In-House Testing or Third-Party Laboratories? Benchmarking & Best Practices Conference Preview Finding and Assessing New Business Opportunities The Benefits of Reshoring 2022 Issue 3 The Official Publication of the Association of Rubber Products Manufacturers STRATEGIES FOR FUTURE SUCCESS
DON'T THEMONEYLEAVEONTABLEarpmmemberssavedanaverageof$6Kinmrospend in 2021Get involved to start saving arpminc.comtoday. $3,015 more than average member dues.
www.arpminc.com 3 Autonomous Robots Increase Plant Safety Eliminating Sources of Waste Online Training Closes Skills Gap Cautious Optimism for Processors in 2021 2021 Issue Official Publication of the Association of Rubber Products Manufacturers STRATEGIES FOR FUTURE SUCCESS 6 Preview 2022 Benchmarking & Best Practices Conference to be Held October 5-7 10 Operations What to Consider When Choosing Between In-House Testing and Third-Party Laboratories 14 Talent Every TrainingNeedsCompanyanEmployeePhilosophy 20 Benchmarking Strong Demand Optimism Against Workforce Headwinds 23 Strategies Finding and Assessing New Business Opportunities 30 Insurance Don’t Take the Medicine Yet! 32 Outlook Reshore or Not? 36 Focus Employee Benefits: Rising Costs vs. Necessary Incentive 10 FEATURES Departments 4 From the Director 18 Industry 26 Member News 28 Technical Standards Update 38 Calendar 38 Ad Index CONTENTS 2022 ISSUE 3 3632 www.InsideRubber.com Cover photo courtesy of Smithers
The seed for the ARPM has grown deep roots and now produces an array of fruits for its members. Unlike other living things, the only thing that provides nourishment to this living entity is the energy of its members. As the community of ARPM grows and provides help to each other, the ARPM grows exponentially larger, producing more fruit along the way. u
The community of members continues to open its doors to each other by offering plant tour events to promote continuous learning and continuous improvement. The motto “seeing another’s process helps to improve your own” is one that is taken very seriously in the ARPM network as members who attend these tour events provide feedback to one another on how to improve production operations and business models. These functions and interactions, as described above, have worked as catalysts in creating thousands of new business and personal relationships. These relationships are further strengthened at ARPM’s annual benchmarking conference, which occurs every year in Indianapolis, Indiana, where the community of ARPM members gathers to share ideas and experiences for the purpose of becoming better leaders, better managers and better overall business professionals. To further promote the vision of community, ARPM provides Innovation Competitions covering a wide range of business topics. For the 2022 Innovation Competition, ARPM members will focus on how automated manufacturing solutions improved operating costs, maximized productivity and increased efficiency, as members provide detailed information on their automation improvements. Pictures and explanations of automation improvements currently being sent to the ARPM headquarters will be provided to the ARPM community so that all may benefit and build on the innovations of each other.
FROM THE DIRECTOR The Seed of Progress Produces Fruit for All It is written in an ancient Chinese proverb that “the best time to plant a tree was 20 years ago. The second-best time is now.” In reflecting on this proverb, a group of rubber manufacturing business leaders made the decision to plant a seed with the hope that it would someday provide fruit to all who provided elements of nutrition to help it grow.
4 Inside Rubber // 2022 Issue 3 Letha Keslar ARPM Vice President, Editorial: Dianna Brodine Editor: Nicole Mitchell Vice President, Design: Becky Arensdorf Graphic Designer: Hailey Mann Published by: 2150 SW Westport Dr., Suite 101 Topeka, KS 66614 Phone: 785.271.5801 7321 Shadeland Station Way, Suite 285 Indianapolis, IN 46256 Phone: 317.863.4072 | Fax: 317.913.2445 info@arpminc.org | www.arpminc.com © Copyright 2022 ARPM Team Executive Director Troy Nix – tnix@arpminc.org Managing Director Letha Keslar – lkeslar@arpminc.org Marketing Director Marcella Kates – mkates@arpminc.org Analytics Tony Robinson – trobinson@arpminc.org Director of Publications Susan Denzio – sdenzio@arpminc.org Membership & Events Director Kaitlyn Krol – kkrol@arpminc.org ARPM Officers and Board of Directors President Travis Turek, Bruckman Rubber JamesViceCorporationPresidentWideman, MBL (USA) Corporation Treasurer Marel Riley-Ryman, Southern Michigan SecretaryRubber Joe Keglewitsch, Ice Miller LLP ARPM Board of Directors Kirk Bowman, The Timken Company Charlie Braun, Custom Rubber Corp. Russ Burgert, Maplan Rubber Machinery Joe Colletti, Marsh Bellofram Randy Dobbs, Sperry & Rice Doug Gilg, Continental ContiTech Diya Garware Ibanez, Fulflex, Inc. Dave Jentzsch, Blair Rubber Seth Johnson, Zochem LLC Donovan Lonsway, BRP Jon Meigan, Lake Erie Rubber & Manufacturing Mike Rainey, HBD Industries Inc. Mike Recchio, Zeon Chemicals L.P. Brandon Robards, Ace Extrusion Mike Smith, Basic Rubber and Plastics Joe Walker, Freudenberg-NOK Sealing Technologies
The seed of ARPM was planted in October of 2010 as the organization opened to begin accepting members as a new rubber industry trade association. With over a decade under its belt, ARPM’s membership stretches from coast to coast serving 105 rubber manufacturing companies and supportrelated businesses. While developing the core values of ARPM over 12 years ago, its founding members envisioned an organization that would someday become recognized as the association of choice for rubber processors and industry support organizations. They imagined an organization that would someday be able to boast of membership camaraderie and activism; for the processors, by the processors.
The goal of the Benchmarking and Best Practices Conference is to help rubber and plastics companies improve their operations and tactics in order to impact bottom line profits. The conference is anchored with best practices and leading benchmark presentations derived from the industry’s best-known sources of statistical information. Known as the absolute best benchmarks in the industry, these presentations identify and correlate profitability to operational behaviors, market choices and more.
6 Inside Rubber // 2022 Issue 3 YOU DON’T WANT TO MISS THIS EVENT! | Early Bird pricing ends August 19! Buy tickets and learn more at www.arpminc.com/conference.
