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February 12, 2010 01:00 AM

Firms weigh pros, cons of using custom mixers

Bruce Meyer
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    Most rubber product manufacturers have to decide at some point whether to mix their own rubber or buy it on the outside.

    Many issues factor into the decision: pricing, technical questions and service among others. But after studying the issue closely, often the decision is quite clear.

    For example, Michael Groves was the plant manager for the Longwood Elastomers Inc. factory in Brenham, Texas, when the plant's internal mixer was showing signs of age.

    The mixer was old and in poor condition. Longwood had two options: The first, spend a good deal of money to either upgrade or replace the mixer; the second, forego mixing at the plant altogether and buy rubber materials from custom mixers.

    Groves' recommendation was to go with option No. 2 and turn to outside sources for compounds. He said at that time there was a tremendous excess of capacity in the custom mixing market, a condition that still exists.

    “We didn't feel we could mix in-house as cost-effectively as we could get it from custom mixers,” said Groves, who now is Longwood's president. “The investment we would have made in the mixers, we would never have gotten a return on it.”

    Of course, Longwood had the benefit of making a plant-by-plant comparison between Brenham and its Wytheville, Va., operation, which already purchased its materials from custom mixers. And what the company found was surprising, even to Groves.

    He expected the Texas facility would have had an advantage in terms of the amount of money tied up in materials kept as inventory.

    Just the opposite was true, largely because the plant had to keep an inventory of all the ingredients needed to mix its wide range of compounds. It was often the case that even for an ingredient such as a process oil—where not much would be needed in a formulation—the company might need to buy a year's supply just because of minimum order requirements from its supplier.

    In addition, the rubber inventory Longwood keeps in stock from custom mixers typically is in forms that take up much less square footage at the factory than that needed to store individual ingredients, providing better operational efficiencies, Groves said.

    “For the overall health of the company, I think it was the right decision,” he said.

    Not enough volume

    ParkOhio Products Inc. in the past had different rubber units in Ohio, Chi-cago and Pennsylvania, only one of which did its own mixing.

    Now the firm has just a facility in Cleveland and a second in Shanghai, China, and the automotive parts supplier definitely believes that buying all its rubber from custom mixers is the way to go, according to Gary Shawgo, director of global engineering.

    Because ParkOhio does strictly injection molding of compounds using such elastomers as EPDM, nitrile, SBR, silicone and natural rubber-based formulations, virtually all of its material comes in strip form. That makes its operations much simpler—and less expensive—than if it tried to maintain its own mixing.

    “Looking at it from a financial stand- point, there is a significant amount of capital equipment we don't have to purchase or maintain,” Shawgo said.

    And while the company uses a good deal of rubber, the volume would not come close to filling up a mill or internal mixer, he said. “We probably only would have enough for a half-shift a day at most.”

    ParkOhio also likes that its facilities are sparkling clean. The floors and lighting remain in pristine condition and the air is clean, Shawgo said, because there isn't carbon black floating around.

    “We're in a technical, high-end rubber molding business,” he said. “Our operators and technicians have to be able to see. That's one of the other advantages to having your mixing done on the outside.”

    Keeping mixing in-house

    Seals Eastern Inc. used to use custom mixers quite a bit when it produced a lot of nitrile rubber parts for automotive, said Dan Hertz, president of the Red Bank, N.J.-based company. Buying custom-mixed materials can be a good option when running higher volume with fewer materials, he said.

    But when Seals Eastern walked away from the automotive business, that made using custom mixing much less attractive.

    “Our compounds are proprietary and also difficult to mix,” he said. “Also, the volume is not enormous.”

    Hertz said Seals Eastern now focuses almost exclusively on specialty work. A potential customer will come to the firm seeking help, and the rubber product maker will decide how best to mix the materials and design and mold the parts.

    “Now we handle all our mixing and development internally to keep it as proprietary as possible,” he said. “We're a problem solver, and hopefully it leads to some production work.”

    Choosing wisely

    Groves said there are four main issues to look at when choosing which custom mixers to do business with: quality, price, service and technical support.

    But of those four, Longwood finds that for the most part the quality and service of everybody is acceptable.

    He thought that lead time, for example, would be a detriment to using custom mixers, but that hasn't been the case.

    Mixers typically give a two-week lead time, Groves said, but will make special arrangements if needed.

    “Very rarely do we call one of our major suppliers that they don't jump through hoops to make sure we get it,” he said.

    That fact means price and technical capability play a key role, with the former often taking precedence on higher-volume materials and the latter more important when looking at smaller volumes of more technically demanding compounds.

    He said there is some pricing difference within individual formulations from supplier to supplier, but Longwood's chemists and purchasing staff track the market closely to determine whether the price the firm is paying is fair.

    The manufacturer also qualified second sources on some materials to protect it from a pricing standpoint. All total, Longwood does business with 10 custom mixers, with the majority of volume going to five of those.

    One con to using custom mixers, Groves said, is that the firm doesn't employ as many chemists than if it did its own mixing. He said Longwood would prefer to use all its own formulas from an intellectual property standpoint, but it does work with mixers on new formulations.

    “One mixer gets first shot at our new compounds,” he said. “But again, they're all decent. We're not afraid to use any of the top five from a technical standpoint.”

    Shawgo said the competitive nature of the custom mix market helps the buyers of the materials. Where possible, Park-Ohio even tries to use single compounds for multiple parts so it will be buying higher volumes.

    “Custom mixing is treated a little more like a commodity than the custom mix houses would like, so competition is fierce,” he said. “Competition for the large-volume grades we purchase is rather significant.”

    Buying from several mixers—it currently uses six or seven vendors in the U.S.—also helps the rubber product makers mitigate price increases as much as possible, Shawgo said.

    And while ParkOhio does have some of its own proprietary compounds, the firm is not shy about working with the custom mixers to jointly develop formulations.

    “That's where we've gained the most ground,” Shawgo said. “We can move nimbly if we need to change a compound or develop new materials quickly.”

    He often hears from ParkOhio's custom mix vendors, who tell him about new additives and chemicals, and how the rubber product maker can take advantage of them when it develops new compounds.

    “We use their expertise,” Shawgo said.

    “They do this all day long. We're rubber molders. That's one less thing we have to concentrate on. We can concentrate on molding, molding, molding,” he said.

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