterfeiting solutions, and systems now can be added in concentrate, blended and compounded formats.

Recent developments in masterbatch technologies have allowed for Siloxane-based materials to be incorporated into applications that require improved coefficient of friction, improved wear resistance, scratch resistance and reduction of noise due to interfacing components. Formulations are available that incorporate materials such as Polypropylene,

Antimicrobial materials continue to become more economical and safer through improved delivery systems. Demand for these technologies continues to be focused on medical and consumer markets’ need for protection against harmful microorganisms. Previously utilized systems for delivery of antimicrobial ingredients are being phased out or limited in many hygiene applications where food or human contact is page 26 u

Amco Polymers Amalloy® clear & specialty polymers Color Concentrates Dry Color Anti Microbial Compounds Anti Counterfeiting Compounds Track & Trace Technology

800-262-6685

DuraStar® Injection Copolyesters Eastar® Injection/Extrusion Copolyesters Tritan® Copolyesters Provista® Flexible Extrusion Copolyesters Eastalloy®

Acrylite® Acrylic Compounds Acrylite Plus® Impact Acrylic Compounds Cyrex® Super Impact PC/Acrylic Cyrovu HP2® Acrylic Compounds XT Polymer® Medical Acrylic AQUATUF ® Performance HDPE for ROTO ECHO ® Recycled Polypropylene ECHO ® Recycled Polyethylene ECHO ® Recycled Filled PP HYBRID PC Alloys HYLAC ® ABS HYLEX Polycarbonate HYLON ® Nylon 6 HYLON ® Nylon 66 HYLOX PBT HYRIL SAN HYSUN ® ASA

Ultrason® Polysulfone / Polyethersulfone Ultramid® Nylon 6 & 66 Ultradur® PBT Ultraform® ACETAL

Iupilon® Polycarbonate Iupital® Copolymer Acetal Iupiace® Modified PPE

www.amco.ws Luran® SAN Luran S® ASA, ASA/PC Styrolux® Clear SBS Copolymer Terblend N® ABS / Nylon Blend Terluran® ABS Terlux® Clear ABS (MABS) NAS® Acrylic Copolymer STYROSUN® UV Resistant PS ZYLAR® Impact Modified NAS

AMCO POLYMERS LLC. 1900 Summit Tower Blvd. Orlando, FL 32810

Technyl® FR Polyamide Technyl A® Nylon 66 Polyamide Technyl B® Nylon 66/6 Polyamide Technyl C® Nylon 6 Polyamide Technyl Star® High Flow Nylon

CaCO3 Calcium Carbonate concentrates

Siloxane® Masterbatch

Enviroplas Compounds

HPPP Copylene ™ CPPP Copylene ™ RCPP Copylene ™

Apec® Heat Resistant PC Bayblend® PC/ABS Desmopan Polyurethane Makroblend® PC/PET Makrolon® Polycarbonate Texin® TPU

HiFill™ Compounds / Concentrates Elastoblend® Impact Modified Compound Electrablend® EMI/RFI Electrically Active Lubriblend® Lubricated Compounds Magnablend® Magnetic Compounds Plastiblend® Alloys & Blends Statiblend® Static Dissipative Compounds

Finacene® Clarified Metallocene HPPP Polypropylene: HPPP, CPPP, RCPP Polystyrene: HIPS, MIPS, GPPS Polyethylene:

Sarlink® Thermoplastic Elastomer Tekbond ® Thermoplastic Elastomer Monprene ® Thermoplastic Elastomer Elexar ® Thermoplastic Elastomer

Emarex® Nylon 6 / 66 Naxaloy® Polycarbonate Blends Naxell® Polycarbonate

Avantra® Ignition Resistant HIPS, PP, ABS ZYNTAR Ignition Resistant PS

Rigid PVC Flexible PVC

NOVAPOL® Polyethylene SCLAIR® Polyethylene Barex Barrier Resins

Safoam® Foaming Agents

All Logos and brand names are property of their respective trademark owners © 2012 Amco.

www.plasticsbusinessmag.com | 23


Industry Insight. World-Class Laboratories. Exceptional Value. You have change-over challenges. We have proven LusinÂŽ purge compounds that utilize a completely new approach: They release the bond of colors and residues at a molecular level, far superior to currently available chemical or mechanical purges that are less effective and may damage equipment. Our purge compounds safely and effectively remove color, residue and carbonization build-up for an efficient transition to a new material or color and longer periods of trouble-free operation. Each year, we spend thousands of hours on the floors of thermoplastic processing shops, giving our technical and manufacturing experts unmatched insight into the toughest production challenges. In our world-class, industry-dedicated laboratories, we apply this insight to developing solutions that improve your operational efficiency.


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trends t page 23 anticipated due to potentially harmful environmental and biological effects. Systems now can be operational without the implementation of harmful depositing additives through innovative masterbatches, compounds and blends that offer a safe, affordable and reliable solution for antimicrobial properties in plastics. Anti-counterfeiting technologies can offer multiple layers of brand protection, as well as provide traceability of finished goods and product deviations. New technologies allow for increased security through the covert ability to confirm authentic products. New concentrates, blends and compounded formulations offer a wide variety of options and price levels to meet most budgets and requirements. The aforementioned has proved to be helpful in reducing brand theft and in reducing the servicing of defective components that were not produced or commissioned by the brand owner. In today’s marketplace, strong relationships with suppliers will remain paramount to growth and profitability. n

26 | plastics business • winter 2013

Adam J. Wozniak is product development manager for AMCO Polymers LLC. Non-biased resin distribution companies like AMCO Polymers LLC offer authorized distribution, compounding, blending and specialty additives, along with reduced lead-times, local supply and inventory management services. As one of the newest members of the Ravago family, AMCO Polymers has expanded production capabilities and capacities and will continue to maintain its long-standing focus on solving customers’ problems through innovative technologies and creative supply solutions. For more information, call 630.444.1792 or email awonziak@amco.ws.


