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March 19, 2020 12:00 PM

Majority of medical goods makers expect growth in 2020

Sarah Kominek
Plastics News
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    Some 84 percent of plastics medical product manufacturers expect their businesses to grow in 2020, according to a recent survey by IQMS, which provides ERP software to plastics and other manufacturers.

    Louis Columbus, principal at IQMS, said that if the survey looking at medical suppliers' expectations for 2020 had been done after the new and spreading coronavirus became well-known, manufacturers' reported priorities would have been different.

    "The highest-performing medical products manufacturers who do outsourcing know supply chain metrics and how to control it. But now, in this world, that would be even higher priority," he said. "I think the supply chains would have come up much higher than they did."

    In December 2019, the software provider surveyed and interviewed 150 North American medical plastics manufacturers for explanations of the survey respondents' priorities and plans.

    Just 3 percent of plastics medical products manufacturers said they expect to see business contract, and all of those were from paper and metal manufacturing industries, the study said.

    Columbus said medical plastics manufacturers are "resilient in the face of uncertainty and labor shortages" and have "rock solid confidence in their ability to deliver high quality products."

    Manufacturers said their top priority was to increase sales to existing and new customers, but not by dropping millions of dollars on marketing, advertising or promotion. Instead, their key strategy for growth is sticking with what they do best and improving on it, Columbus said.

    "To them, the marketing is in what they do every day in terms of meeting delivery dates," he said. "These are companies that run on pretty thin margins, and they're already pretty efficient. But they're driven to deliver a strong return on sales and deliver a strong EBITDA so they can preserve long-term financial growth."

    Manufacturers' second and third top-reported priorities were improving operations and building their revenues.

    The survey said manufacturers reported their biggest expected barrier to growth in 2020 would be a skilled labor shortage.

    "They want a specific skill set of running plastics extrusion at a high velocity," Columbus said. "That experience is pretty rare, and so they offer sign-on bonuses. … It's all based on the fact that there's not a lot of people betting their careers on technically oriented jobs in manufacturing. It's exacerbated by the opioid crisis in parts of the Midwest as well.

    "Robotics gets kind of a bad rap because people say it's replacing jobs," Columbus said, but manufacturers can hire fewer-skilled workers to run the robotics machines to work around the skilled-labor shortage.

    Training experiences for plastics manufacturing positions are "not as prevalent as you would hope," he said. "It's something the industry really needs."

    The second and third top barriers manufacturers reported for 2020, were an overall flattening of demand and competitors driving price wars.

    "Medical plastics manufacturers are doubling down on what helped them grow so much in 2018 to 2019. What got them there is shop floor control, scheduling—the building blocks of an effective manufacturing plant," Columbus said.

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