The ability to quickly adjust to marketplace conditions and continually improve operational efficiencies is a must in manufacturing. The core of this year’s Benchmarking and Best Practices conference will address leadership, operational best practices, the latest financial benchmarks, sales and marketing and the impact of employees on the bottom line. With over 500 rubber and plastics professionals expected to meet in Indianapolis, Indiana, on October 5-7, the Conference staff has created a schedule packed full of best practices, leading-edge benchmarks, expert presentations and the best networking opportunities in the industry.
www.arpminc.com 7 HOTEL This year’s event will take place at the Indianapolis Downtown Marriott 350 W. Maryland • Indianapolis, IN 46225 A room block has been secured for the event. Book at www.arpminc.com/conference AGENDA Please note, this agenda is still a work in progress. The Conference Committee wanted to share the general timeline of the event to assist attendees with travel arrangements. All times are EDT. Wednesday, October 5 1:00 PM Young Professionals Pre-Con 1:00 PM MBS Advisors Pre-Con 1:00 PM DelmiaWorks User Group Pre-Con 1:00 PM Harbour Results Power BI Pre-Con 1:00 PM Sponsors/Exhibitors Move In 4:30 PM Sponsors Meeting 5:30 PM Industry Welcome Reception (adjourns at 7 PM) Thursday, October 6 7:00 AM Breakfast 8:00 AM Conference Welcome and Keynote Troy Nix 8:20 AM Keynote Jason Hewlett 9:30 AM Networking Break amongst the Sponsors 10:00 AM BC LABS 11:50 AM Lunch and Learn with Keynote Jason Hewlett Or Networking Lunch 1:00 PM BC Labs 2:30 PM Networking Break amongst the Sponsors 3:30 PM Keynote Paul Krismer 4:30 PM Member Meeting 5:00 PM Members’ Choice Reception (adjourns at 7:30 PM) Friday, October 7 7:00 AM Breakfast 8:00 AM Peer to Peer Networking 9:00 AM Innovation Awards Ceremony 9:30 AM Networking Break amongst the Sponsors 10:00 AM BC Labs 11:00 AM Keynote Ricky Kalmon 12:00 PM What’s Next? 12:15 PM Conference Adjourned
Paul Krismer, author Paul Krismer is a noted public speaker and trainer. He is the best-selling author of Whole Person Happiness: How to be Well in Body, Mind and Spirit Krismer has a proven track record as an inspirational leader. For 20 years, he has served in senior management roles — overseeing hundreds of employees, multi-million-dollar projects and cheerfully growing future leaders. As a Certified executive coach, he is appreciated for his kindhearted, yet relentless pursuit of the client’s best life. Helping individuals and entire organizations reach greater success is his trademark promise.
Troy Nix, executive director, ARPM Troy Nix serves as the Master of Ceremonies for the Benchmarking and Best Practices Conference. Known for his spirit, enthusiasm and belief in American manufacturing, Nix will deliver an opening address that will focus on lessons in leadership and the importance of becoming more in tune with one’s inner self. Professionals over the last decade who have heard Nix deliver his opening address know that the first 30 minutes of the conference will spark emotion in each attendee’s inner core. This year’s message will focus on tapping into that internal fuel source to inspire, motivate and overcome obstacles encountered every day. Nix’s tag line – “America Is What America Makes” – is an essential ideal that motivates those attending the conference to strive for excellence.
The Conference team is pleased to welcome the following keynote speakers to the event:
FEATURING
Jason Hewlett, public speaker
8 Inside Rubber // 2022 Issue 3
Having delivered thousands of presentations over two decades, Jason Hewlett is the only speaker in the world teaching leadership in a performance of uncanny musical and comedy impressions, utilizing the legends of the stage. A recent, and one of the youngest inductees in the prestigious Speaker Hall of Fame, his talks inspire leadership from the perspective of a Promise, while giving attendees an engaging, entertaining and educational experience all in one. Hewlett has presented over 2,000 times for Fortune 500 companies and clients such as American Express, Delta Airlines, the Salt Lake Olympics, Experian, NuSkin, Younique, CocaCola and Wells Fargo.
www.arpminc.com 9 SPONSORS The BC LABS are comprised of a series of parallel presentation sessions or learning tracks suggested for each functional area below. Each BC LAB is designed to equip attendees with indispensable insights, advice and tools to achieve the mission-critical priorities of today and build the successful organizations of tomorrow. Ricky Kalmon, author Ricky Kalmon is a mindset expert, motivational speaker and author of the book Leverage Your Mindset – Overcome Limiting Beliefs and Amplify Your Life. He is also the creator and developer of the growth mindset and meditation app titled “RICKY KALMON” that gives users access to his mindset coaching programs in the palm of their hands. As an international speaker and consultant, Kalmon is a visionary architect in personal growth and igniting potential. Kalmon’s mindset message and techniques will change the way you live, work and think. Kalmon works with Fortune 500 companies, sales teams, leaders, executives and sports teams, teaching them how to reinforce their thoughts and beliefs to enhance their results. By creating awareness of your thoughts, Kalmon reveals how to enhance your mindset to eliminate doubt and ignite your positive intentions. BC LABS Below are the learning tracks for the 2022 Benchmarking and Best Practices Conference LABS: • Executive Stakeholders/Owners • Leadership • Senior Leaders (Presidents/VPs) • Human Resources/Safety • Sales & Marketing • Operations/Engineering • CFOs/Finance/IT
The ideal combination of in-house and independent testing will differ for every company – and even every project. There are seven important factors to consider when deciding how to proceed.
By Lori Knous, general manager, Smithers Laboratory testing is a critical part of any product development cycle. From research and development to material validation to failure analysis, objective test data can provide valuable insight into a given challenge and support confident decision-making. Companies have several choices when it comes to collecting test data. Some companies have in-house laboratories and a designated team to manage their testing and validation projects. Others rely entirely on independent, third-party laboratories. Many use a combination of in-house and independent testing resources to maximize efficiency.
10 Inside Rubber // 2022 Issue 3
What to Consider When Choosing Between In-House Testing and Third-Party Laboratories
1. Capabilities In-house testing laboratories often are equipped and configured based on the specific, frequent needs of the company. This level of optimization makes the in-house lab an easy choice for certain types of testing. Because independent laboratories serve a wide variety of industries, these labs usually are equipped for a broad range of testing capabilities, including more niche services. This robust service portfolio can be an asset for testing projects that require more complex protocols.