“We're still making short parts. We thought the tooling changes we made would resolve these issues.” —Process Engineer

“We won't be able to move this mold into production as scheduled and we need 3 more days.” —Production Manager

“We don't have 3 more days! We're already in hot water with this customer.” —CEO

ARE YOU TIRED OF HAVING THESE CONVERSATIONS? CAN YOU AFFORD TO KEEP HAVING THEM? Virtual mold and process development moves costly mold trial & error into the computer, making it faster, more efficient, and cheaper. By literally creating a virtual molding machine, process engineers can optimize mold designs and processes before steel is cut, guiding the design. The unique ability to combine a complex mold and complete molding process into an easy to use tool provides process engineers a process simulation tool they can use efficiently.

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product

PolyOne Solutions Help Incoe Introduces Customers Bid Farewell to Metal Nozzles for Cold PolyOne Corporation, a global provider of specialized polymer materials, Sprue Applications services and solutions based in Avon Lake, OH, is helping OEMs replace metal with high-performance solutions that improve product performance and meet customer demands for sustainability with its recent polymer formulation developments. The company’s approach to metal replacement includes developments targeted at improving manufacturing efficiency without sacrificing performance and increasing design freedom while reducing production costs. The developments include OnForce™ LFT long fiber technologies for structural part strength at high and low temperatures; GraviTech™ high-density formulations for aesthetics, magnetic functionality and custom density; Therma-Tech™ thermally conductive solutions; Stat-Tech™ static dissipative and conductive materials for electrical conductivity and shielding; and XECARB™ carbon-fiber reinforced materials from Xenia. For more information, visit www.polyone.com.

Milacron Expands Magna™ T Line, Offers Interactive Tech Manual

Milacron, Batavia, OH, has expanded its Magna™ T Servo product platform to include the newly designed MTs 500 and MTs 550 ton machines. The MTs achieves 40- to 60-percent greater energy efficiency than a conventional hydraulic machine by coupling a permanent-magnet AC servo motor with a fixed gear pump. The machine’s servo system allows the pump to deliver oil on demand as required for each stage of the injection process. As a result, the system requires less energy for part production and oil cooling and ejects less heat into the plant, creating cost savings that provide a faster return on investment compared to hydraulic platforms. Milacron’s new Interactive Technical Manual comes standard with all new Magna T Servo injection molding machines. The ITM is a tool for laptops and tablet computers that makes it easier to keep equipment operating at peak performance. It comes with training videos to help processors deal with a widening skills gap. For more information, call 513.536.5212 or visit www.milacron.com.

28 | plastics business • winter 2013

The CSR single nozzle from Incoe Corporation, Troy, MI, specifically was designed to replace worn or outdated cold sprue nozzles in existing injection molds with 1” max bores. Replaceable end caps are supplied with extra stock, providing the flexibility for machining to any exact dimension as required to fit each application. The nozzles are available in five standard lengths and recommended for small- to mediumsized molding applications of commodity-grade resin parts only. For more information, call 248.616.0220 or visit www.incoe.com.

Husky Launches Next Generation HyCAP™, HyPET Systems Husky Injection Molding Systems, Bolton, Ontario, Canada, has launched its next generation HyCAP™ and HyPET systems. The HyCAP system is for high-output beverage closure manufacturing, while HyPET is a preform injection molding system. The HyCAP system provides complete melt stream control and reduces variability in the injection molding process, resulting in increased productivity, reduced waste and improved part quality. Changes also have been made to the HyCAP hot runner, including modified insulation technology and heating requirements, to reduce energy consumption. For more information, call 905.951.5000 or visit www.husky.ca.


Beaumont Method Characterizes Moldability of Polymer Melt

A patent-pending method for characterizing the injection moldability of polymer melt has been developed by Beaumont Technologies, Erie, PA. The Thermaflo Moldometer™ duplicates both the hydrodynamic and thermodynamic conditions of the injection molding process by injecting polymer melt through a cooled mold channel using an injection molding machine. The non-isothermal flow environment creates the same diabatic conditions found in an injection mold where actual melt temperatures and frozen boundaries are a result of the thermal exchange between the melt and the mold. The graphical data output of Therma-flo Moldometer characterizes the injection moldability of a material at up to 140 different molding conditions, allowing a part or mold designer to evaluate the impact of a part’s wall thickness on fill pressure or determine the material’s critical flow velocity. An injection molder can evaluate the results and determine if an alternate material would reduce fill pressures during molding. For more information, call 814.899.6390 or visit www.beaumontinc.com.

Conair Blender Innovations Help Process Difficult Materials

Two new TrueBlend™ blender solutions from Conair, Cranberry Township, PA, can help plastics processors using bottle flake and other difficult-to-feed regrind without costly re-pelletizing. For small quantities, Conair TrueBlend blenders can be fitted with side feeders with steeply angled sides that help prevent the regrind from hanging up and bridging, allowing material to flow easily through an oversized opening at the bottom to a horizontal auger that conveys granules into the mixing chamber. For high volumes, Conair blenders use “lift augers” to eliminate bridging problems and promote a Conair TB2500 fitted with fluidizing free flow of material. Lift augers are augers is one of two designs developed positioned at an angle in the corner to handle difficult materials. of the bin, turning in the opposite direction to move granules up and away from the bottom of the bin. This movement keeps the material loose so it can flow more easily through oversized side gates and into the mixing chamber. Throughputs can range from less than 50lb/hour on model TB45 to 12,000lb/hour on model TB3500. Units with up to 12 ingredient bins can be supplied. For more information, call 724.584.5500 or visit www.conairgroup.com.

