Higher inflation. Continuing labor challenges. Scattered material and component shortages. These and other challenges will affect some industries a lot in 2023, and others not as much. 2023 may be another challenging year, depending on what industry you’re in.
The New Berlin Plastics leadership team has built resiliency and agility into the company’s DNA and is confident that it can successfully navigate the future, whatever path it takes.
Here’s a look at what three senior-level NBP executives see in their crystal balls for 2023:
The U.S. economy
The Federal Reserve will continue to incrementally raise interest rates as it tries to curb inflation. That may lead us into a period of stagflation – slowing growth combined with high inflation. How this will affect businesses will vary depending on what industry you’re in, explains Business Development Manager Karl Held:
“I think we’re going to see a situation similar to the early days of the pandemic, where some industries will be thriving and others will be suffering. As a supplier, our best position during times like these is to have a diversified portfolio of customers in many industries. That’s something we’ve worked very hard to develop,” he adds.
Material and component shortages
Resin pricing and availability have stabilized for the most part. That’s a big change from early 2021, when a major winter storm hit the Gulf Coast and Texas, forcing many resin producers to shut down. At the same time, a sudden spike in consumer demand for many products caused massive resin shortages.
Since then, it appears that resin producers have overshot the market’s needs. According to the Kiplinger Report, many producers have been restricting output and selling off inventory overseas. This may signal incremental price increases for some commodity resins in 2023 as producers work to balance supply, demand, and pricing.
New Berlin Plastics has strong relationships with resin and insert suppliers, plus the engineering expertise to intelligently offer alternatives when they encounter pricing or availability challenges. “The resin availability picture looks much better than it did in 2021. We don’t expect any major issues with material availability in 2023,” predicts Vice-President of Sales Joseph Mechery.
Other challenges are outside of NBP’s control. For example, automakers are still experiencing massive computer chip shortages, which may not be resolved any time soon. It takes several years for new chip plants to be built. According to industry experts, it may take another year or two before this additional capacity comes online.
What do chip shortages have to do with plastic injection molding? More than you may realize:
“Almost every plastic part we produce is part of a larger assembly or product. It requires other parts and components. If any of them is in short supply, that becomes a limiting factor for all the producers upstream from the OEM. You’re only as strong as your weakest link,” Mechery points out.
Labor remains in short supply and is expected to be a continuing challenge in 2023. New Berlin Plastics is redoubling its efforts to cultivate an environment and culture where people want to work.
One new initiative that is spurring employee engagement is a new lean management system, a systematic approach for surfacing problems and inefficiencies and solving them. “As part of this approach, we ask employees to do mini-audits of their operational areas. These generate a steady stream of ideas for improvement that we can implement,” points out President Jim Schneberger.
The result has been transformative for the NBP team: “This program has generated a lot of team spirit, cohesiveness, and alignment within our teams which is really exciting,” he explains. “It helps to make our team members feel like they’re an asset to the company. They love that they can see the fruits of their labor. Engaging their minds as well as their hands is one key to retaining them.”
In early 2022, NBP hired a new Vice-President of Manufacturing to replace a retiring Director of Manufacturing. He’s brought new thinking to this part of the company’s operations, including the lean management system. NBP has also hired a Learning & Development Specialist, who will be charged with elevating the company’s approach to training.
One factor that makes New Berlin Plastics less prone to labor challenges is its extraordinary commitment to automation. Robots are used extensively on the production floor for insert staging and loading, removing parts from the mold cavity, inspecting them and in some cases, packing them for shipment.
“We’re always on the lookout for mundane, repetitive tasks that can be automated. That enables us to move our people into higher value-added jobs that require human thought and decision-making,” Schneberger indicates. At the same time, it enables NBP to consistently produce high-quality parts at a competitive cost.
“My mission in this organization is to make sure that customers never pay for incompetence. In other words, when we quote them work, it always includes some percentage of overhead and the cost of running this business,” he explains.
“If we weren’t disciplined in our processes, had high scrap rates or excess labor in our processes, that would need to be passed on to customers in the form of higher prices. But we are very disciplined in our approach. By standardizing, optimizing, and streamlining our operations with technology, we’re ensuring that we can be a low-cost producer that is also a lower risk to our customers,” he reveals.
Schneberger recalls taking one prospective customer on a tour of NBP’s production floor. As they watched the precise ballet between a robot and a molding press, the visitor cautioned, “We don’t want to pay for all this technology.” Schneberger immediately corrected him: “You’ve got it all wrong. You would pay more if we did NOT have it!”
Confidently preparing for an uncertain future
No one knows for sure what 2023 will bring. Predicting the future when so many factors and interdependencies are involved is next to impossible. NBP’s solution is to model multiple potential outcomes, playing “What if?” with the future.
“Our leadership team does a lot of scenario planning. That focus, along with our commitments to operational excellence and conservative management of our resources, has helped us to build a lot of resilience and flexibility into our company,” Schneberger emphasizes.
Fortunately, New Berlin Plastics has always been conservatively managed; its Z score of 5.0 means that the company is incredibly stable financially. This enables it to proactively plan and make carefully considered investments in the company’s people, process, and technology even during challenging economic times.
“We may be more conservative in our investments during 2023, but we’re going to continue to expand our capabilities and our offerings to our customers,” Schneberger concludes.