Molding a New Future

The state’s manufacturing sector has been battered by the recession, losing about 60,500 jobs since December, 2007, according to the latest figures from the Center on Wisconsin Strategy.

Companies within the plastics sector have not been spared from the carnage of the recession. Firms such as Portage Plastics Corp., Ball Corp.’s plastics packaging division, Verona-based Engineering Industries Inc. and many others have incurred large layoffs in recent months.

While many players in the plastics industry have seen large losses and layoffs, some are finding ways to build market share, launch new divisions and transform their companies during the downturn.

“(Many plastic) molders are looking at customers as a partner,” said Michael Thomas, a retired plastics industry professional who continues to be involved in the Milwaukee chapter of the Society of Plastics Engineers. “They’re saying, ‘I’m not the cheapest molder in town, but look at all of the services I can give you. My engineers will save you money, and you and I together can cut our costs and still be profitable.'”

Some manufacturers in the plastics industry in southeastern Wisconsin also are looking to add other services that will give them a deeper connection to existing customers or access to new markets, Thomas said.

“Many of them are talking about and looking for those opportunities,” he said.

By investing in the latest technology, expanding their product offerings and changing the way they market their services, some of Milwaukee-area plastics companies are positioned for big growth as the recession ends.

The transformation

Nashotah-based Dickten Masch Plastics LLC, a thermoplastics and thermoset molder, has transformed itself from a supplier into a problem-solving and revenue-generating provider for its customers over the past two years.

DMP has changed from being a “shoot and ship” molding company into a solutions provider, positioning itself as an expert in plastic molding and implementing continuous improvement processes, lean manufacturing and modern, highly automated machinery.

“As we took the idea of adding value to the (production) stream, we changed our strategic play where we focused on in the past,” said Steven Dyer, president and chief executive officer of the company. “We had a lot of people working real hard and doing a lot of things. We repurposed a lot of people – moved some of the seats on the bus and stretched our capabilities, reinvented our organization as we reinvented our mission statement: better products through broader perspective.”

DMP’s solutions approach is realized through its engineers and long-term employees, who have become experts in plastics manufacturing. Its engineers also use the company’s materials analysis lab, where they work with customers to determine the proper type of plastic or blend of materials for a product, giving it the right strength, heat resistance or flexibility needed.

“If we are going to survive, we have to compete as one continuous value stream,” Dyer said. “We don’t give (customers) cost concessions. We’re giving them value stream and value added (processes). There has to be a true partnership with a level of trust that exists. The pricing and procurement (departments) have been killing manufacturing in this country. It’s just piece/part price. This crisis in our economy has been a wakeup call that the old relationships can’t exist.”

Instead of waiting for customers to call, DMP’s engineers and senior management are now routinely looking at new potential customers and finding ways to streamline their processes, use better and less expensive materials, and reduce their operating costs.

“We don’t wait for customers to come to us,” said Doreen Lettau, DMP’s business development manager. “We go to them and say, ‘Give us half an hour and let us show you what we can do.'”

Better than China

Earlier this year, DMP’s new consultative approach paid off when it won a large contract with Cardiac Science, a Washington-based manufacturer of heart monitoring and therapy equipment.

While Dyer, other senior managers and engineers were on a tour of a Cardiac Science facility in Deerfield, Wis., they walked past large amounts of rejected plastic products that were contracted from an Asian supplier.

“They (Cardiac Science) had been dealing with that issue for years. They thought it was just the cost of doing business,” Dyer said. “They didn’t see the problem. They thought that the design should take six to 12 months and that they should have to wait three months for product with a reject rate in the 10 to 15 percent range and that they should be prepared to scrap a lot of product in place.”

Dyer suggested to Cardiac Science that the company might be able to save itself significant shipping costs and dramatically cut its rejection rate by partnering with a local plastics company.

“We know how to design a product, how to schedule (production) and how to deliver just on time,” he said. “And if there are hiccups, we are 18 miles down the road.”

Because it already performs assembly and other secondary functions for other customers, DMP has also been able to take some of Cardiac Science’s assembly steps out of the project, saving the customer even more money.

DMP is now supplying Cardiac Science with a large amount of plastic components and is performing all of the work that was formerly outsourced to Asia.

DMP is now also working on three projects with Racine-based Modine Manufacturing Co., which needed assistance in developing flexible tooling for intricate, low-run molding tools.

“The issue was, how do they cost effectively produce parts?” Dyer said. “They make such a wide range of sizes and lengths, but these are low runs for specialty heavy duty applications, about 5,000 to 6,000 units per year. And tooling can be expensive.”

By using its internal tooling department and materials lab, DMP is working to develop a flexible tooling system for Modine.

