By Maggie Taylor, writer, Plastics Business
Coming off three very unpredictable years, the plastics industry is gearing up to enter 2023. Many manufacturers report coexisting sentiments of optimism and realism as they navigate the uncertain waters of economic change, supply chain issues and more.
“The past two years have been tough, and I don’t see it getting any easier,” said Tammy Barras, president of Westec Plastics Corporation. She anticipates a range of factors continuing to challenge the industry into next year. “I think the economy will be the biggest challenge for 2023, and that will affect everything: staffing, supply chain and growth. We’re also starting to see customers delaying their orders as their inventory grows due to lack of sales.”
Facing Challenges in 2023
Barras also expressed concern about ongoing supply chain issues. “It is difficult to expand when lead times for materials increase from two weeks to six weeks – or more.” The problem is compounded by hiring challenges, which have affected virtually every industry since the early days of the COVID-19 pandemic. “Planning for staffing is problematic when order due dates are looming but raw materials are delayed. Competing for skilled, talented workers in the California marketplace requires patience and determination.”
Tony Cavalco, CEO of Nicolet Plastics LLC, reported a blend of sentiments. “We are a family-owned business and have been able to invest heavily in our people, equipment and facilities to allow us to meet our existing and new customer requirements,” said Cavalco. “Supply chain issues have stabilized, which is helping us be more proactive in the business. We are seeing a slowdown with several of our customers, but fortunately, we have a significant backlog of new tools coming into production. The key for 2023 will be leveraging our ability to bring new programs into production while balancing the shorter production runs based on reduced demand from some existing accounts. Our focus is on becoming more efficient from a labor standpoint, and to improve our machine utilization to make sure we reduce the impact of a slowdown.”
Part of Nicolet’s outlook can be credited to well-timed strategic planning. “We had started working on strategies to improve our response times to inquiries before COVID,” said Cavalco. “Once COVID hit in March of 2020, we needed to make decisions quickly and pivot our production to the few products that were in high demand. This quick response to opportunities helped Nicolet Plastics not only retain our main customers but helped us win significant new business with both existing accounts and new accounts.”
Like Cavalco, Scott Pflughoeft, CEO of Ashley Industrial Molding, Inc. (AIM), reported a blend of opportunities and challenges in recent years. “While 2022 had its share of challenges, we were glad to see an overall positive direction. With the degree and number of headwinds, we expect 2023 to provide similar challenges and opportunities. We anticipate the biggest challenge in 2023 will be ongoing supply chain issues. We’re working closely with our key suppliers and customers to proactively identify solutions.”
Investing in the Opportunities
Pflughoeft is hopeful about the opportunities that may unfold over the next year. “The biggest opportunity for AIM in 2023 is to supply our customers with product to meet their order backlog if supply chain issues are resolved and they are able to increase their output. With that goal in mind, we are working with customers to secure packaging and build inventories to support their planned growth.”
Barras believes ongoing supply chain issues will create opportunities for domestic manufacturers, including Westec. “I think re-shoring will continue to be a huge opportunity for US manufacturing. Not just the work that will be coming back from Asia, but new business that won’t be planned for overseas. We’ve had many customers insist on domestic tooling this year, as opposed to years past. With the added uncertainties in the world, customers are trying to limit the risk and keep production local.”
Westec has invested in significant growth to prepare for an anticipated spike in demand for domestic manufacturing. “In the last two years, Westec has expanded our facility by 9,200 sq. ft., brought in five new injection molding machines and hired additional trained support staff to focus on improving our efficiencies and offerings,” said Barras. “We’ve invested in new clean rooms. [We’re] now offering an ISO Class 7 in addition to the ISO Class 6 and 8 we had available. We also brought in three two-shot molding machines with robots, numerous automation programs, laser welding and vibration welding, and [we] have plans to add more in the coming years. We’re ready and working hard to meet the requirements of our current customers and always searching for new customers to support.”
Westec also has made significant, short-term shifts to its operations to support its customers’ needs. “We became a distribution center for eight months to keep one of our major customers in business!”
Nicolet also has invested in meaningful growth. The Wisconsin-based company has acquired a 60,000 sq. ft. building in Ripon, Wisconsin. “We have [already] made significant improvements to prepare this facility for future expansion. Our new building will allow us to nearly double our revenue organically, so we have plenty of space for expansion of our custom injection molding business,” said Cavalco.
The new building will integrate into Nicolet’s strategic use of its existing facilities in Mountain and Jackson, Wisconsin. “Our biggest opportunities for 2023, are based on several large new programs with new customers coupled with being awarded new programs with long-term customers,” said Cavalco. We leverage the capabilities of our two facilities, with our Mountain facility being very short- to medium-run, and our Jackson facility being medium- to long-run. We are implementing productivity improvement programs to optimize our changeover times and improve our secondary operations in our Assembly department. We have significantly increased the number of robots in our facility and will be adding additional automation this year.”
Growth and expansion are central to Nicolet’s five-year plan. “Our focus for the next five years will be on three main initiatives: Growth of our existing business, an investment in a Mantle 3D Manufacturing System to expand our tool room capabilities and we continue to explore strategic acquisitions to help us expand into new markets,” said Cavalco.
Learning From the Past
Barras reported a wide variety of lessons learned over the past few years that will guide Westec into the future. “I think the biggest lesson learned is how resilient we are! Even on days when we felt we’d been knocked down, we all kept moving forward knowing it would get better. Our company motto is ‘Find a way or make a way,’ and this proved time and again to be true.”
Barras also emphasized the importance of ensuring clear expectations throughout the company. “Communication at all levels is key so not just management but the entire plant floor understands what is happening and what the plans are.”
Pflughoeft pointed to a few key principles, both practical and philosophical, that will guide AIM as they move through 2023 and into the future. “The lessons we learned were:
- Don’t panic.
- Triage the issues to fix ‘those that will kill you’ immediately.
- Make sure that the ‘shelter’ of our balance sheet is secure.
- ‘Cash is king,’ so manage it closely.
- Secure revenue that yields positive net results.
- Be in community with others to succeed together.”
Barras reported feeling hopeful about the upcoming years. “As for planning for success for the next five years, to me, the most important aspect of Westec is its people. Without a strong team, we are unable to concentrate on the needs of our customers, and without happy customers, Westec will not continue to thrive. We are focused on continuing to build the strength of our team with training and opportunity for growth.”
As we enter 2023, plastics industry leaders seem to be relying on a blend of good people and strategic planning to navigate the uncertain waters ahead.