What do you do differently that makes you stand out in the marketplace?
One of the most depressing feelings for an owner of a plastics company is the lack of a clear or concise answer — meaning they compete on convenience (legacy business contacts) and price. Growth is often difficult for these companies, and margins appear to get slimmer each year. However, we are finding that molders of liquid silicone rubber are quick to share they possess this skill, but is it enough to attract growth and profitability?
Plante Moran has conducted the North American Plastics Industry Study for more than 20 years. This year, we streamlined the questionnaire to make it easier for completion, but also added supplemental questionnaires to address specific items of interest. One of those is the LSR questionnaire. We are still collecting data, but we have some preliminary findings.
It is quite common for LSR parts to be small or the LSR joined on a thermoplastic part to be of a limited amount. Therefore, the pounds of LSR consumed by a processor is typically measured in the hundreds of thousand pounds or less vs. the millions of pounds or more of thermoplastic resin. Certainly there are large companies that process LSR, but the volume of LSR remains limited as LSR complements the functionality of a larger thermoplastic part.
A tale of two approaches
We estimate that about 7 percent of our NAPIS participants have LSR process capabilities, but that population is split 50-50 on the extent of processing conducted. Half of our LSR respondents have some LSR production but will not even consume 10,000 pounds. The LSR equipment may have less than 5 percent utilization. These companies typically entered LSR molding because of a customer request and the LSR equipment became dormant once the customer was satisfied. While these companies are quick to say they are LSR molders, it is not a differentiator for them in the marketplace. For these companies, the customer is what in important to them.
On the other hand, some companies maintain their focus on LSR and are able to find additional customers. These companies need to be diligent for years to address the many challenges with processing LSR effectively and efficiently. It is easy to produce scrap with LSR. While the dollars consumed in LSR material may be low, the inclusion of LSR may impact 33 percent of a company's total sales activity, making scrap very expensive. For these companies, LSR is their unique process capability and they actively manage the challenges.
While most companies do not actively support part design, most do actively work with the customer to ensure the part can be effectively tooled. The company needs to understand the part geometry, the specific material and the cure process to design the tool for the job. Unfortunately, this is more art than science. Experience counts in anticipating the issues and working with the tooling company.
Tooling is always important in plastics processing. However, for LSR molding, the experience of the tooling vendor is being ranked as the most important hurdle in the process. As a result, those tooling vendors that are known for their LSR skills are in high demand. With high demand comes longer lead times, higher prices and stressful program launch efforts. For most LSR molders, having the right tooling vendor is worth this frustration to support the multiple iterations of tryout that will probably be necessary.
Automation often accompanies high-volume LSR molding. Tuning in automation to retain repeatability is more challenging due to the flexibility of the material. Synchronizing the metering, the cure process, the part extraction, surface treating and any assembly (joining to another component) is an ongoing processing challenge. However, this is also where a company will find higher value add benefit for the customer.
There is a misperception that LSR molding is predominately conducted in a clean room. While that may be required for some product, it is not a requirement for LSR processing. What is required are maintaining an environment devoid of contaminants and cleaning the equipment regularly. Most LSR molding is processed in a white room where the environment is actively managed but not rated.
New technology is being developed to help the LSR processor, whether it be new presses, metering controls or pumps. That is particularly true for controlling smaller shot sizes. However, this also requires the company to be willing to continually invest in new equipment.
How do you rate?
Companies that truly embrace LSR as a process capability compete nationally vs. locally. Therefore, the sales process is different than most other plastics processors. The sales discussion is with the customers' engineers vs. supply-chain personnel. The parts tend to be smaller, making logistics concerns less important. The challenges make the competency of the processor more important. As noted, there are many challenges to overcome that are put into the pricing. We believe managing the challenges effectively harvests the risk quotient of the pricing into higher margins.
How do you rate as a LSR molder? Join our study of the LSR industry by first completing the North American Plastics Industry Study, and then completing the supplemental LSR survey. The questionnaire is streamlined, the data collection is confidential, and the 60-plus-page report shared with you is free.
Jeff Mengel is a leader of the Plante Moran Plastics Industry Team that has been studying the industry for over 20 years and a frequent presenter at the Plastics News Financial Summit and Executive Forum. See the North American Plastics Industry Study at plantemoran.com/napis, and the focused survey on LSR molding at plantemoran.com/lsr.