5. Confidentiality
A good independent laboratory will have comprehensive processes in place to protect client confidentiality and ensure that all test samples and proprietary data are secure. However, some companies have strict policies in place that prohibit third-party involvement in certain projects or stages of the research and development process. Every company will have its own philosophy regarding how it prefers to handle proprietary testing data and is responsible for deciding what course of action is best suited to its preferences.
2. Convenience
photos courtesy of Smithers
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Independent, third-party testing labs usually are staffed by technicians and scientists with years of diverse experience, from hands-on industry roles to laboratory testing expertise. Virtually all independent lab employees have worked with a wide variety of components, materials and industries and have seen countless variations of comparable products. With that diverse background, independent lab employees can bring a fresh perspective to a new product or a specific performance challenge.
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Another factor to consider when assessing capabilities is scale. For example, a company seeking to experiment with several new rubber compound formulations may only have industrial-sized mixers in house. Many independent laboratories are equipped with small-batch mixers, an option for conducting more cost-effective mixing studies.
However, not all laboratory testing is deadline driven. Many companies conduct fairly repetitive validation testing on a regular basis, even daily. For these types of testing, in-house testing may be the more efficient choice, since there is no need to constantly ship samples back and forth. In many cases, in-house and independent testing laboratories can coordinate simultaneous testing programs to maximize efficiency. A company may choose to split a project between its in-house lab and a partner in order to receive its test results faster and make a more efficient decision, minimizing production slowdowns and increasing speed to market.
When it comes to deciding between an in-house lab and a third-party, independent testing partner, the importance of convenience is determined by the desired outcome of the testing project. For example, a company may be simply experimenting, with no clear objective yet defined. Unexpected discoveries may require a sudden change to the testing protocol or other adjustment. If this happens at an in-house laboratory, the testing team can pivot right away and continue with its work. An independent laboratory also can accommodate open-ended development programs and offer flexibility and innovation throughout the process. The lab can work directly with the company to adjust its previously defined testing program before continuing with the project. If the company prefers to examine test samples in person before determining next steps, a visit must be arranged to the independent lab. This can prolong a project timeline. However, if the independent laboratory is within driving distance, on-site visits are far more convenient and require less time to arrange. In this case, choosing between an in-house or independent lab is simply a matter of preference.
3. Efficiency and time
Efficiency and project deadlines are important considerations when deciding whether or not to outsource testing. If a company’s in-house lab is fully booked due to a preexisting project delay or other backlog, outsourcing can be an excellent solution for keeping a project on track.
4. Expertise When it comes to expertise, both in-house and independent testing laboratories can provide unique value to a testing project. There may be a person or team at an in-house laboratory who has worked with many generations of a given product, component or material. Their long memory for the evolution and nuances of the project and the market can be highly beneficial in certain contexts.
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6. Data objectivity
If clients already have a strong relationship with a particular lab, they are likely to trust the integrity of any testing data from that lab. In these situations, partnering with the right independent laboratory can lend additional credibility to a new business partnership.
There are a number of criteria to consider when selecting an independent, third-party laboratory for outsourced testing. Companies should be mindful of: • The lab’s accreditation. ISO 17025 accreditation is only awarded to laboratories that meet ISO’s The ‘feature-filled’ Freeze Trim
8. Choosing an external testing partner
Different clients have different requirements regarding the origins of testing data for purchased products or raw materials. Some will accept in-house testing data. Others require data from an independent, third-party testing lab.
In many cases, the cost of external testing will be a fraction of the revenues and profits the company may realize by launching the product on time. Every scenario is different, but project leaders should carefully weigh the benefits of realizing revenues earlier against the out-of-pocket costs of sending a product to an independent laboratory for testing.
7. Cost In any business decision, cost considerations can factor heavily into the final plan. However, the sticker price of independent testing is not the only number in the equation. The long-term value of in-house vs. third-party, independent testing is affected by several additional factors, such as delayed timelines and lost revenues. Any new product launch brings with it the expectation of monthly revenues. However, project timelines can be delayed if the company lacks the time or resources to complete in-house validation testing on schedule. When this happens, the project team has a few choices: 1. Wait for resources to become available – and forego monthly revenues for the duration of the waiting period. 2. Reduce or eliminate the delay by outsourcing the required testing to an independent laboratory.
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• Capabilities. Ideally, an independent lab should be equipped to conduct most elements of a given test specification or project.
www.arpminc.com 13 standards for quality management, which is critical for ensuring accurate test results.
• Approach to client relationships. An independent, third-party lab should be willing to invest in a longterm relationship rather than just a transactional one, so it can support the ongoing growth and evolution of its clients and its products. A deeper relationship can help in anticipating needs, quickly adapting to testing changes and investing in new technologies to support a client’s growing needs.
• Industry experience. Some labs specialize in a few specific industries, while others take a more generalist approach. A lab with a strong track record in the relevant industry can lend a valuable perspective to any testing project.
When it comes to in-house and third-party, independent laboratory testing, the ideal path forward will be unique to each company and each project. And of course, there will almost always be additional variables to consider when choosing. Careful consideration of each factor, coupled with a review of company priorities, can ensure a confident decision, an optimized timeline and accurate data. u Lori Knous is the general manager of Akron-based materials testing laboratories Smithers, a leading provider of testing, consulting, information and compliance services, where swhe oversees a team of experienced testing engineers, chemists and technicians. She has 16 years of experience in operations leadership and nearly 30 years of experience in materials and metallurgy. For more information, visit www. smithers.com
• Global footprint. Some labs have just one location. Others are part of a vast network of experts who can offer support, perspective and diverse experience on a global scale.
• The point person. Direct access to experts, rather than just project managers, is a tremendous benefit when choosing an independent lab to work with. Some complex technical problems are best solved via direct communication with the engineers and technicians conducting the testing.
By Joe Kitterman, CEO, 180 Skills
Whether a company realizes it or not, it loses a lot by failing to adopt an employee training philosophy – especially when there’s a labor shortage and companies are competing for talent.
2. Yields Consistent Performance
Research shows the companies that provide training and development opportunities to their workforce tend to attract the best recruits. Prospective employees see these companies as having a good reputation and a forward-thinking organizational culture.
Whether putting together a presentation or fabricating a part, consistency in performance yields quality, accurate work. By implementing a robust skills training platform into operations, companies can keep everyone on the same page in terms of onboarding and career growth.