Stratasys Debuts High-Performance Thermoplastic for Additive Manufacturing

Stratasys, Minneapolis, MN, recently unveiled a high-performance thermoplastic for use in the 3D printing process that provides automotive, aerospace and other manufacturers with mechanically superior parts. The black color ULTEM 9085 from SABIC Innovative Plastics offers superior strength, is light weight and FST-rated. The FST (flame, smoke and toxicity) rating is a safety standard that ensures a material won’t promote a fire, release harmful smoke or emit toxic fumes. Like standard ULTEM 8085, the black color material has a V-0 flammability rating. It is heat resistant up to 320°F and inherently flameretardant, offering full FST compliance including OSU heat release of less than 55/55, or 55kw min/m2 for heat release and 55kw/m2 for peak heat release. In addition to the automotive and aerospace industries, Stratasys anticipates black ULTEM 9085 will be useful for construction, agriculture and industrial equipment manufacturers. For more information, call 888.480.3548 or visit www.stratasys.com. n

www.plasticsbusinessmag.com | 29


association

MAPP Plant Tour Event Comes to Alabama Speed, Speed, Speed... this plant tour event is about one company’s quest for increased speed and improved quality. Most executives understand that the goal of reducing cycle time often is accompanied by decreases in product quality. Succeeding in one area, but failing in another is a risk for many, but not for KW Plastics. In the last two years, manufacturing professionals at KW Plastics have reduced cycle times on the injection molded products by 16 percent – or an additional 2,000,000 parts per year per machine – and, on top of that, have actually improved quality levels. With the understanding that every ½-second improvement produces nearly 500,000 additional parts per machine running three shifts in a standard year, handling even minimal quality issues turned into a major feat. By utilizing the latest in machine/mold base monitoring and implementing 100 percent inspection via visual control, the executives at KW Plastics saw the need to measure their quality in PPBs (Parts per Billion), rather than the standard PPMs. To most processing professionals, this alone is an amazing accomplishment. KW Plastics takes it further by also utilizing 100 percent recycled material in all of its products while still maintaining critical tolerances. KW Plastics (Troy, AL) Measuring Parts per Billion… the Next Level of Quality Thursday, February 21, 2013 Join MAPP members for this unique plant tour. Register at www.mappinc.com. MAPP Unveils 2013 Sales and Management Survey The MAPP organization has completed its Sales and Management Survey for 2013, with a Member survey completion rate of 84 percent. The purpose of conducting this survey was to collect and report on industry norms associated with how companies manage their sales and the sales process. This Sales Management Benchmarking Report provides various data and information on training, methods of landing new sales, internal and external commission rate structures, utilization of sales representatives and much more. The final report now is available free to members online via www. mappinc.com (under the Members tab, then Benchmarking Reports). This report is available to non-Members for purchase online at www.mappinc.com under the Publications tab. Membership information also can be found on the site.

30 | plastics business • winter 2013

MAPP Program Adds $1.0 Million in Leverage Since 1998, purchasing volume in MAPP’s MRO Discount Program with W.W. Grainger has grown nearly eleven (11) times its original size. Ending last year with aggregate buying power of over $5,500,000, now over 75 percent of MAPP Members generate savings that significantly exceed their annual membership dues payment. “Many of our member companies that have strategically aligned with Grainger realized a return on investment on their dues between 10-41 times,” states Troy Nix, executive director of MAPP. Rick Walters, president of Dekalb Molded Plastics, indicated in a recent interview: “Dekalb’s return on investment with the savings generated just from the free-freight portion of the MAPP program alone pays for our annual dues. When I factor in total product and service savings, which should equate to nearly $9,000 this year, it makes being a Member of MAPP just that much more important for my organization!” According to Scott Harte, Grainger’s national account manager, many MAPP Members utilize specialized inventory programs that reduce costs and increase efficiencies. Grainger’s KeepStock® Inventory Management Solutions continually impact MAPP Members. Regardless of the business size, Grainger’s KeepStock® Solutions program works to remove extra costs from inventory by performing the following functions: • Optimizing inventory levels and reducing excess product stock and stock-outs • Improving control and organization of inventory • Increasing productivity and efficiency with a streamlined purchasing process • Reducing procurement costs for frequently purchased MRO items MAPP Members soon will be receiving their 2012 annualized Grainger ROI statements for both freight and product savings. Those wanting to know more about Grainger’s inventory management solutions should contact Scott Harte at Scott. Harte@grainger.com.


MAPP Adds to Its Board of Directors To gain additional representation from its membership base, MAPP expanded its board of directors in 2012, adding more senior-level processing executives and industry professionals. “Our aim is to ensure we are receiving proper guidance and feedback from those we serve,” stated Kelly Goodsel, MAPP’s current president of the board. “Since MAPP is a processor-driven organization, our Members rely on the board of directors to make the appropriate decisions about new programs, services and enhancements to their membership benefits. As an example, MAPP’s board made the decision to create and host quarterly functional area exchange meetings for staff-level executives in order to expand their resource bases and to help them take advantage of the co-mingled experience of their individual groups. These exchanges for human resources, purchasing, operations and sales and marketing professionals allow individuals to talk on a regular basis about issues that matter to them. It’s an incredible benefit and also is free to our membership base.” Board members added to MAPP’s leadership team include the following individuals:

Upcoming Events in MAPP Senior Leaders Member Exchange Human Resources Member Exchange Sales and Marketing Member Exchange KW Plastics Plant Tour Mergers and Acquisitions Webinar Senior Leaders Member Exchange Human Resources Member Exchange Quad Plant Tour Sales and Marketing Member Exchange Dymotek Plant Tour Benchmarking Conference

February 1 February 8 February 15 February 21 February 27 May 3 May 10 May 15 May 17 August 15 October 17-18