New markets

DMP also is moving some of the metal stamping and assembly operations formerly performed by Milwaukee-based Charter Automotive into its Nashotah facility. Last year, Charter Automotive announced it wanted to sell its dipstick and tube business. However, the company was unable find a buyer.

Dickten Masch was already supplying molded plastic components for Charter Automotive and had become involved in the engineering and design of the products.

“We had a 20-year relationship (with Charter), a partnership and level of trust,” Dyer said. “We approached their customers and said this was an opportunity for a seamless transition for them. We told them, ‘We will pick up the equipment and people’ and we will mitigate a lot of risk for them.”

Transferring the stamping equipment to DMP provided the best alternative for Charter Automotive, said Peter Murray, Charter’s vice president and general manager.

“When Charter Automotive made a strategic decision to exit the fluid level indicator business, it was important to the company – and to our leadership – to take care of both our customers and employees,” he said. “That’s why, when DMP approached us about their interest in pursuing this business, we supported them in that effort.”

Last month, Dickten Masch installed and began running limited production on one of Charter Automotive’s stamping machines. By the end of the first quarter of 2010, four of Charter’s stamping machines, ranging from 50 to 300 tons, will be running inside the Nashotah facility and more than 60 of Charter’s former employees will be working there.

Dyer and Lettau said Dickten Masch did not acquire the line of business from Charter Automotive. Instead, the Dickten Masch purchased machinery and agreed to hire employees, but had to convince Charter’s customers to hire Dickten Masch to make their products.

“We had to build a book of business. Charter introduced us, but the customers had a choice. We had to earn their business. This was not an acquisition. It was an out-of-the-box approach to taking care of customers, people and then business need,” Lettau said.

Dickten Masch now has contracts with General Motors, Chrysler and Nissan, as well as a verbal commitment from Ford. Dickten Masch also is negotiating a contract with Honda. It has also secured several non-automotive contracts with several of its existing customers.

By gaining metal stamping capabilities, Dickten Masch is gaining access to a large number of new potential customers, Dyer said.

“For DMP (Dickten Masch Plastics), this gives us incredible stabilization,” he said. “There are three new industries – automotive, light truck and heavy truck. One of our customers has already ordered two new lines. Our play in all of this is to manage growth, then cross-sell these new customers our technical molding capabilities.”

DMP’s headquarters and manufacturing operations are split between two facilities located next to each other in Nashotah, which total about 188,000 square feet. The company also has a 90,000-square-foot manufacturing facility in Ankeny, Iowa.

The Charter Automotive equipment is now being assembled into about 43,000 square feet that was formerly used as warehouse space.

DMP will never become a metal stamping company, Dyer said, but will use its newly acquired stamping capability to deepen relationships with current customers and gain access to new markets.

“If we’re going to survive as a contract manufacturer in the upper Midwest, we need to have the business acumen to solve customer problems,” Dyer said. “We want to be able to handle more work and provide more resources to customers.”

The new model

Dickten Masch’s new business model has resulted in the hiring of more than 50 new workers and has grown its total workforce to more than 280.

“We’ve had a 50-percent increase (in orders) from this facility in the last 12 weeks,” Lettau said. “And over the next three months, we think orders will be just as strong. The question we’re all asking ourselves is, ‘Is this the real rebound?’ But most of this is new business, not an economic uptick.”

By the end of 2009, Dickten Masch will hire about 20 more employees in Nashotah and another 20 at its facility in Iowa.

The company also will begin transferring at least 60 of Charter Automotive’s employees to its Nashotah facility during the first quarter of 2010, Dyer said. The 60 workers will help get DMP’s metal stamping division up and running. The company will likely need about 80 workers total in that division when it reaches full capacity. It will need to expand that division when the auto industry rebounds at some point in the future, Dyer said.

DMP will have about $43 million in revenues for 2009.

The compnay is forecasting about 21 percent revenue growth in 2010, which will take it back to 2008 levels. And the company believes it is in line for significant growth in future years.Molding a
New Future
Dickten Masch recalibrates during recession

The contract with Cardiac Science is now worth about $1 million per year, and will likely increase to about $2.3 million by 2011.

“This (contract) moved the needle,” Dyer said.

While DMP has enough room to accommodate its stamping and auto business for the near future, the company is considering other options for its long-term needs.

“In the long term, we’re going to have to take a hard look at our overall footprint,” Dyer said. “Everything we have put in place (over the last two years) has been to fuel double-digit growth, year-over-year. In our five-year plan, we believe we will double the size of the business within five years, which means we’ll be twice the size we are today.”

“We know we’re going to need to do something, and we’ll be prepared to do it,” Lettau said.