14 Inside Rubber // 2022 Issue 3 Every company needs to adopt an employee training philosophy to thrive. See how skills training creates a win-win situation for employers and employees.
Imagine a manager who strives to do right by his or her employees and wants those employees to be properly compensated, regularly recognized and constantly developing new skills. But the manager’s hands are tied because the company doesn’t want to invest in employee training.
Why invest in employee training?
Furthermore, companies that don’t invest in employee training as part of their culture often experience high turnover. When companies operate under the belief that employees are replaceable, they have it all wrong. When a good employee walks out the door, a company could spend up to two times that individual’s annual salary on a replacement.
According to Glassdoor, more than 80% of employed professionals claimed they would leave their current position to work at a company with a positive reputation.1 For employers, these are ideal job seekers because they are people who want to better themselves.
So, let’s go back to the manager scenario above. If the executive team doesn’t consider employee training a good return on investment, it’s on the manager to change the team’s mind. Ongoing skills training creates win-win situations for employers and employees for the following reasons:
1. Increases Employee Retention
When a company makes skills development and career advancement part of its culture, employees have a vested interest in the organization, so they’re less likely to leave. As presented by Entrepreneur Middle East, Go2HR claims 40% of employees who don’t receive adequate training end up leaving their job within a year.2
Every Company Needs an Employee Training Philosophy
4. Creates Cohesion Among Teams
One of the biggest challenges for employees to participate in skills training is time. Studies show that online training can reduce an employee’s learning time by up to 60%. Yet, while online skills training requires a lot less time, employees still need to have space for it. Research shows that workers get interrupted every 11 minutes.3 With online training, hourlong sessions can be converted into shorter learning segments (also known as microlearning) to allow for interruptions.
While in-person training can cost thousands per employee, e-learning costs dollars. After all, there are no employee travel expenses, venue rental fees or material printing costs. Plus, the on-demand nature of online learning makes it convenient and affordable to train employees regularly or whenever they need a new skill.
4. Covers More Competencies
5. Addresses All Skill Levels
In-person training often teaches at a speed that accommodates the least knowledgeable person in the room. So, if there is a lower-skilled worker learning alongside a higherskilled worker, the latter often doesn’t receive the level of
6. Helps Close the Skills Gap
3. Reduces Learning Time
Online training platforms have the flexibility and scalability to teach more skills to more employees than in-person training. For example, 180 Skills subscribers have 24/7 access to nearly 800 online courses that teach skills related to rubber manufacturing, metalworking, Microsoft Office, project management, workplace communication and more.
5. Develops a Leadership Pipeline
When it comes to employee promotions, an individual might need additional skills to be effective in a new role. Let’s say, for example, an employee was promoted into management. This individual might be a good leader overall but struggles with resolving conflict among employees. With training, he or she can become experts in diffusing internal disputes. Benefits of online training as a part of employee training philosophy
2. Maintains Employee Productivity
180 Skills and ARPM Partner to Provide More Exclusive Training Opportunities to ARPM Workers
Bringing in talent from the outside to fill leadership positions isn’t always the best option. Hiring an external person is typically more expensive and time-consuming than promoting from within. By providing in-house talent with skills training, companies quickly can fill leadership positions with people who know the business and are vested in the company.
www.arpminc.com 15 page 16 u
Online skills training not only eliminates travel costs but also keeps employees productive. Instead of spending days in an instructor-led training session, employees can learn a new competency at work in less than an hour. And given that online skills training is flexible, employees can learn around their work priorities and pause whenever an emergency project arises.
Collaboration is key to the success of any organization. Training that focuses on team building and interpersonal communication breaks down the silo mentality and gets everyone working toward a common goal.
180 Skills has been delivering skills training to manufacturing workers for over a decade. 180 Skills has an extensive library for skills training and has curated courses exclusively to benefit ARPM members. Through its partnership with ARPM, 180 Skills offers various training modules that are available exclusively to ARPM members, including Quality in Rubber Manufacturing, Material Mixing Operator Tasks and others. Registering for ARPM training through 180 Skills also grants members access to more than 800 online competency-based courses. Finally, 180 Skills’ partnership with ARPM extends a 50% discount on setup fees and a 10% user discount on its standard Skills Training System to ARPM members. As the world becomes increasingly digital, online training is becoming more commonplace and more important in virtually every sector. As the skills gap grows in the manufacturing sectors, tapping into the many benefits of online skills training will help rubber manufacturing companies thrive and grow.
3. Sparks Innovation and Drive
When employees learn new things and develop new skills, they tend to approach their jobs in new ways. They feel empowered to make changes that will increase their productivity and performance. Plus, good employees deserve the opportunity to develop their skills and engage in new challenges or shift their career focus.
If companies want to sustain their employee training philosophy and long-term business growth, they need their employees to engage at work and perform to the best of their ability. One way to accomplish this is by providing employees with quality learning and development opportunities. And while there are a variety of options available, here are the benefits of online training for employees.
1. Saves Employers Money
3. consumption-in-employee-training/600536/https://www.hrdive.com/spons/6-ways-to-reduce-time-
16 Inside Rubber // 2022 Issue 3 t page 15 knowledge they had hoped for with the training. With online skills training, however, online learning can efficiently and effectively meet the specific learning needs of employees at every level of the organization.
7. Eliminates the Fear Factor In-person training sessions often are considered high-risk learning environments. Why? Because many employees won’t ask questions or seek clarification for fear of looking ‘dumb’ in front of their peers. As a result, they leave training none the wiser and lose interest in future development opportunities. Conversely, there’s no judgment with online skills training. u Resources
4. training-timing-is-everything/506971/https://www.hrdive.com/news/when-it-comes-toJoe Kitterman is the CEO for 180 Skills, which provides a turnkey skills training system that empowers manufacturers to create, grow and retain their workforce. The organization’s library offers nearly 800 skills courses, including a variety of courses on rubber manufacturing processes that are exclusively available to ARPM members. Additionally, ARPM members receive a 50% discount on
1. does-your-companys-reputation-matter/https://www.glassdoor.com/employers/blog/quiz-why2. https://www.entrepreneur.com/article/275842
6. Enhances Learning Retention
For most employees, it’s tough to retain information from allday training sessions. Therefore, many companies use online courses to provide employees with just-in-time training.4 It’s an approach that allows employees to learn a new competency and immediately apply it on the job – all of which promotes knowledge retention. Furthermore, online training promotes knowledge retention by addressing various learning styles and allowing employees to review course material as often as they want. It also helps when online skills courses feature knowledge checks and require employees to pass a final assessment.
