An October 11^th article in the Wall Street Journal (WSJ; subscription publication) gave extensive coverage to how toymaker K’Nex Brands, one part of SPI member company Rodon Group (Hatfield, PA), has returned production of most of its plastic construction toys from China to its Pennsylvania factory, and why it did so.

Last November 30th, President Obama chose Rodon Group/K’Nex to speak about U.S. manufacturing.

Joel Glickman, chairman of K’Nex and the custom plastics molding business of the Rodon Group told the Journal, “In the long term, it’s much better for us to manufacture here.” The reasons why are several. For one, K’Nex says it can react faster to shifts in demand for various toys. For another, it gives better control over materials and quality, a vital factor relative to safety issues.

K’Nex also reshored production to the U.S. due to the rising cost of labor and transportation within China. However, K’Nex said that, so far, it has not found it possible to produce 100% U.S.-made toys, which is its goal. The decline in American manufacturing that took off during the nineties shrunk the overall number of American suppliers notably, whereas China now has a nearly limitless number and variety of supplier companies.

K’Nex still imports small battery-powered motors for its toys because it can’t find a competitive U.S. supplier. Michael Araten, the CEO of K’Nex, told the Journal, “In China, you can go over with just a drawing and say, ‘I need a million of these.” And that has had a huge effect: In 2012, China’s exports of toys, games and sporting goods was worth $33.5 billion, which is about three times what America exported in those sectors.

Although the WSJ article focused on the K’Nex toy business, it also gave a well deserved shout-out to the custom molding Rodon side of the business. When the U.S. economy cratered in 2008, demand for the company’s products fell sharply, and there was not enough work for the workers. Wanting to avoid major layoffs, the Glickman family, which owns both K’Nex and Rodon, decided to move production back to Pennsylvania.

They were confident Rodon’s well developed, highly automated plastics production technologies would result in competitive costs, despite higher U.S. labor costs for needed manual assembly. Further, to lower that assembly cost certain toys were modified. For example, roller-coaster tracks that were put together in China with hand-inserted pins, were redesigned to snap together.

Added to its plastics manufacturing expertise that could enable competition with China, Rodon had another major, though intangible, resource. Let’s call it Attitude, with a capital A. The Journal article says Rodon’s slogan is “Cheaper than China.” But it’s not just a slogan, it’s an attitude.

The image on the left is prominent on the home page of Rodon’s website, and the “We Beat China Pricing” message is on display around the rest of the website, as well as around the 260,000-ft2 Hatfield production facility. That kind of competitive, winning attitude is what coaches work hard to instill in their teams, and business, as many have noted, is very much a team sport.

Video spotlight on Rodon’s custom injection molding capability…

According to a Packaging Digest article, a new report from research firm Smithers Pira shows the North American packaging market has rebounded to $169.1 billion in 2011, up from $164.6 billion in 2007, the year before the recession began. Market revenues that fell to $150 billion in 2009 have increased modestly in each of the following years. The material leading the charge is plastics.

The report, The Future of Packaging in North America to 2017, goes on to say, “The anticipated market value for 2012 is $173.4 billion—an increase of 2.6 % over the prior year—and for 2017 that forecast should grow by 1.4 % above inflation levels to $186 billion. Despite this growth, Packaging Digest says, “…the region remains slightly cautious because of market and political uncertainty, as well as fluctuating raw materials prices.”

The Packaging Digest article then has a sub-headline that says: “Packaging materials market share led

by paperboard.” The text continues: “In North America in 2011, the largest share of packaging consumption was paperboard packaging, at 33.7 % of the total. Rigid plastic followed at 20 %, flexible packaging at 19.9 % and metal packaging at 17.7 %. … For the first time, rigid plastic packaging surpassed flexibles by growing 8.4 % in 2011, compared with flexible packaging at a 7.3 % rate…Flexible and rigid

plastic packaging is forecast to grow 2.3 % and 2.6 % per annum, respectively, accounting for 20.7 % and 21.5 % of the total North American market by 2017.”