For more information, go to www.mappinc.com. n

Bill Bartlett, First American Plastics/Quad Inc. Norm Forest, Dymotek Molding Technologies Matt Groleau, RJG, Inc. James Krause, Microplastics, Inc. Eric Paules, Crescent Industries Returning board members are as follows: Tom Boyd, Blow Molded Specialties Dan Cunningham, Parish Manufacturing Kelly Goodsel, Viking Plastics Lindsey Hahn, Metro Plastics Technologies Laurie Harbour, Harbour Results, Inc. Ben Harp, Polymer Conversions, Inc. Bob Holbrook, Viking Plastics John Passanisi, PRD, Inc. Jeff Randa, PolyOne Distribution Alan Rothenbuecher, ICE Miller LLP Scott Titzer, Infinity CleanRoom Solutions Mike Walter, MET Plastics, Inc. Rick Walters, DeKalb Molded Plastics Roger Williams, Royer Corp. Wendy Wloszek, Industrial Mold & Machine MAPP’s board of directors meets on a quarterly basis at its Members’ locations across the United States to review strategy and ensure execution of its operating mission. PRLTD_AD_3.75x4.875_062810.indd 1

www.plasticsbusinessmag.com | 31 6/28/10 12:50 PM


strategies

Cliff Notes and Other Tax Changes by Michael J. Devereux II and Adam J. Herman, CPA/ABV/CFF, CVA, ASA, CFE, Mueller Prost PC

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (2012 Act), thereby retroactively averting the so-called “fiscal cliff.” Absent any action by Congress, tax rates would have increased for all Americans and many of the tax provisions plastics processors rely upon to reduce their federal tax liabilities would have expired. The following provides a brief summary of the tax changes made by the 2012 Act, along with an explanation of other tax changes taking effect in 2013 that affect plastics processors. 2012 Tax Rates Made Permanent for Most Taxpayers Under the 2012 Act, the 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent individual tax rates are maintained into 2013 and made permanent. However, for taxpayers whose taxable income exceeds $450,000 (married filing jointly), $425,000 (heads of household) and $400,000 (single filers), the top marginal tax rate is reinstated to the increased rate of 39.6 percent.

AMT exemption for inflation, Congress has removed the annual burden of “fixing” the AMT to ensure millions of additional taxpayers are not subject to it. The AMT was originally enacted to ensure that wealthy Americans pay a minimal amount of federal income tax. For 2012, the exemption amounts are $78,750 for joint filers and $50,600 for individual filers.

This change preserves and makes the permanent the Bush1 tax cuts for over 98 percent of Americans.

This increase to the AMT exemption, the higher marginal tax rates for individuals ($450,000/$400,000) and the continuation of bonus depreciation (AMT depreciation is equal to regular tax depreciation for bonus depreciable assets) will result in a wider gap between the taxpayer’s regular tax liability and the AMT, thereby allowing taxpayers to be able to utilize more general business credits, including the research tax credit.

Qualified Dividends and Long-Term Capital Gains The maximum long-term capital gains and qualified dividend tax rates will remain at 0 percent/15 percent for those with less than the $450,000/$400,000 income thresholds. The 2012 Act reinstates the long-term capital gain and qualified dividend rate at 20 percent for high-income taxpayers (those with income greater than $400,000/$450,000 as noted above).

Payroll Tax Holiday Allowed to Expire The 2.0 percent payroll tax holiday for employees expired for wages paid after December 31, 2012. The 2010 Tax Relief Act temporarily reduced the employee’s portion of the OASDI (FICA) rate from 6.2 percent to 4.2 percent. The 2012 Act fails to extend this provision, thereby allowing payroll taxes to increase up to $2,274 per employee.

Further, by continuing to tie the qualified dividend rate to the long-term capital gain rate, the IC-DISC (Interest Charge – Domestic International Sales Corporation), remains a viable solution for privately held companies to permanently reduce its federal income taxes on exported products that were made in the United States.

Research Tax Credits Extended & Modified The 2012 Act retroactively reinstates the research credit for expenditures incurred in calendar years 2012 and 2013. Prior to the 2012 Act, the credit was only eligible for expenditures incurred prior to December 31, 2011.

Alternative Minimum Tax (AMT) The 2012 Act permanently increased the AMT exemption amount and indexed it for inflation. By indexing the annual

32 | plastics business • winter 2013

Depending upon the methodology elected by the taxpayer, the credit is equal to 14 percent (alternative simplified credit method) or 20 percent (traditional credit method) of the research expenditures in excess of a base amount.


Eligible activities for plastics processors may include the following:  Developing new part designs to meet customer specifications  Developing new mold designs or improving upon transfer molds  Experimenting with processing variables to develop new process (or improve existing processes)  Improving processes through robotics or other types of automation techniques  Experimenting with new resins  Performing PPAP or first article inspections on new part designs In addition to extending this popular tax incentive, Congress made two modifications to the credit. First, the 2012 Act clarifies the manner in which a taxpayer computes its qualified research expenditures in a tax year in which the taxpayer acquires a major portion separate unit of a trade or business that also incurred qualified research expenditures. Second, the 2012 Act changes the manner in which taxpayers, which are members of a controlled group of corporations or under common control, allocate the group’s credit. Work Opportunity Tax Credit (WOTC) Extended Retroactive to January 1, 2012 and through December 31, 2013, the 2012 Act reinstates the Work Opportunity Tax Credit (WOTC). The WOTC allows taxpayers to claim a federal income tax credit equal to 40 percent of the first $6,000 wages paid to a member of a targeted group of employees. Targeted groups include the following:  Veterans in a family receiving supplemental nutrition assistance, unemployed veterans and service-related disabled veterans discharged from active duty  Qualified ex-felons  Families receiving benefits under the Temporary Assistance to Needy Families (TANF) program  Designated community residents  Vocational rehabilitation referrals  Qualified food and nutrition recipients  Qualified Supplemental Security Income (SSI) recipients  Long-term family assistance recipients  Qualified summer youth employees Further, the WOTC is one of the few credits that may offset the AMT, making it particularly advantageous for taxpayers who are subject to the AMT.