set-up fees and 10% user discount on the 180 Skills training system. For more information, please email Kaitlyn Krol at kkrol@arpminc.org • Compound Development • Physical and Mechanical Testing • Chemical and Analytical Testing • Dynamic Testing and Engineering Services • Mixing and Molding • Failure Analysis • Reverse Engineering/ Formula Reconstruction • Microscopy • PPE Testing • Pharmaceutical and Microbiological Services • Custom Test Design • Prototyping • Technical Training • ConsultingFROM CONCEPT TO PROTOTYPE A PASSION FOR PROBLEM SOLVING Rubber LatexPlastic TRUSTED INDEPENDENT TESTING, DEVELOPMENT AND PROBLEM SOLVING SINCE 1962 2887 GILCHRIST RD. TOLL FREE 866-780-ARDL AKRON, OHIO 44305 WORLDWIDE 330-794-6600 ARDL.COM FAX 330-794-6610 CONTACT OUR EXPERTS TODAY AT ANSWERS@ARDL.COM
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ASTM International Presents Robert D. Stiehler Award
ASTM International, W. Conshohocken, Pennsylvania, presented its Dr. Robert D. Stiehler Award to Tom Marsh in honor of his career at the organization and his contributions to committee D11 on rubber and rubber-like materials. A longtime ASTM International member, past chair of ASTM’s board of directors, Marsh had been previously honored by the committee with its Distinguished Award, its Award of Appreciation and the COTCO Service Award. Marsh works currently as chief technical officer and managing director of global latex operations at Pioneer Worldwide, a position he has held since June 2022. For more information, visit www.astm.org.
Name
Trelleborg Sealing Solutions, Fort Wayne, Indiana, developer, manufacturer and supplier of precision seals, bearings and custom-molded polymer components, recently appointed Seth Grundmeier as ServicePLUS quality manager and Caio Beraldo as its technical manager. The company launched also a 3D virtual showroom environment to provide customers with an insight into its sealing technology. Interactive exhibits allow users to explore solutions for aerospace, automotive and eMobility, fluid power, food and beverage and semiconductor industries in real-time, as well as view Trelleborg’s R&D and advanced manufacturing capabilities and value added ServicePLUS offering. The showroom will benefit from ongoing enhancements and regular updates including new products and materials, as well as additional industries and related information. For more information, visit www.trelleborg.com.
18 Inside Rubber // 2022 Issue 3
Lamons Manufacturing and Service Company, a safety sealing and attachment solutions company located in Houston, Texas, has recently commemorated its 75th anniversary. Lamons was founded in 1947 by W.A. Lamons, and the company began by providing gaskets to the oil and gas and petrochemical industries. It acquired Richard Gasket Company in 1985 and Packing & Gasket Engineering (PAGE) in 1988. Lamons then purchased Industrial Bold and Gasket in Beaumont, Texas, in 1997. In 2010, Lamons acquired South Texas Bolt and Fitting; Isotek was purchased in 2012, which in turn added gaskets, sleeves and washers to the company’s portfolio. In 2019, Lamons became part of the First Reserve family, a global private equity investment firm focused on energy. For more information, visit www.lamons.com.
Trelleborg Appoints New Employees, Launches Virtual Sealing Room
Lamons Celebrates 75 Years
ACE Products & Consulting Changes
ACE Products & Consulting, an ISO/IECrubber17025-accreditedlaboratory service provider based in Ravenna, Ohio, announced its name change to ACE Laboratories, effective April 25. The change reflects ACE’s growth and the expansion of its extensive testing, consulting, research and development capabilities. ACE is also unveiling a new logo showcasing its new name. The logo, which maintains ACE’s familiar blue-and-orange color palette, is a visual representation of its promising future. Additionally, the URL for the company’s website has changed. For more information, visit www.ace-laboratories.com.
Americhem Announces New Business Division
Americhem, a designer and manufacturer of custom color masterbatch, functional additives, engineered compounds and performance technologies located in Cuyahoga Falls, Ohio, has announced new business division: Americhem Healthcare. Americhem Healthcare is focused on optimizing performance and innovating solutions in the Healthcare and Medical Device industry. Americhem Healthcare collaborates with its medical OEM customers on everything from biocompatibility testing and formulations to DMF and regulatory support to medical certification compliancy and locked formulations. Americhem Healthcare will support its customers every step of the process by providing global expertise in material selection, medical device product development support and cross collaboration between teams. For more information, visit www.americhem.com. uSeth Grundmeier
Join us at IEC 2022 where connections are made, knowledge is shared, new products, new technology and new ideas are introduced, business is conducted, developed and gained, fun is had, encouragement and empowerment happen, and the future is embraced. Interested in exhibiting or attending? Visit Octoberrubberiec.org.10-13, 2022 • Knoxville, TN Component s include: Expo • Technical Meeting • Educational Symposium • Student Symposium • Career Fair • 5K Walk/Run • Women’s Workshop • Awards Breakfast • Networking Opportunities Brought to you by:
As business leaders work to raise wages and improve benefits to meet market demands, some leaders have adjusted their hourly wages for entry-level operators as much as 29% over the last two years in order to run production machines. Over the last three years, entry operator wages have increased by over 7% per year – meaning that the $13 per hour median wage in 2019 has grown to the new median wage of $16 per hour. The highest entry-level machine operator starting wage documented in this year’s report was $22 per hour (see Chart 1). Another telling metric tracked over the last decade is the total median cost of the combined annual compensation for nine of the most common management staff-level positions.
Compensation inflation
Chart 1. Machine Operator Median Hourly Wage Trend
By Troy Nix, executive director, ARPM The Association of Rubber Products Manufacturers’ (ARPM) most recent industry study reveals the need for significant expansion of the workforce over the next 12 months to meet market demands, but the headwinds of wage inflation, employee turnover and new hire recruitment will make meeting customer expectations difficult. Rubber and plastics processor business leaders anticipate the expansion of the industry’s workforce by more than 20% over the next year, according to the ARPM’s newly published study on wage, compensation and workforce trends. Travis Turek, president of Bruckman Rubber Co. and current leader of ARPM’s board of directors, stated in a recent interview that “although our industry faces many challenges with employee retention and wage competition from other market segments, customer demand and strong short-term forecasts are forcing many in our sector to staff up in order to meet needs.” As a result of these needs, total aggregated hiring forecasts of this year’s participants reveal the need to onboard nearly 5,100 additional workers. ARPM’s 2022 Wage and Salary Study was strongly supported as over 260 manufacturing executives, located in 37 states across the US, provided data on 55 job descriptions and a variety of inquiries related to the state of employment. The bulk of the nearly 25,000 employees represented in this year’s study work predominately for small to midsized processors located in the Midwest with sales revenues between $5M to $50M.
