PLASTICS CUSTOM RESEARCH SERVICES
695 Burton Road
Advance, NC 27006
Phone: (336) 998-8004
Fax: (336) 998-8044
GLOBALIZATION: IMPLICATIONS FOR THE NORTH AMERICAN INJECTION MOLDING BUSINESS
“Think globally”. Today this is the new, universal business management mantra. Yet globalization is not a new
phenomenon. Rather it is the acceleration of an age-old process – namely, the international exchange of goods,
services, technologies, and cultures. Moreover, globalization carries risks as well as rewards. Economists have
for centuries advocated free trade as essential to improving efficiency and raising consumer welfare. Yet
international trade presents both opportunities and challenges, and globalization is viewed by many as a threat
as multinational enterprises proliferate and foreign outsourcing replaces domestic output and employment.
Like all other manufacturing industries, the North American injection mold-makers and molders today confront
the full force of globalization. The U.S. and Canadian economies have historically held competitive advantages
on domestic and foreign markets in terms of innovating and utilizing leading-edge technologies in mold-making
and molding. Yet today every country in the world, developed and developing, is able to access technologies of
equivalent productivity. The Mexican economy has maintained a long-term competitive advantage derived from
its low-wage structure, and its participation in the North American Free Trade Agreement (NAFTA) resulted in
a business boom in its maquiladora free-trade zones in the second half of the 1990s. Yet by combining even
lower wage structures with advantages of an infrastructural and institutional nature, Asian mold-makers and
molders have been able to capture many U.S. part programs formerly outsourced to Mexico.
Much of the current concern registered by the North American injection molding community is directed at
China. The free-market reforms that have transformed China over the past quarter century into an economic
power have radically changed the global marketplace. By investing in modern technologies and making them
available to its low-wage labor force, China has rapidly progressed beyond traditional primary product exports
to high value-added consumer and industrial products. As a result China holds major shares of key injection
molding markets such as consumer electronics and toys, and it is setting its sights on other markets such as
automobiles. To a large extent China’s advance in global trade is grounded in comparative advantages in factor
endowments and factor productivities. Yet China is criticized for providing export subsidies, manipulating its
currency, strictly regulating foreign investment, and engaging in other trade practices that violate WTO rules.
Over the period September-December 2003 PCRS conducted telephone-based interviews with decision-making
officials at over 100 companies with injection molding operations. The thrust of our inquiry was essentially
three-fold – namely, 1) Has globalization, directly or indirectly, positively or negatively, impacted your
operations?, 2) In what way and to what extent?, and 3) What strategic changes has your company made or is it
contemplating in response to globalization?
In this report we review some of the principal tenets of international trade theory and their applicability to the
current and future opportunities and challenges that regional injection mold-makers and molders face in light of
globalization. We examine recent trends in U.S. plastics industry exports and imports, and we explore shifts in
market focus among the molders. We then provide case studies of custom and proprietary injection molders and
the strategies that they are adopting to deal with new market dynamics brought about through globalization.
