Plastics Firms Are Primed for Growth, Wisconsin Business Group Says

Jan 16 - While manufacturing in general has suffered from the recent economic slowdown, one sector stands out as an area of growth and development: plastics, according to state business recruitment group Forward Wisconsin.

"We have created a Web site, www.PlasticsWI.com to help promote the industry," said Scott Riegstad, director of communications for Forward Wisconsin. The organization hopes to retain plastics companies already operating here, as well as attract other firms that serve and feed off of plastics providers.

Wisconsin serves as home to more than 650 plastics-related businesses, about 84 percent with fewer than 100 employees, Riegstad said.

However, a fair share of these businesses actually have only a handful of workers. Tom Lynch owns and is the sole employee of Plastic Innovations in Kimberly.

"It's a fairly competitive field," said the fabricator of custom-made plastic sheets, rods, tubing, etc. Citing competitive concerns, Lynch declined to talk about his target market except to say he works with small businesses.

"It's going to be a lot more competitive in the future and lead times are going to get shorter," he predicted. With customers going through a recession, Lynch also believes loyalty will take the sideline to cheapest prices, at least for a while. "I don't blame them," he said. "Everybody's scared right now."

Sometimes Lynch feels like it's him alone against the big guys; but, ironically, he also relies on those large plastics manufacturers to distribute materials to his business.

"I fill a niche the other guys don't want to deal with," Lynch said. He will make pieces one or two at a time rather than the large runs of cookie-cutter items.

To bolster his business, Lynch recently started manufacturing custom-shaped cutting boards. He's found a market in cheese retailers, he said.

Plastic Innovations has grown slowly and steadily and Lynch feels the industry still has room for expansion.

"Wisconsin customers are looking for more things made out of plastic," he said. "We're turning into a throw-away society." James Haney, president of Madison-based Wisconsin Manufacturers and Commerce agreed. "It's clearly a growth industry," he said. While other manufacturers have decided to hold back until the economic tide turns, plastics makers have made investments in equipment and operations facilities.

"They feel that when the economy is doing well again, their businesses will be very busy," Haney said.

Evco Plastics, a De Forest-based plastic injection-molding manufacturer, recently announced plans to undergo an $11 million expansion at its Oshkosh facility. For almost 25 years, Evco operated from a 27,000-square-foot plant. Evco purchased 44 acres in the Aviation Industrial Park to build a 54,000-square-foot facility. The construction cost is estimated at $3 million. The company plans to add another $8 million in new equipment. According to PaperWI.com, the company ranks fifth statewide in producing injection moldings and No. 93 nationally.

"We've tried to expand many times before, but each time something happens that gets in the way," said Dale Evans, Evco president. "This time, we thought we'd follow through and plan for the future."

Typically, Evco builds during slower periods to ensure full capacity when the orders pick up. The new plant's plans call for a training facility and eventually research and engineering labs. The expansion also includes an increase in manpower. Evco would like to increase the Oshkosh work force from 59 to 115 over the next three years.

Deluxe Plastics Inc. in Clintonville underwent an expansion of its facilities in 2000, adding 23,000 square feet of manufacturing space. Upgrades cost about $1.5 million. Deluxe does contract molding, making products used in cameras, medical supplies, furniture, etc. The company initially expected to increase its work force from 47 to about 100 over the next couple of years, but "pressure on pricing" and a slow 2001 put that on the backburner, according to Michael Curran, general manager.

"Sales just kind of fell off," Curran said. "We had two or three weeks that we shut down and several four-day weeks last spring. We started feeling the recession last January." However, the last few months have picked up and Curran remains "cautiously optimistic" about 2002.
Haney expects the plastics industry to provide a number of jobs in the future. "There's need for much technology experience," he said.

Wisconsin ranks 10th in terms of plastics employment with more than 51,000 workers, according to Washington-based Society of the Plastics Industry. Forward Wisconsin is hoping to increase that position over the next few years. Nationally, the numbers of jobs have increased 25 percent since 1994, according to society reports.

Several UW colleges offer classes related to plastics engineering and other skilled labor positions. Because Wisconsin has such a strong manufacturing background -- about 22 percent of the overall work force -- the state is a natural base for plastics making, Haney said. In 1999, the most recent year for which statistics are available, Wisconsin shipped $8.5 million in plastic products, the fifth-highest amount nationwide.