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Strong Demand Optimism Against Workforce Headwinds
Over three quarters (76%) of the manufacturing job descriptions, including both shop floor and support personnel, experienced median compensation increases over the last year, with nearly four out of 10 rising 5% or more. The most substantial annual wage increases included such positions as automation technicians at 18% and tooling engineers at 13%.
Positions referred to in this single compensation number include salaries for the general manager and managers in engineering, human resources, information systems, maintenance, plant, purchasing, quality and sales. The 2022 total median compensation of $915,637 has increased by 10%, or $84,000, over just the last two years and by over $226,000 over the last decade.
Chart 2. Employee Turnover Rates “OVER THE LAST YEAR, TURNOVER RATES HAVE DRAMATICALLY WORSENED FOR THE MAJORITY OF RUBBER AND PROCESSORS.PLASTICS”
The shift in employee turnover
Some companies are incorporating onsite job fairs, hiring bonuses and open interview processes connected to immediate, on the spot, job offers to those meeting hiring criteria. From a marketing perspective, handing out logoed candy during parades with hiring messages and QR-coded business cards given to service sector employees (restaurants, fast food, lodging, convenience stores) who demonstrate solid work-related skills are tactics that more and more businesses are using.
The truth about current employee turnover comes at a time when most management teams are working their hardest to modify retention tactics to improve how employees view their companies: from eliminating attendance policies, paid bonuses for showing up to work on time for a week, to “work when you want to work” schedules. However, even with all of the tactics being used to retain people, the industry recognized a 60% jump over the last year in the number of companies with an employee turnover rate greater than 25% (see Chart 2). Although the issues associated with wage inflation and recruitment/retention challenges are significant, seasoned executives expressed sentiment that strong market demand outweighs issues associated with labor. To discover the latest wage and compensation rates, along with the most recent workforce management benchmarks covering shift differentials, overtime, PTO and more, visit www.arpminc.com. u
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Despite raising compensation, professional roundtable exchanges between member business leaders of the ARPM have revealed that higher starting wages alone don’t necessarily do the trick in landing new employees. Many are using additional tactics in conjunction with higher starting pay rates to attract workers to their organizations.
The old adage, “what a difference a year makes” can be easily applied to trends in employee turnover. Over the last year, turnover rates have worsened dramatically for the majority of rubber and plastics processors providing data for this year’s survey. Exactly half of the surveyed population revealed an existing employee turnover rate in excess of 15%, which is a rise of 22 percentage points from last year.
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Finding and Assessing New Business Opportunities
Hunt: We put a lot of focus on our marketing initiatives to generate leads through our website, making sure we’re constantly keeping current with our product information. We also have some targeted account-based marketing campaigns that we employ in different areas, and we’ve used email marketing. We utilize outside firms from time to time to help with campaigns. But, we always lean on our business development managers (i.e. outside sales team), to try to cultivate new opportunities with the current customer
– Mark Hunt, vice president, global business development at Engineered Seal Products (ESP), Cedar Rapids, Iowa, and Tom Wood, vice president, sales at E-S Plastics, Milwaukee, Wisconsin – to discuss how their companies are navigating the tough environment.
ESP has been in the business for over 50 years, supplying elastomers and rubber seals to its customers, which are predominantly larger original equipment manufacturers (OEMs). The company is 100% employee-owned, with facilities across the US in Cedar Rapids, Iowa; Arlington, Texas; Kansas City, Missouri; and two facilities in Asia –Chennai, India, and Shenzhen, China. E-S Plastics has over 100,000 sq. ft., 47 presses, 117 employees and $25,000,000 in molding revenue across its two facilities. The company’s account base includes agriculture, lawn and garden, refrigeration, water purification, generators and industrial manufacturing sectors. According to Wood, E-S Plastics’ sales team is comprised of four manufacturer representatives, with a balance cultivated and maintained internally as house accounts.
How is your company prospecting for new sales opportunities these days? Wood: Reshoring is driving new opportunities. Also, dual sourcing / back-up tool opportunities are emerging. Many molders are evaluating their account base, and “noisy” customers are being asked to move their business. Customers who aren’t a good fit for an organization can take up a lot of resources, so exiting from noisy customers presents another form of new opportunities to evaluate. Sales opportunities are coming through networking channels within our region, the industry, our customer base and our supply base. Part of our success in networking is brought about by being in the business so long – it’s a process I’ve spent my whole career doing. It’s attending seminars, reading the trades, being in MAPP and other similar associations. Then, it’s knowing the toolmakers and suppliers. There comes a point when a potential customer will ask, “Who should I use for this part?” and people will say, “You should contact E-S Plastics.” Also, we (as many molders are) receive several unsolicited tool transfer RFQs per month.
By Nicole Mitchell, editor, Inside Rubber Manufacturing companies across the US are struggling to find the right new business opportunities for their teams – and those new opportunities have to be weighed against current capacity due to labor shortages, increased product cost, transportation issues and more. In the last two years, manufacturers have had to step back and discover new ways of successfully prospecting in the rubber and plastics industries. Inside Rubber interviewed two manufacturing professionals
Once an opportunity is brought inside the company, then we have our cross-functional team of experts get involved, especially if there’s any design work. But our sales teams are always the first filter to assess if a project will be a good fit.
validate if it’s in alignment with our capabilities. We also talk a lot about differentiating value. We want to make sure we’re bringing value to a customer – something that sets us apart.
How do you balance the desire to bring in new business with the supply chain shortages and transportation issues? How are those two challenges affecting your workflows?
Assessing New Opportunities 5.3.2.1.4.6.