Bonus Depreciation Extended for One Year The 2012 Act extends the 50 percent bonus depreciation for assets placed in service prior to January 1, 2014, thereby extending the popular tax break for one calendar year. That is, taxpayers may claim an additional, “bonus” depreciation deduction equal to 50 percent of the basis of the new asset. The basis of the property and related depreciation deductions are adjusted accordingly for the year of purchase and later years in order to reflect the bonus depreciation allowance. As noted earlier, the additional depreciation deduction is available for both regular tax and AMT purposes. Assets eligible for bonus depreciation generally fall with the following categories: property to which the modified accelerated cost recovery system (MACRS) rules apply with a depreciable life of 20 years or less; qualified leasehold improvement property and computer software that is not acquired in connection with the purchase of a trade or business. Further, the asset must be new, not used. That is, the original use commences with the taxpayer. Enhanced Section 179 Expensing and Phase Out Limits Extended Section 179 allows taxpayers to elect to expense the cost of qualifying property up to a specific limit. The maximum expense amount is reduced by the amount of qualifying property placed in service in excess of a threshold amount. Prior to the 2012 Act, the Section 179 limit was scheduled to revert back to $125,000 with a phase-out threshold beginning at $500,000 for tax years beginning in 2012, and $25,000 with a phase-out threshold beginning at $200,000 for tax years beginning in 2013 and thereafter. The 2012 Action increased the Section 179 limit to $500,000, with a phase-out threshold beginning at $2,000,000 for both tax years beginning in 2012 and 2013. The changes are illustrated by the table on page 34. New Medicare Taxes While passed in 2010, the Patient Protection and Affordable Care Act (Affordable Care Act) enacts specific tax increases beginning in tax year 2013. High-income taxpayers will be subject to two new taxes, beginning in 2013. The 3.8 percent Medicare contribution tax will be assessed on the lesser of the taxpayer’s net investment income and a threshold amount. The threshold amount is $250,000 for those filing married filing jointly, $200,000 for single taxpayers and heads of households.

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strategies t page 33 Tax Years Beginning in 2012

Tax Years Beginning in 2013

Section 179 Limit

$125,000

$25,000

Phase-out Threshold

$500,000

$200,000

$500,000

$500,000

$2,000,000

$2,000,000

Pre-2012 Act

After Passage of 2012 Act Section 179 Limit Phase-out Threshold

Net investment income includes interest, dividends, royalties, rental income, annuities and gains from the sale of property. Wages and income from a trade or business in which the owner materially participates are not included in net investment income. However, net investment income includes closely-held businesses (such as S Corporations or Partnerships) in which the shareholder/partner/owner does not materially participate in the trade or business. Further, flow-through income from an entity owning rental real estate also may meet the definition of net investment income, depending upon the facts and circumstances of the specific taxpayer. In short, the owners of privately-held, pass through companies may be subject to a new tax depending upon whether they materially participate in the operations of their trade or business. In addition to the 3.8 percent Medicare contribution tax, the Affordable Care Act assesses a 0.9 percent additional Medicare tax on wages and self-employment of high-income taxpayers, in addition to the 1.45 percent that all wage earners pay. The 0.9 percent additional Medicare tax is assessed on the employee and applies to wages in excess of $250,000 for married taxpayers and $200,000 for single taxpayers and heads of households. Therefore, for a married employee, the total Medicare tax collected on his wages in excess of $250,000 sums to 3.8 percent (1.45 percent paid by the employer, plus 1.45 percent paid by the employee, plus 0.9 percent additional Medicare tax paid by the employee). Changes to the Estate & Gift Tax Effective January 1, 2013, the top estate/gift tax rate increases from 35 percent to 40 percent. The 2012 exemption of $5 million per person is extended permanently and applies to life-time gifts and the taxpayer’s estate. The exemption amount is indexed for inflation. In 2012, it was $5.12 million and is estimated to be $5.25 million in 2013.

34 | plastics business • winter 2013

Conclusion Tax year 2013 has brought numerous changes to the tax law affecting those that operate in the plastics industry. Taxpayers who plan for such changes now and in the future can increase the profit and value of their company. Further, tax incentives such as the research tax credit, work opportunity tax credit and IC-DISC should be evaluated to ensure they are securing the benefits which Congress intended. n 1

The Bush tax cuts refer to those changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, which temporarily decreased the tax rates on ordinary income, capital gains and qualified dividends.

Michael J. Devereux II, tax consultant, joined Mueller Prost PC in 2000. He has led hundreds of R&E Tax Credit study engagements and is lead coordinator for Mueller Prost PC’s special tax incentives program. He is frequently asked to speak to various professional and industry trade organizations and associations about opportunities to reduce federal and state tax liability. Adam J. Herman, shareholder and director of consulting services, manages a group of professionals in the fastest growing areas of public accounting today, including CPAs, valuation analysts, forensic experts, engineers and technical writers. Mueller Prost PC offers practical solutions and insightful advice to individuals, businesses and non-profit organizations, providing a full range of audit, tax, accounting and business advisory services. The experience of its more than 80 accountants, engineers, operations leaders and former business owners gives the company a unique and comprehensive perspective to address the needs of growing organizations. In addition, Mueller Prost leverages its membership in PKF North America (an association of more than 100 legally independent accounting and consulting firms) to enhance its national and international capabilities. For more information, visit www.muellerprost.com.


