by Dianna Brodine, Plastics Decorating
In Michigan, the automotive industry downturn in 2009 hit nearly every business, requiring a reality check and a revised plan for continued survival. For Eimo Technologies, Inc., that reality check was intensified by the knowledge that the injection molder recently had shifted its market focus to the very industry that now was in the national economic spotlight.
Changing ownership, shifting markets
Founded in 1969 as Triple S Plastics, the Vicksburg, MI-based injection molder originally was owned by three local businessmen – Dave and Phil Stewart and Vic Siemers. Early customers included IBM, Eastman Kodak, Xerox and Polaroid, but the focus shifted over the years to cell phone production. “In 2001, Triple S was riding the wave of the telecommunications boom,” explained current General Manager Gary Hallam. “At the urging of our largest customer, Nokia, Triple S merged with Eimo Oy o Lahti Finland to form a mega-supplier to the telecomm industry.” With a presence on four continents (Europe, Asia, North and South America), Eimo was an attractive target for those looking for entry into a hot telecommunications market and, in 2003, Eimo was acquired by Foxconn. Soon, the molding was consolidated at the Foxconn campus in Shenzen, China.
With its previous reason for existence moving overseas, the Eimo facility in Vicksburg needed to reinvent itself in 2005 and 2006. “While Foxconn closed every other Eimo facility worldwide, Eimo Vicksburg scratched and clawed and survived,” Hallam said.
In 2008, Foxconn sold the Vicksburg facility to Nissha Printing of Kyoto, Japan. Nissha – an in-mold decorating (IMD) film supplier – and Eimo had enjoyed a 10-year relationship as supplier/customer, with Nissha’s IMD process used to decorate the clear acrylic lenses in millions of cell phones. “Nissha wanted to have a molding facility in North America to showcase its product and IMD processes to potential customers,” said Hallam. “This union created a vertically integrated IMD injection molding supplier unique to the industry, and Eimo now is in the seventh year of Nissha ownership.”
Today, Eimo’s Vicksburg facility has reinvented itself as a high-end decorative automotive supplier, while keeping a diverse portfolio of traditional molding. The most recent numbers show an industry split that is 52 percent automotive, 21 percent home living (appliance, home audio and beauty care) and approximately 15 percent medical. The company molds and decorates automotive interiors and exteriors, such as the Chevy “bowtie” and red GMC badges; appliance fascia for refrigerator ice/water dispensers and washer/dryer control panels; and consumer products, such as the Bose Soundtouch 20 and 30 systems.
Economic chaos hits the automotive industry
Reinvention wasn’t an easy process, however. “In the late 1990s, our company was heavily involved in the cell phone industry,” said Hallam. “The volumes were amazing – with just one model, we would ship a million plastic handsets per month. However, near the end of 2005, cell phone production was consuming about 80 percent of the capacity in our plant, and we knew the boom was beginning to slow.”
Eimo Techologies made the decision to shift its focus to the automotive industry, but “we had a timing issue,” Hallam explained. “We couldn’t bring in a lot of new work when 80 percent of our machines were running an existing program. It resulted in a couple of lean years.”
For three years, Eimo worked to build its automotive business, and the company was just beginning to hit its stride in 2008 with $8-10 million in molding programs transferred to the facility from distressed molders. Then, in the words of Hallam, “2009 happened.”
While the pain of the economic downturn hasn’t completely faded, Hallam acknowledged that the end result was positive. “At the end of the day,” he said, “it ended up being a healthy adjustment for Eimo, because we learned to cut a lot of waste.”
The first step was ensuring that everyone understood the company’s costs. “Getting the business in at the right price is very important,” Hallam confirmed. “We developed a very good cost accounting system that translates directly into our estimating system. When we quote a project, we’re quoting it properly.” Hallam also noted that the decorative molding raw material costs were too high. “The IMD film was more than 50-60 percent of the raw material costs for most projects,” he said. “Without discipline, the decorative portion of a molding job can put you under water pretty quickly. We had to attack our scrap costs.”
Radical culture change cuts scrap rate
“It can’t be overstated – in our business, reducing scrap is the key to success,” said Hallam. “The high material cost has put several decorative suppliers out of business and, in almost every case, they were good people with good equipment, but lacked the leadership to control scrap rates and make the needed quality improvements.” Eimo Technology wasn’t going to go down the same road.
The first step to scrap rate reduction was operator empowerment. Previously, if a problem was detected, parts would continue to run while waiting for a trained mold repair employee to clean the mold. Now, Eimo has given its operators the authority to shut down machines if two defects occur in a row. “Constant monitoring helps us keep an eye on the scrap rate,” Hallam explained. “We have daily production meetings where we look at the scrap rates, and we’ve created a total mindset, from the production supervisor to the technicians to the quality leaders. Their primary focus is quality.”