Hunt: They’ve got to be in alignment with our technical capabilities from a product offering standpoint. We consider ourselves problem solvers for our customers. So, if they’re having a problem or a performance quality issue with the current vendor, we’re going to first assess if we have something in our portfolio to solve the problem. If not, we may look at developing a solution if it fits within our engineering capabilities. But at the end of the day, if all those things don’t align, we have no trouble walking away because we want to do what’s best for the customer as well as for our company. Walk me through your process of assessing an opportunity to see if it will fit.
Wood: Our assessment process involves a review of the complexity of molding required, research related to the potential customer and then an analysis of press capacity.
Hunt: Whenever an opportunity is presented by a customer, our sales team is expected to assess that opportunity and t “WE ALWAYS LEAN ON OUR –BASE.THEIROPPORTUNITIESTODEVELOPMENTBUSINESSMANAGERSTRYTOCULTIVATENEWWITHCURRENTCUSTOMER”MARKHUNT,VP,GLOBALBUSINESS,ESP
24 Inside Rubber // 2022 Issue 3 base and keep their ears and eyes open for new prospects in their region. What criteria do you use to determine if new opportunities fit into your business plan?
If it turns out we don’t have that point of differentiation, then we may just be another quote for the customer, and we’re less likely to pursue those opportunities. It’s about training our sales team on our capabilities, and then training them on how to sell our differentiating value so that they’re fully equipped to assess these opportunities and make that determination.
Wood: We are cautious when evaluating new business against the commitments we have for current customers. The key is to manage expectations and not overcommit to timelines when onboarding new business. When we do onboard the business, generally we want to make sure that we each are on the same
Is this customer a cultural fit for our way of doing work? Will this customer bring additional opportunities in the future? Do we have the resources (presses, people, capacity) to take on the project? What differentiated value do we bring to the customer? Does it fit within our technical capabilities? Does the potential business fit within our current sales strategy?
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Wood: We like to diversify our account base when possible. We balance the sales volume and number of tools from the potential customer against limited internal resources, including product management, technical support, capacity and complexity of business. Space is another factor. We recently passed on quoting a bid on a 92-tool, $2,000,000 tool transfer for these reasons. We also are looking at new business as a path to simplify our account base and possibly upgrade customers.
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Hunt: The biggest challenge is balancing the daily schedule. Our sales team is expected to focus on new business. But, given all the challenges we’ve faced over the last two or three years, they’ve had to get more involved in day-to-day issues: delivery challenges, pricing challenges and a variety of other things that would be handled by the customer service team in a perfect world. But in these kinds of markets, it’s all-handson deck to serve the customer at a high level. So, the sales team tends to wear a lot of different hats, and sometimes that means they don’t have as many hours in the day to focus on bringing that new business in. u
page. One process we’ve implemented is to take on programs in phases. For example, phase one is three tools; phase two is five tools; and phase three is another set. It’s helped with not overcommitting. What levels the playing field is all of us have the same supply chain challenges. Our success has been found in transparency, with a commitment to communicate good and bad updates. Hunt: We offer our customers a variety of solutions. We have a large supply base network across the world, and we also are pretty strong at finding alternatives if the current material or compounds are not available. We’re constantly assessing where we have bottlenecks and trying to find alternatives, tapping into our resources in Asia when needed. But I’d say, more recently, we’re seeing more and more customers having an interest in onshoring some of their product, just to mitigate risk of some of the global challenges we’ve faced over the last couple of years. It’s definitely impacting us just as it is with about every company out there, but we’re constantly looking for options, whether for supply chain issues or transportation issues. At one point, we were air freighting our parts to avoid delays with ocean shipments. We’ve had parts brought into our facility via truck as opposed to rail. So, we’re constantly looking at ways to address those bottlenecks. It’s all about communication and looking for alternatives to try to minimize the disruption to production lines.
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Free MembARPMerBenefit
What’s the biggest challenge for your sales team today? Wood: Staying humble. We have had a great run since the pandemic changed our industry in 2020. Opportunities are abundant now, but we all need to remember this phase will pass. Then, we will be right back to the time-worn “beat down” of customer edicts, existing business being tensioned, internet bids, auctions and injection molders being played against each other.
ARPM Young Professionals Network
ARPM Connects
The APRM leadership team wanted to create a space for all rubber industry peers to get together for a few hours at an ARPM Sponsor facility to network, learn and have good food/ drinks. Whether you are an owner, engineer, EHS director, plant manager, etc., this is event is the perfect opportunity to get away from your desk, see what is new in the industry and network with your peers.
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Interested in becoming part of the YP Network? Reach out to Kaitlyn Krol at kkrol@arpminc.org today!
ARPM’s Young Professionals Network is dedicated to bringing together the innovative, creative and dedicated young professionals from across ARPM member companies. This program is composed of up-and-coming leaders from all over the country and in all areas of business. The YP Network hosts events year-round that are exclusive to young professionals in the rubber industry. These events focus on networking, leadership skills, best practice sharing and creating lasting connections and relationships.
Events and initiatives will continue to develop at the group grows, but in 2022 the YP network is facilitating a 16-week cohort program, a mentorship program, a five-session virtual leadership series and a pre-con session at the Benchmarking & Best Practices Conference.
Upcoming In-Person Plant Tour
Home Rubber Company, Trenton, New Jersey, will be hosting ARPM’s first in-person plant tour in two years on November 3, 2022! Plant tours offer the opportunity for APRM members to visit other member facilities, see how others are approaching challenges and help the host company see new areas of opportunity. Being able to attend memberhosted plant tours is one of the top benefits of being an ARPM member. This plant tour will focus on Home Rubber’s constant innovation principal and will highlight its newest strategic initiative – Lean Manufacturing. Attendees will have the opportunity to listen to Home Rubber’s team share their approach to Lean Manufacturing, what has been accomplished on the journey so far and what the next steps are. In the spirit of continuous improvement, the ARPM member executives who participate will have the opportunity to get new ideas and perspectives on areas of improvement at their own facilities as well as offer up best practices and solutions to their industry peers.
Newly Updated Technical Standards
ARPM is pleased to announce two newly updated product standards: IP-1: Conveyor and Elevator Belt Handbook and OS-14: Recommended Practice for Measuring Thickness and Bond Strength of O.D. Coating for Radial Lip Type Oil Seals. Members of ARPM can download all product standards for free by logging in to the website. Non-members can purchase them directly from the website. For more information, visit www.arpminc.org.