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outlook

Planning for Profitability and Stability in 2013 by Laurie Harbour, Harbour Results, Inc. Most companies can look back at 2012 and say it was a good year. In fact, many seem to have forgotten to some degree that the world went through the most significant recession in history. Production volumes were up, quote activity has been higher than normal as companies replenished their product portfolios and product complexity is at an all-time high for many factories. All in all, companies are returning to profitability. However, it may not be the best profitability, and it may be coming at a price. Productivity is improved around the world, and companies are using their factory space more efficiently than ever. However, Harbour’s data does show a seven percent decline in revenue per employee in 2012, with a 15 percent increase in revenue. Based on recent manufacturing assessments, companies are growing significantly in volume and complexity, but their management of that growth has not been as effective as it could have been. In some cases, companies are “throwing labor” at the volume and struggle to meet the changes in complexity. While profits are there, these companies are not as strong as they could be if their focus on continuous improvement and planning for new processes was more robust. That said, for most it was still a good year despite concerns with the election, the fiscal cliff, global pressures and the struggle to find good talent. Moving into 2013 and beyond, there are important things for companies to consider and plan for as they look to improve profitability and long-term stability. Economic Outlook: It’s not clear where the tax and/or spending cuts will hit in 2013, but the unknown will bring uncertainty in hiring of talent, capital expenditures and overall

36 | plastics business • winter 2013

company spending. Once the dust settles, the hoarding of cash should stop and the strength of the plastics industry will shine. According to SPI, in mid-December the value of exported molds grew 18 percent during the first nine months of 2012. We have seen this demand continue through the final quarter of 2012, based on the backlog and demand seen with many in Harbour’s client base, and have every expectation this will continue well into 2013. The cadence of the automotive industry and other industries that are revamping their product lines will begin to pressure this demand, but not until late 2013. In spite of the mold export strength, export of plastic parts was flat year over year in 2012. This should not concern the industry dramatically because the North American demand is high enough to maintain current levels of production. However, this will be a critical indicator to watch as changes in the US economy in 2013 may have a significant impact on small plastics processors. Global Issues: From a global perspective, there is a great deal going on throughout the world that continues to put pressure on North American companies. The European crisis is ongoing, and it will be a long time before stability is reached. While Europe may not seem critical for many, this market and its currency exert considerable pressure on the global economy and have a major impact on the US market. Additionally, European companies are looking to source more manufacturing in the US to support their own product that ends up on US soil.


The Chinese government continues to give significant incentives to those companies that manufacture in China and export to countries like the US. Goods kept in China for internal consumption are taxed at higher rates than goods that are exported. This provides huge incentive for China manufacturers to market themselves to US companies. This is true for the mold building industry, as well as parts production. That said, the 2012/2013 Chinese Manufacturing Outlook by MAPI stated that after 10 years of high-speed growth, China’s auto industry is entering an adjustment period, and the expansion pace will be moderate in the next two years. Passenger vehicle production mainly is being impacted by the gradual exit of government stimulus policies and new regulations limiting issuances of license plates to reduce traffic congestion in big cities. The decline in commercial vehicles primarily results from the double-digit drop in investment, making truck production sensitive. The first half of 2012 was very slow for growth in China. Chinese policy makers will continue to control currency to

ensure demand stays steady and growth will continue, but the traditional 25-percent growth rates may be a thing of the past. The wage rates in China will continue to increase as the country works to create its middle class. Expectation is that wage rate differences between the US and China only will be 10 percent by 2016. This will give the US a greater opportunity to retain manufacturing and even export more throughout the world. That said, the next China is out there and another competitive threat will arise to pressure US manufacturers. A new/old global threat to US plastics companies is Mexico. In the 1980s, customers were pushing plastics companies to locate or find a way to support production in Mexico because labor rates were low. Then the China threat became overwhelming, and many large companies moved operations again due to Mexico’s poor infrastructure and lack of talent (not to mention China pricing). Today, Mexico is a new threat to low-cost countries. page 38 u

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outlook t page 37

In recent years, almost every major domestic, Asian and European automotive manufacturer has made or is preparing to make major investments in Mexico to support consumption in Mexico, South America and North America. The growth continues, and plastics companies may be forced to consider Mexico as an option again. The wage rates between Mexico and China are only pennies apart and, with Chinese wages creeping up, Mexico is better positioned to support US manufacturing. Additionally, the talent gap is shrinking. In 2011, Mexico graduated over 90,000 engineers, compared to approximately 30,000 in the US. The logistics and time zone advantages, along with fewer language barrier issues, are making Mexico an attractive sourcing option again. In recent years, almost every major domestic, Asian and European automotive manufacturer has made or is preparing to make major investments in Mexico to support consumption in Mexico, South America and North America. The growth continues, and plastics companies may be forced to consider Mexico as an option again. Talent Pool: Retaining, hiring and training people will continue to be essential for the best and brightest companies. Retention will be paramount for those companies that have strong management and technical teams. The biggest gap Harbour continues to see is in technical competency. This lack of competency manifests in other areas, such as operations, project management, sales and quoting – not just management. Keeping up with the ever-changing demands and technology through continued learning is key to maintaining market position, profitability and overall flexibility. Finding new, young talent to enter the field of manufacturing is probably the number one challenge of most companies today. Without investment into the new generation, many industries – like mold making – may lose their business to low-cost countries simply due to the lack of interested talent. The best US manufacturers have started to attract new talent by holding open house events at their facilities, inviting both young adults and their parents to see the ways in which manufacturing has evolved. Young adults still are looking to their parents to support their decision-making. Once the parents see that manufacturing is not what it used to be, a barrier to attracting new, young talent to manufacturing plants is removed. Project Management: Relative to other industries, plastics processors continue to be weak at project management and launching new products. The industry needs to accept this data