The change wasn’t automatic. In fact, the entire facility had to adjust its containment mindset. The departments operated as individual sections of the business, rather than seeing itself as part of a whole. For instance, a product was made in the molding department, which then sent it on to the quality department, which then pushed it to the shipping area. There was no accountability taken other than for the direct responsibilities of that department. A radical culture change was required. “We moved quality inspection to real-time where we could actually do something about it before one bad part became many bad parts,” Hallam said. “One bad part became everyone’s responsibility, not something that was discovered far from the production floor. By empowering our operators, we’re asking them to be creative in solving problems, and we’re getting their input on what works and what doesn’t.”
In another move designed to emphasize first-time quality, Team Leaders were replaced with Quality Leaders. “Eimo Technologies had quality inspectors and team leaders, but we wanted to combine the job,” explained Hallam. “We wanted someone leading the charge to keep everyone focused on quality.” Now, the Vicksburg plant has four Quality Leaders per shift, covering up to seven injection molding machines per leader. “Those Quality Leaders own the part and own the result,” said Hallam.
Growth has been steady for the company since 2009, and Eimo Technologies now has 280 employees at three facilities located in a two-mile radius. The Vicksburg plant contains 28 injection molding machines with up to 500 tons of clamp force, and that facility is where all in-mold decorating is done. The Vicksburg East plant has 20 injection molding machines and is focused on precision molding for the automotive, medical and material handling industries. The Tooling & Technology Center performs a majority of tool making and try out processes for the company as a whole, although some IMD tools are built by parent company Nissha.
IMD leads to growth opportunities
For the Vicksburg plant, much of the growth can be traced to the value-added processes in place for Eimo’s automotive and appliance customers. Two different types of decorative processes are used on everything from the beverage dispenser panels on refrigerators to interior panels for Toyota and Honda. One is a true in-mold decorating process, where a preprinted image is held on a carrier on a spool. The spool indexes in the mold during every shot, transferring the image off the carrier film and onto the part. The other process, which is preferred for parts with a deeper draw and side walls, begins with an ABS decorative laminate form. The laminate is vacuum formed, trimmed and insert molded.
It was the second process that led to significant savings for Eimo Technologies during the downturn of 2009. “In 2008, we were purchasing the preforms from an outside supplier,” said Hallam. “We had just purchased one machine capable of creating the preforms with the intent of performing trials, but it became a matter of survival. We insourced several programs and saved 25 percent of the product costs.”
Eimo Technologies was an early adapter of IMD, beginning with the Bose Lifestyle system in 1991 and continuing with more than 20 million cell phone windows in the 2000s. In 2014, 50 percent of the company’s sales utilize the IMD process. Hallam believes more is on the way. “We’ve had very steady growth,” he said. “Last year, the company had $46 million in sales, and we’re on track for $50 million in 2014. Our next target is $100 million, and we’re developing strategies to achieve that.”
While all markets are showing growth, it’s the appliance and consumer markets that are the biggest growth areas for the past two years, and IMD has led the charge. “It used to be that every cell phone was in-mold decorated, but that market has almost disappeared thanks to touchscreens. We had to expand the markets that IMD is able to touch,” said Hallam, “and those markets appreciate the styling and product differentiation that IMD brings to the table.”
Eimo Technologies has invested more than $3 million in its facilities since the start of 2013. The Vicksburg plant added 16,000 square feet of warehouse space to create room for five new molding cells, as well as a state-of-the-art material delivery system. The company has no plans to slow down either, with a future eye to both local expansion opportunities and acquisitions in key market and/or geographic areas. “Our mantra after our recent expansion was ‘$50 million by 2015,’ but it looks like we’ll accomplish that goal early, so we’re already looking at how to achieve $100 million in sales,” Hallam said.
As sales growth occurs, so do the challenges in maintaining the quality mindset that is so crucial to both the Eimo Technologies’ culture and its customers’ expectations. “It’s a challenge that never ends, and it requires constant training with the operators and constant negotiations with the customers.”
“With all the sophisticated equipment and processes at our fingertips, at the end of the day, the business still boils down to people,” Hallam explained. “We like to think we are molding people’s lives’ – those people include our customers, our team members, our community, our suppliers and our stockholders.” As an example of its commitment to community – and its efforts to promote awareness of careers in manufacturing, Eimo has donated a 20-ton all-electric molding machine to the local high school’s computerized manufacturing laboratory. “The industries in which we work have incredibly high quality expectations, and we can’t meet those expectations without the attention and dedication of the people who work with us now and those who will work with us in the future.”