by Ian Gjertson, analytics director, MAPP
To maintain profitability and strategic advantages in an increasingly competitive industry, it is critical for injection molders to determine machine rates, track labor costs and govern markup and adjustment opportunities. However, because the plastic injection molding industry manufactures an impressively diverse volume of parts for several unique industries, evaluating machine rates can be complicated. There are many influencing factors, and organizations vary in their approaches to calculating machine rates. Manufacturers Association of Plastics Processors (MAPP) created its annual Machine Rate Report seven years ago to address this problem and continues to publish an improved report every year for plastics processing companies across the United States.
MAPP recently published the 2021 Machine Rate Report, which provides meaningful benchmarks for machine rates for 14 distinct injection molding tonnage ranges. The data in this report was obtained from approximately 200 unique plastics processing companies that serve over 15 market segments across the United States. A committee of plastics processing executives assisted in the design of the survey and defined the parameters for collecting accurate data.
The companies that contributed to this year’s machine rate report were required to review and acknowledge specific definitions and terminology. For example, what is included and excluded from the base machine rate (the machine rate without operator/labor costs), and how to calculate an organization’s tonnage capacity utilization (actual run hours ÷ available run hours). Descriptive statistical methods were used this year to improve the integrity of the report. For example, the interquartile range (IQR), often referred to as the H-spread, was used to identify and remove outliers as needed.
The most significant variable when calculating and quoting machine rates is the tonnage capacity of the press. A micro-molding machine with a tonnage capacity of fewer than 45 tons may charge an average machine rate of $32 per hour, whereas a 1,000-ton press would require somewhere closer to a $90 hourly rate. Other notable factors that influence machine rates include the current state of the plastics processing industry, the market segments served, operator compensation trends, etc. MAPP’s Machine Rate Report also examines quoted labor rates by United States regions, which are the average labor rates used for quoting machine rates (but not necessarily the compensation for the position).
The 2021 Machine Rate Report also includes insights on the various markups and discounts often included in quoted machine rates. These markups and discounts include the following: selling, general and administrative expenses (SG&A); scrap rate, assembly, components, packaging, automated molding cells, discount for high-volume parts, markups for low-volume parts, two-shot and insert molding, and complicated parts or materials.
The report also includes the average age of machines by industry, company size, United States region, and tonnage capacity. The oldest machines were reported in the lowest tonnage capacity (<45 tons), and the youngest machines were in the tonnage range of 1,160 to 1,350 tons. The average age of machines across the industry is generally between 10 to 15 years old (see chart above).
The 2021 Machine Rate Report is available to purchase for MAPP members and study participants: https://www.mappinc.com/resources/benchmarking.