38 | plastics business • winter 2013

point and make sure it puts appropriate time and resources into solving the issue. Harbour hears many excuses in our travels, but limited-to-no root cause analysis is being done to truly understand why. The processing industry tends to blame customers or design firms for not having the adequate information or wherewithal to launch a new part. The reality is that this is an excuse, and processors need to take a more active role in the process. Those companies that figure this out and position themselves properly will continue to prosper in uncertain times. Value Added Activity: Manufacturers must continue to add value. This value will come from working both the upstream and downstream sides of the value stream: supplier and customer. Companies need to find creative ways to partner with suppliers to ensure they provide value-added goods and services that better serve and/or grow customers. However, the bulk of the value will come from doing more for customers in the form of value engineering. Value engineering is finding ways to combine parts, perform additional assembly or develop any other creative thought that allows the customer to reduce the handling of its parts. As the economy continues on its rollercoaster ride, the best and the brightest organizations must get better at critical thinking. Processors must consistently challenge the traditional thinking to ensure that every opportunity to make the company better has been exhausted. More than ever, quality is club dues, and the forward-thinking organizations that can bring something new to the table will get the gold. The low-cost producer model that lacks creative thinking and problem solving capabilities will become a thing of the past. This creative thinking is the real “secret sauce” to the best manufacturers’ overall performance. n Combining operational and financial advisory expertise with industry analysis and thought leadership, Harbour Results delivers results that impact the bottom line. The company specializes in manufacturing, production operations and asset intensive industries, as well as a number of manufacturing processes, including stamping, tooling, precision machining and plastics. For more information, visit www.harbourresults.com.


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industry

Legislative Outlook: Uncertainties Mean Plastics Industry Must Remain Engaged on National Issues by William R. Carteaux, SPI With the November elections fading into a distant memory, Congress and the White House now face the challenge of day-to-day governing – and it will be a challenge. As I talk to plastics company leaders around the country, their frustration over the recent handling of the so-called “fiscal cliff” comes across loud and clear. For businesses that make purchasing, hiring and other key decisions based in no small part on our nation’s overall economic picture, the uncertainty that characterized the lead-up to eventual resolution wasn’t amusing political theater. It was a threat, pure and simple.

over these issues, and at least one other major ratings service has threatened to do the same if there’s a repeat performance. All this has a direct impact on the ability of plastics processors to access all-important capital. Overdue: TSCA Modernization On the environmental front, the federal Toxic Substances Control Act (TSCA) gives the US Environmental Protection Agency (EPA) authority to review and regulate chemicals and ensure that products containing them are safe for intended uses. Despite the EPAs clearly defined role, and often stirred by activist claims rather than scientific facts, individual states have begun creating their own chemical use reporting and

It is true that the deal struck between the White House and Congress included some pro-business provisions that SPI has lobbied for, most notably an extension of the federal R&D On the environmental front, the federal Toxic Substances tax credit and 50 percent Control Act (TSCA) gives the US Environmental Protection “bonus depreciation” which Agency (EPA) authority to review and regulate chemicals and allows for faster write-offs of capital purchases, such ensure that products containing them are safe for intended as factory floor equipment. uses. Despite the EPAs clearly defined role, and often stirred However, rate hikes of by activist claims rather than scientific facts, individual states nearly five percent on have begun creating their own chemical use reporting and a multitude of plastics industry companies that management systems. pay taxes at individual rates (because they are organized as S-corporations or other “pass-through” entities) certainly management systems. Facing a patchwork of overlapping will have a negative impact. How negative remains to be seen. and conflicting state laws is not acceptable for our industry. The solution is a modernized TSCA that embraces scientific Unfortunately, avoiding the “fiscal cliff” doesn’t mean we’re advances since the law’s enactment over 35 years ago. out of the woods from an economic perspective. The US soon Modernization is overdue and must be predicated upon sound will reach its borrowing limit once again, and Washington’s science and a meaningful and open stakeholder consultation ability to handle issues around our debt ceiling will be the process. We continue to strongly oppose efforts to pull next crucial test. We all recall none-too-fondly the summer of processors into the reach of the law, which has historically 2011 when Standard & Poor’s downgraded the US debt rating applied only to chemical manufacturers and importers.

40 | plastics business • winter 2013


Plastics Industry Expertise Select Investment Banking Transactions Mixed Bag: Medical Device and Food Packaging Sectors Implementation of 2010’s “Obamacare” law means a new 2.3 percent tax on the sale of medical devices went into effect at the beginning of 2013. This is among the controversial aspects of the law and, like all taxes, imposes a new burden. In this case, the burden falls on processors doing business in the medical arena. While goods such as those sold through retail outlets – contact lenses, for example – are exempt, the new tax affects a huge swath of plastic products. Those in the food packaging space can be confident that the Food Packaging Coalition, a group of trade associations and companies that come together here at SPI, continues its work to ensure the Food and Drug Administration’s Food Contact Notification (FCN) program remains viable. The program is a successful model of government/industry collaboration that is vitally important to ensuring timely introduction of new food packaging technologies into the US market through expedited FDA review. Wait a SEC… Why Are These Compounds Included? Also on the regulatory front, SPI will continue seeking clarification from the Securities and Exchange Commission (SEC) on the scope of its rule implementing the conflict minerals provision of the Dodd-Frank Act. Many think that Dodd-Frank applies only to the banking and financial services industries, but actually it is much broader. Currently, we are pressing for the exclusion of chemical compounds derived from tin, tantalum and tungsten (“3T”) from reporting requirements. As many readers will know, chemical compounds like tin oxide and tin tetrachloride, which are chemically distinct from 3T, may be used in extremely small amounts as catalysts, stabilizers and aids to polymerization in the manufacture of plastic articles and coatings. SPI does not believe the SEC intended to include these compounds within the scope of its Dodd-Frank interpretation. However, if the SEC decides otherwise, all manufacturers of plastic articles and coatings manufactured with these substances would be subject to administratively and financially burdensome reporting requirements. Fuel and Feedstock: Why Energy Issues are Doubly Important In closing, a few short words about the crucial natural resources upon which we rely both for the power to run our facilities and for our raw materials. It benefits us all to remember that this gives our industry a unique voice in the national energy discussion, and with this voice comes page 42 u

