Thomas Index Report: Custom Injection Molding

Shawn Fitzgerald September 8, 2017

To help buyers and suppliers stay ahead of the latest shifts and emerging trends in the digital industrial economy, we constantly analyze the industrial/B2B buying activity taking place at Thomasnet.com, where every 2 seconds a buyer evaluates a supplier on our platform. This powerful, proprietary data fuels our Thomas Industrial Index.

Here’s what we’re seeing in the Index this week:

Custom Injection Molding is a process that’s been heavily offshored over the past couple of decades, as manufacturers sought the cost savings that came with relatively cheap labor overseas.

Today, changes in the global market — such as the growing demand for higher wages in countries such as China — are eating away at the benefit of offshoring, and spurring many American companies to bring their manufacturing back home. In fact, according to Boston Consulting Group, 17 percent of US companies are now actively reshoring, a number that’s up 4 points since their previous study in 2013.

Our data on THOMASNET.com shows:

In the past 5 weeks, sourcing for Custom Injection Molding is up 35% in comparison to it’s all time average
In the more narrow category of Injection Molded Plastic Fabrication, sourcing activity has been higher than the all time average in 8 of the past 12 weeks
Supplier evaluations in the broad category of Manufacturing Services also saw an increase of 14% in the past week alone

When we take a closer look at how manufacturers are weighing the changing costs/benefits of offshoring versus reshoring, this upward trend for Custom Injection Molding starts to make sense.

The Shine Is Wearing Off Of Offshoring

For many companies, the drawbacks associated with offshoring have started to outweigh the benefits. In addition to the leveling of wages mentioned above, the challenges include:

Communication barriers
Time zone differences
Longer lead times
Enforcement of intellectual property
High costs of shipping
Delays in product delivery
Product quality and consistency issues

When it comes to Custom Injection Molding, the quality and consistency issues are often too great to ignore. Mark Fuhrman of C&J Industries in Meadville, PA points out that the tools used in countries such as China rarely comply with Society of Plastic Industry Mold standards, which specify things such as part tolerances and cosmetic finishes for injection molded plastic parts made in the U.S. “I have visited China and taken pictures of individuals painting product after molding,” he explained. Tasks such as painting and trimming are secondary operations to mask defects caused by sub-par tooling.

Ultimately the problem comes down to the fact that outside of the U.S., there often aren’t clear standards for mold construction. Lower quality materials are commonly used, tolerances can be imprecise and tool life can vary widely – one mold may be good for 50,000 pieces while another is good for 1 million.

Reshoring Is Becoming A More Viable Option

According to Harry Moser of the Reshoring Initiative, companies are looking at Total Cost of Ownership (TCO) of offshoring versus reshoring, and are often finding they can manufacture more profitably in the U.S. In addition to reducing costs via lean, improved product design, U.S. manufacturers are investing heavily in automation technology (often out of necessity, as retiring baby boomers leave a huge talent void in their wake).

In addition, benefits such as tax incentives, abundant natural gas pushing down energy prices, and the cachet of “Made In America” -- combined with greater agility for innovation and responsiveness to changing customer demands -- are making reshoring a smart business decision.

Jill Worth of The Rodon Group, a custom plastic injection molding supplier in Hatfield, PA, summarized the issue. “Companies overseas aren’t able to offer the same level of service, and often projects fall apart due to the lack of dedicated, personalized commitment that a turnkey manufacturer in the U.S. can provide,” she explained. “Over time, this level of service saves customers both time and money.”