Packaging materials market shares are sometimes reported this way, however since the numbers are specifically about packaging materials, the shares should be stated as plastics 39.9%, paperboard 33.7%, and metal 17.7%. Plastics, whether flexible or rigid, are plastics, and with a nearly 40% share of the packaging market plastics are the sector’s leading material.

A big reason why plastics are dominant in packaging and many other sectors is that they can meet widely varying requirements, for example rigidity and flexibility. They can be semi-rigid or slightly flexible, rigid enough to be an airplane fuselage or flexible enough to wrap a sandwich. Plastics other performance properties offer similarly wide ranges of choice, and plastics are economical, easy to design with, recyclable, and more. It’s a winning combination of advantages.

Though this “In The Hopper” blogsite belongs to SPI: The Plastics Trade Association, that’s not the main reason for making the preceding point. The numbers as given say plastics are the number one material in packaging. And who better than SPI to point out why plastics are the materials of choice for so many tasks?

Back to the report: Packaging Digest says the Smithers Pira report also says industrial packaging such as foodservice and bulk containers, which experienced a steep decline in 2009, will have a growth rate close to that of consumer packaging from 2012 to 2017. The single fastest growing segment, according to the report, will be consumer healthcare packaging: 2.9% per annum over the next five years.

The report offers an overview of the packaging industry in Canada, the USA and Mexico, historical and current market sizes and trends, and forecasts demand from now to 2017, with more than 400 tables and figures to make it clear. Full information is on the Smithers Pira website.

“Get Excited! South Carolina Plastics LLC, a maker of plastic automotive components, announced plans to invest $12 million in our state and create 119 new jobs in Fountain Inn!” That was South Carolina Governor Nikki Haley’s Twitter message following the official announcement of the new factory.

The governor had good reason to be excited, and not only about the $12-million investment and 119 new jobs. The new South Carolina Plastics facility is expected to be operational in February, making auto components such as door modules, door handles, cable drum housings, and seat belt covers, plus various products for the appliance, medical, and rail sectors.

South Carolina Plastics is a subsidiary of Carolina Technical Plastics Corp. (New Bern, NC), which is part of the Wirthwein AG Group headquartered in Creglingen, Germany. Wirthwein is a major global automotive supplier made up of 16 companies in Germany, Poland, China, Spain, and the USA that provides a broad range of plastics molding, mold making, and production capabilities.

The new facility is another addition to South Carolina’s growing advanced manufacturing cluster, which includes a variety of auto suppliers and plastics processors. The growth of automotive production in the Southeastern U.S. region, not only South Carolina, continues, aided by the auto industry’s return to healthy sales figures.

BMW’s American production facility in Spartanburg, SC, about 30

miles northeast of the new factory at Fountain Inn, is the sole manufacturing site

for several models of BMW’s X Series. Supporting BMW’s global presence, the plant exports many of its cars to about 130 countries around the globe.

Just last month the National Association of Foreign Trade Zones recognized BMW Manufacturing Spartanburg as Exporter of the Year—for the second consecutive year. According to U.S. Dept. of Commerce 2011 data, BMW Spartanburg was the largest automotive exporter in America.

The U.S. auto industry will close strong for the year 2011, with vehicle sales expected to reach nearly 12.8 million. That’s up from about 11.8 million in 2010 and 10.6 million for ’09 – a year we would prefer to forget.

Auto industry analysts are saying that car buyers in the USA are once again feeling OK about making larger purchases, despite continued uncertainty in the overall economy. Recently, Jesse Toprak, chief industry analyst for auto-pricing website TrueCar.com, described that as a big behavioral change from ‘08 and ’09 and called it good for the industry.

How good? Good enough that a number of industry forecasts are projecting that vehicle sales could reach around 13.8 million in 2012 – barring, of course negative impact from a double-dip domestic recession, Europe’s debt crisis, a slowed Chinese economy, some combination of those, or something no one is talking about as yet.