Businesses such as Presto Products Co., Appleton; Chilton Products, Chilton; and Banta Healthcare, Neenah, have been mentioned by Forward Wisconsin as large contributors to the state's production.

Presto Products, which was founded in 1961, produces store-brand plastic bag and wrap products. It employs about 1,900 people at six facilities, including 600 total at those in Appleton, Little Chute and Weyauwega.

Chilton Products, the largest employer in the city with about 500 workers according to the Chilton Chamber of Commerce, is ranked as the No. 3 top film and sheet plastic manufacturer in the state, and No. 41 nationally.

The Chilton company, a division of Milwaukee-based Western Industries Inc., has operated in northeast Wisconsin since 1967, making molded plastic and stamped metal items such as gasoline and propane tanks.


Haney, as well as the Society for the Plastics Industry, foresees much room for new players in the industry over the next decade. "It's full of niche opportunities with a lot of technology," he said.

DERBY PRODUCTS FOCUSES ON QUALITY TO SET ITSELF APART: Since small businesses comprise the majority of the plastics industry, Neenah-based Derby Plastics could be viewed as a typical manufacturer. For president and majority owner Tom Derby, however, typical isn't good enough. "Our main area of concern is quality," he said. "It has to be perfect to go out the door." Looking through a small basket of rejects, he points to a piece that was originally intended for a consumer technology product. "There's no way that would go out of here," he said, citing its imperfections.

Derby Plastics, an injection mold manufacturer in the Southpark Industrial Park, has to compete for business among the many other molders throughout the state for business.

"There are a lot of molders in Milwaukee, around Madison and some pretty good size ones in Green Bay," Derby said. However, Derby has won accounts for large manufacturers such as Kimberly-Clark Corp., Banta Corp. and Bemis Co.

For more than 10 years, Banta Corp. has looked to Derby to manufacture the plastic backing and stand for it's day-by-day desk calendars. "We make about 12 million a year," said James Martin, director of marketing and business development for Banta Packaging Fulfillment. Derby Plastic manufactures about 75 percent of the "backers." For years, Martin flew around the country to meet with different molders, and then he heard of Derby right in his backyard.

"Tom has earned our business over the years," Martin said. "He's honest and hardworking. If he has to work a Memorial Day weekend to get an order out, he'll rearrange his schedule to do it." While most of the small manufacturer's clients lie within a 100-mile radius of the plant, it does have customers around the country, as well as in Canada and the United Kingdom.

Derby deals in thermoplastics, the kind that can be recycled. The facility makes custom-contract molds, as well as its own line of pails, which it silk screens for customers and stocks onsite. It posted sales of $500,000 last year on the buckets alone, an amount the company plans to double this year. "The pails are relatively new for us, we've only been making them for a year and a half," Derby said. "But we intend to be at $1 million in sales by the end of 2002."

Overall, he expects the whole business to increase by about 20 percent this year. The plastics product maker employs 24, but hires almost as many through temporary services, Derby said. December and January prove the sector's slow period. However, come February, "We'll have product lines start up that take up half the machines we've got here," Derby said. The company started as a two-man operation in 1987 in the Edison Center in Appleton. Derby had worked in plastics since the early 1960s and wanted to return to the Fox Cities where he was born and raised.

By 1991, Derby Plastics moved into a 7,000-square-foot warehouse on Haskell Street in Appleton, growing each year. Finally, the business built its current 18,000-square-foot facility in Neenah. "We have room to triple our size," Derby said of the more than three acres the company owns. "We hope to add on another 15,000 in 2004," he added. One of the challenges facing a small plastics manufacturer like Derby: "There's an awful lot of technology that continues to change."

In the best-case scenario, the company would like to update its equipment every seven years to keep up with new advancements, but that's quite expensive. The company will buy two new injection molders this year for a price of about $300,000.

Plastic production is becoming an increasingly technical process, Derby said. "Plastics have shrinkage after molding and each type of resin shrinks differently," he said. Therefore, processing engineers must carefully watch and program machine for temperature and cooling processes.

Molds can cost tens of thousands of dollars just for small parts. "We only produce large orders," he said. "It wouldn't make sense to spend $80,000 on a mold to make $1,000 worth of parts."

SOURCE-- By Stefanie Scott To see more of The Post-Crescent, or to subscribe to the newspaper, go to http://www.postcrescent.com (c) 2002, The Post-Crescent, Appleton, Wis. Distributed by Knight Ridder/Tribune Business News.

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