Publication: January 2004
TABLE OF CONTENTS
INTRODUCTION
EXECUTIVE SUMMARY
PART I: INTERNATIONAL TRADE THEORY: FIRST PRINCIPLES
The Foundations of International Trade Theory
International Trade Myths and Misconceptions
Globalization: The Bright Side and the Dark Side
Globalization and the Supply Chain
The Increased Role of Developing Countries in International Trade
The Increased Role of Multinational Enterprises in International Trade
PART II: INTERNATIONAL TRADE PRACTICE: RECENT TRENDS IN U.S. PLASTICS INDUSTRY TRADE
The SPI/Probe Economics Report
The Evolving Competitive Position of the U.S. Plastics Industry
PART III: THE CASES FOR AND AGAINST FREE TRADE
The Case against Free Trade
The Long-term Trend to Globalization
The Economic Mandate in Support of Free Trade
The Political Mandate in Support of Free Trade
The Moral Imperative in Support of Free Trade
PART IV: THE CHINESE DRAGON: THE CHALLENGE POSED TO NORTH AMERICAN INJECTION MOLDMAKERS AND MOLDERS
Chinese Factor Endowments
Chinese Factor Productivities: The Role of Infrastructure
Chinese Institutional Advantages
Chinese Institutional Disadvantages
Fair and Unfair Chinese Trade Practices
The Linkage of the Chinese Yuan to the U.S. Dollar
The Effect of China on the U.S. Balance of Trade in Plastics
The Response by the U.S. Government to the Chinese Trade Imbalance
The Cost/Benefit of Chinese Competition
Looking to the Future of Sino-U.S. Plastics Industry Trade
PART V: STRATEGIC OPTIONS AVAILABLE TO THE NORTH AMERICAN INJECTION MOLDERS
The Perfect Storm: The Confluence of Domestic and Foreign Challenges to Growth
The Challenge to Companies with Mold-Making and Molding Capabilities
Going on Defense
The Weak Case for a Weakened U.S. Dollar
Export Subsidies
Tariff and Non-Tariff Barriers: Lessons from the Steel Industry
Buy American Campaigns: Lessons from the Military
Orderly Marketing Agreements: Lessons from the Automotive and Textile Industries
Going on Offense
Strengthening Regional Integration: The Free Trade for the Americas Agreement
Fortifying Sales/Marketing Departments
Exploiting Export Opportunities
Recent Shifts in Leading Injection Molding End-use Markets
Restoring U.S. Competitiveness through Innovation
PART VI: RECENT INFRASTRUCTURAL CHANGES IN NORTH AMERICAN INJECTION MOLDING
Capital Intensity
The Trend of Presses per Plant
The Trend of Sales per Press
Labor Intensity
The Trend of Employees per Plant
The Trend of Employees per Press
Corporate Consolidation: The Quest for Economies of Scale
The Distribution of Injection Molders by Number of Plants
The Trend of Sales per Plant
PART VII: CASE STUDIES: THE RESPONSES OF INJECTION MOLDERS TO GLOBALIZATION (100
Companies in Total)
ABC Group
AMP Industries
Acsys Technologies
Aim Corporation
Allegheny Plastics
Armin Tool & Die
Atlantis Molded Plastics
Avail Medical Products
Berry Plastics
CTP Carrera
Capsonic Group
Cary Products
Channel Commercial
Circle Plastic Products
Custom Molded Products
Custom Plastics International
Deimling-Jeliho
Durden Enterprises
East Coast Plastics
Erie Plastics
Hoffer Plastics
Kamco Plastics
Key Plastics
Mac Closures
Mack Group
Magna Donnelly
Midwest Plastic Components
Molded Plastic Research of Illinois
Nyloncraft
Nypro
ORC Plastics
Phillips Plastics
Pixley Richards
Plastek Industries
Sajar Plastics
Sonoco Crellin International
Technimark
UFE
Unimark Plastics
Winzeler Gear
170 Pages
22 Tables
12 Figures
ABOUT THE AUTHOR
Dr. Peter J. Mooney is the founder and president of Plastics Custom Research Services. Dr. Mooney holds a Ph.D. in
economics from the University of North Carolina, and he taught courses in microeconomics, macroeconomics, international
trade, and economic growth and development theory at the University of Connecticut from 1982 through 1995. He has
covered the plastics industry as a technical/economic market research analyst and consultant since 1980. He is a member of
several plastics industry associations such as the Society of the Plastics Industry and the Society of Plastics Engineers. He is
also a member of the National Association of Business Economists. He has researched and written over 60 multi-client
reports, as well as over 100 single-client reports, in the field of plastics and related industries. He has also organized,
chaired, and made presentations to numerous conferences on critical issues facing the domestic and global plastics industry.
ABOUT PLASTICS CUSTOM RESEARCH SERVICES
Plastics Custom Research Services was formed in 1993 in response to the growing demand for accurate and insightful
market research tailored to the evolving needs of plastic industry participants. PCRS is able to utilize research methods
developed through over 20 years of experience in this field - methods that yield cost-effective and timely data and insights
of relevance to the product and service offerings of the plastics industry. These research methods include telephone-based
and in-person surveys of key decision-making officials in the field, as well as hard-copy and electronic searches of trade
literature and patents. Research findings, conclusions and recommendations are provided in written and oral reporting
formats. PCRS also researches and publishes multi-client Plastics Industry Reports, dealing with subjects that are part of its
core competencies and that have relevance to a wide range of plastics industry operatives.