Some perspective lest we get starry-eyed: Prior to the Great Recession the U.S. had peak vehicle sales years of around 16-million units. Sobering. And back then the auto sector was one of the two biggest market application sectors for the U.S. plastics industry, the other being packaging. Those two markets are still the biggest customers for the plastics industry, and it’s not surprising that the auto sector also is slimmer than in its pre-recession years.

It was nearly impossible for a supplier not to be squeezed when a major customer is forced to contract. Lately, however, both automakers and their plastics industry supply chain have regained stability, and they are moving forward together again.

The basic reasons why this marriage endures have not changed. Plastics give vehicle designers and manufacturers multiple options for achieving dramatic and brand-differentiating shapes, colors, and surfaces; the ability to combine functions in a single part; plus design-for-manufacturing (DFM) and design-for-assembly (DFA) procedures that ensure efficient manufacturing.

By 2015, says LMC Automotive, hybrids like the new Ford C-Max will be 6.4% of the U.S. auto market, versus less than 3% today.

However, perhaps the single most basic reason automakers have favored plastics is now more important than ever. The high strength-to-weight ratio of plastics permits replacing metal and glass with plastics that reduce overall vehicle weight. Less weight correlates directly to improved fuel efficiency, thus positioning plastics beautifully for the new designs of electric and hybrid vehicles.

One look at BMW’s recently unveiled i3 (all electric) and i8 (hybrid) cars, each featuring CFRP (carbon-fiber-reinforced plastic) body panels, offers a striking vision of plastics’ automotive future – and that future has arrived.

The BMW i8 hybrid's composite plastic body panels are the real stars (sorry Tom Cruise) of Mission Impossible: Ghost Protocol

So yes, 2012 looks to be a good year for U.S. automakers, domestic and foreign brands, as well as for their creative partner suppliers in the plastics industry. For what they have each been through in the last few rough years, both automakers and plastics suppliers have more than earned some good times.

Here is wishing all of us a healthy and prosperous 2012!

I’m ashamed to admit it, but for five years in the early 90s, I was a manufacturing lobbyist who had never stepped foot inside of a manufacturing plant.  I was 25 years old, lobbying tax and budget issues and I thought I was pretty sharp.  To make matters worse, in many instances I was lobbying members of Congress and Hill staffers who had also never been inside a plant … talk about the blind leading the blind.

 It wasn’t until years later when I had my first of many plant tours,  that I realized how little I really knew about the people and the processes that I was representing and the disservice that I was doing to my association’s members.  The unfortunate truth is that too many members of Congress and agency staff that are responsible for regulations and legislation affecting our companies, are guilty of this same ignorance.  Sure, they’re smart people, they read newspapers and many have been to law school.  Like I did, they probably think they know everything they need to know about manufacturing.  But, they don’t. 

Last week, I visited two Berry Plastics facilities – in Baltimore (pictured in the photo above) and Hanover, Md. — and was reminded of how important it is to show, and not just tell, our elected representatives about what we do and how we do it.   I had forgotten about the impressive and innovative technologies that allow companies like Berry to stay competitive.  High tech manufacturing isn’t just in Palo Alto anymore — it is the norm in American manufacturing.  I saw, firsthand, the importance that this company places on employee safety and investments that they have made in recycling scrap –not just to be green, but to reclaim a valuable resource.  Finally, I witnessed the tremendous pride of the Berry employees in their plant and the products they produce.  In the coming months, Berry’s Hanover plant will be making $30 million worth of investments in equipment, hiring several dozen new employees and ensuring steady and satisfying work for the 145 employees who already work there. 

Can you imagine making an important business decision without understanding all of the implications?  Members of Congress will be in their home districts in August and for several weeks in the fall.  Let’s make an effort to bring them into our plants and show them our pride.  Seeing is believing.  Check out this photo – and this one and one more – of  elected representatives who have recently visited the plants of SPI member companies  

Be a Plastics Champion and “Take Action for Plastics” by hosting an elected official on a plant tour of your company’s facility. SPI can help make the arrangements and provide you with solid “how-to” information.  Get started — for more information on  SPI grassroots programs, email grassroots@plasticsindustry.org.