Falcon Plastics: Customer-Driven Growth Guides Expansion, Profitability

by Dianna Brodine, Plastics Business

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

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.

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.

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 30,000-sq.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 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.

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.

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

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.

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 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.”

Growth through Value-Added Services

Four rapid prototyping machines enable low-volume production and functional prototype creation.

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.

Recent equipment purchases include two blow molding machines, several injection molding machines, several press-top robots, a corrugated extrusion line, a foam-in-place gasket machine, a thermoforming machine and a sophisticated measuring machine.

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

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 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.

“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.”

The company completes automated assembly with 6-axis robots.

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 not, but we’ve only had it four or five months.” The new FDM machine has been used to create functional prototypes, and Bender believes it has helped to drive business to Falcon. “It’s been a growing area of business for us, even though we haven’t marketed it much,” he said. “Now, that’s changing since we’ve invested some real money into rapid prototyping – the machines aren’t toys anymore!”

Growth by Encouraging Other Entrepreneurs

On the home page of the Falcon Plastics website, a bright yellow light bulb asks, “Have a Great Idea?” The text continues, “We help entrepreneurs realize their vision with our affordable design and rapid prototyping, so you can show 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.

“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 high-production 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 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

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

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.

“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.”