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industry t page 41 responsibility. We must caution our elected officials about the unintended consequences of arbitrary restrictions on access to these natural resources, and that environmentallyresponsible extraction – including hydraulic fracturing – is helping to create a new era of manufacturing in America. In 2011 (the most recent year for which aggregated data is available), plastics industry shipments nationwide totaled some $380 billion – over a billion dollars per day and on pace to yield well over a trillion dollars every three years. That adds up to real economic might and should make all of us proud. But, we can’t take it lightly, and we can’t allow decisions that affect our bottom lines to be made without our input. By hosting a plant tour for an elected official, plugging into the advocacy network of an industry association or taking advantage of other opportunities for engagement, we each take our rightful places as leaders of a strong and advancing industry. n

William (Bill) Carteaux is president and CEO of SPI: The Plastics Industry Trade Association. Founded in 1937, SPI promotes growth in the $380 billion US plastics industry. SPI delivers legislative advocacy, market research, industry promotion and the fostering of business relationships and zero waste strategies. SPI also owns and produces the international NPE trade show. All profits from NPE are reinvested into SPI’s industry services. Find SPI online at www.plasticsindustry.org and www.inthehopper.org.

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production

The View from 30 Feet: Analysis of the Sales Management Process

by Troy Nix, MAPP, Inc.

Business gurus often talk about the view from 30,000 feet – the big picture that provides a look at overall operations. Perhaps, however, the focus should be on the view from 30 feet – a close-up of specific processes and procedures that make an impact now. The MAPP organization recently conducted and published the 2013 Sales and Management Study for the plastics processing industry. A total of 116 manufacturing executives participated in the survey process in order to gain a better insight into current sales management benchmarks, some of which have never been documented. The top three most prevalent markets served by the survey participants included the automotive, medical and communications sectors, with 63 percent identifying themselves as custom manufacturers, six percent as proprietary and 31 percent as both custom and proprietary. A total of 89 percent of the participants represented companies below $50M in annual sales. MAPP’s study demonstrated that companies utilize a variety of sales tactics, and over half of this study’s respondents use both inside and outside sales representatives. However, the study also revealed that over 20 percent of the companies under $5.0M in annual sales utilize the company owner or president as the sales arm. (Note: Less than one percent of companies over $5.0M in sales assign the primary sales responsibility to the company owner or president.) This statistic indicates that more company leaders understand that functioning as part-time sales executives is ineffective and that a dedicated, full-time sales force is a solid strategy for diversifying and growing sales.

reported that the median internal commission rate for obtaining new business from current customers was 2.00 percent and for obtaining new business from new customers was 2.25 percent. Over the last 18 months, 76.5 percent of the survey respondents have frozen commission rates, while slightly over 13 percent have elected to raise commission rates. However, not all companies utilize a sales commission structure as nearly half of the respondents (47.47 percent) use a base salary plan plus a bonus structure to compensate their internal sales managers. To find out more about this comprehensive study, visit the Publications section of MAPP’s website at www.mappinc.com or call 317.913.2440. n

The majority, or nearly 71 percent, of the survey participants pay commissions based on sales price, while one in eight utilize a formula to subtract purchased components, raw material and other items from the selling price to establish the amount upon which commission is based. Companies

www.plasticsbusinessmag.com | 45


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Back Cover Federated Insurance .................................................................................................www.federatedinsurance.com ........................................................................................ 42 Frigel ........................................................................................................................www.frigel.com ............................................................................................................. 18 Harbour Results, Inc. ...............................................................................................www.harbourresults.com ............................................................................................... 39 Ice Miller LLP..........................................................................................................www.icemiller.com ........................................................................................................ 14 INCOE Corporation .................................................................................................www.incoe.com ............................................................................................................. 13 IQMS........................................................................................................................www.iqms.com ................................................................................................................ 3 Jade Group International ..........................................................................................www.jademolds.com............................................................................ Inside Back Cover M. Holland ...............................................................................................................www.mholland.com ....................................................................................................... 19 MAPP (Manufacturers Association for Plastics Processors) ...................................www.mappinc.com ........................................................................................................ 46 Milacron Plastics Technologies ...............................................................................www.milacron.com/servohybrid.................................................................................... 41 Paulson Training Programs, Inc...............................................................................www.paulsontraining.com ............................................................................................. 11 PLASTEC Shows.....................................................................................................www.plastecshow.com .................................................................................................. 44 Polymer Resources Ltd. ...........................................................................................www.prlresins.com ........................................................................................................ 31 RJG, Inc. ..................................................................................................................www.rjginc.com/training ............................................................................................... 21 SIGMA Plastics Services, Inc. .................................................................................www.3dsigma.com ........................................................................................................ 27 Slide Products, Inc. ..................................................................................................www.slideproducts.com................................................................................................. 12 Stout Risius Ross (SRR) ..........................................................................................www.srr.com .................................................................................................................. 41 Strategic Marketing Partners (SMP) ........................................................................www.smp4mfg.com ....................................................................................................... 22 Time Compression LLC ..........................................................................................www.timecompressionllc.com....................................................................................... 39 ToolingDocs ............................................................................................................www.toolingdocs.com ................................................................................................... 35 Ultra Purge/Moulds Plus International ....................................................................www.ultrapurge.com...................................................................................................... 37 Yushin America, Inc. ...............................................................................................www.yushinamerica.com................................................................................................. 5

46 | plastics business • winter 2013


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Plastics Business - Winter 2013  

Plastics Business - Winter 2013