The 2022 Benchmarking and Best Practices Conference will be held in Indianapolis, Indiana, October 5-7. The conference will feature well-known Keynote Speakers
Jason Hewlett, Paul Krismer, Ricky Kalmon and ARPM’s Troy Nix. Other events include peer to peer networking, BC Labs, the innovation awards ceremony and more. Learn more about the event, including ticket prices, a detailed schedule and speaker bios, on page 6.
ARPM hopes to offer an ARPM Connects event each quarter in different regions to give as many options for people to participate as possible. Keep an eye on ARPM’s event calendar to see when the next ARPM Connects event is!
ARPM Welcomes New Member! ESP International ARPM Benchmarking Activities ARPM’s leadership team strongly believes that information is power and has positioned ARPM as the information hub for the rubber processing industry. With this role, ARPM provides leading-edge benchmarks and best practice handbooks in a wide variety of areas, including general industry trends, HR policies, compensation and salary, health and benefits, sales and marketing and much more. Each year, ARPM conducts and publishes two keystone studies that are requested by rubber business leaders – the State of the Industry Report and Salary Report. As a benefit to ARPM members, the final reports are distributed to participating member organizations at no cost. In addition to the State of the Industry Report, ARPM conducts three quarterly pulse surveys to better understand the current and future state of the rubber industry as each year progresses. As ARPM continues to collect information each quarter, trends and predictions will continue to be made based on the input given directly from rubber industry leaders. Interested in reviewing the open surveys or purchasing final reports? Visit www.arpminc.com or reach out to info@arpminc.org. u Do your compounds meet research, innovation and consulting. Find out what sets us apart: ace - laboratories.com 330 557 ace_sales@ace4088 laboratories.com Report Quarterly Pulse Q1 | 2022
To address these issues, ARPM’s Managing Director Letha Keslar worked with the CGA to establish one of ARPM’s hose gurus, Brett Stone, in an advisory role with the CGA. That connection, and his work, identified the primary CGA concern was small shops building a few assemblies, not those coming from the industry giants. The standard was modified in a satisfactory way for both groups, but more importantly, a new connection thread was built between the CGA and ARPM for the future. Standard S-620, from the American Society of Agricultural and Biological Engineers (ASABE), St. Joseph, Michigan, covers safety in anhydrous ammonia application equipment (think farming). The hose safety coupling that attaches the ammonia tank to the spray equipment is designed to separate if pulled with a certain force. The ASABE is considering increasing this breakaway force.
CoordinatorTechnicalARPM
The ARPM Hose Technical Committee is a web of connection between standards organizations, industry partners and technical documents. At its base, though, are the participating engineers who contribute, manage and standardize. u Greg Vassmer
ARPM Hose Committee Chair Jeff Epperson and Subcommittee Leader Ron Moner initiated and led a group of ARPM and ASABE representatives who are conducting tests to determine whether the higher breakaway force will damage the hose or its coupling and settle on a new force limit for the ASABE standard. Finally, its time to consider hydraulic hoses in general. They work under pressure, use various fluids and are reinforced using different materials and schemes. Five standards represent the products in this area: ISO 1436 (ca. 1978), ISO 3862 (ca. 1980), ISO 4079 (ca. 1978), ISO 11237 (ca. 2004) and ISO 18752 (ca. 2006). Each was developed independently as new techniques and requirements emerged in the market.
ARPM’s IP-14 and IP 11-2 cover these types of hoses, and while they do not address the safety coupler directly, any change at the coupler affects the hose.
ARPM Hose Technical Committee Addresses Confusion
“When we try to pick out anything by itself, we find that it is bound fast by a thousand invisible cords …, to everything in the universe.” – John Muir, 1869 The Compressed Gas Association, McLean, Virginia, maintains CGA E-1, a standard for rubber welding hose and assemblies. In its concern of the manufacturing quality of these assemblies, it is requiring 100% testing of all newly made hose assemblies. Such a requirement tugs on several threads. First is cost. As one might guess, testing 100% of hose assemblies is costly and perhaps unneeded considering the quality systems in place at major manufacturers. Second is quality. There is a difference in a hose assembly manufactured under controlled quality conditions at a major manufacturer compared to a technician at a welding supply company making assemblies from a box of couplers and a reel of hose. Third is consistency. ARPM’s Hose Technical Committee maintains IP-7, a welding hose specification standard and sister to the CGA standard. Both E-1 and IP-7 typically are referred to together when buying this hose. Consistency is needed or confusion results.
By Greg Vassmer, technical coordinator, ARPM
Last year, 18752 was updated to include water-based fluids to align the document with ISO 1436, ISO 3862 and ISO 4079, which already had water-based fluid tests. But not exactly. The water tests are dissimilar between the standards – but don’t have to be. The test method is the same, but test parameters like temperature, number of cycles, etc. can vary. It was about to become a round-robin of changes, moving from one standard to the next trying to keep them all synchronized. So, the group decided to change from individual threads to a “cloth of standards.” The TC45 SC1 ISO group created a “template” standard to ensure all their similar standards contain the same structure, describe methods the same way and cover all the same topics. A change to one will be transferred easily to the others. The change to 18752 was done with the new template last year. This year, ISO 11237 is being updated. The others are coming in the years after that.
28 Inside Rubber // 2022 Issue 3 TECHNICAL STANDARDS UPDATE
Another Muir thread just pulled. If the force to actuate the safety coupler is higher, both the rubber hose and the metal coupling at the end of the hose will see more stress before the safety coupling finally separates. Does this mean there is a chance the hose might fail before the safety coupling?
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Steps to impact cost Under a fully insured plan, the carrier controls the contracting arrangements as it accepts the entire liability of the health plan. Unfortunately, health insurance is a pass-through model; there is little incentive to contain the organic costs associated with prescription drugs. The carriers benefit from higher costs as these are the basis for the annual increases to health plan sponsors (employers). Compounding this is the possibility that the carrier may have ownership or profit-sharing arrangements with the PBM.
Don’t Take the Medicine Yet!
By Will Hinshaw, partner/founder, Captive Solutions & Options
Walmart and Sam’s Club represent the next rung on the point-of-sale ladder, and widely are regarded as a lower-cost alternative, although this is not necessarily the case. While these retailers leverage their scale to lower the price for plan members, the cost to the employer (or the plan sponsor or health plan) has proven to be as costly, and in some instances, more costly than the national retailers. Prices are lower for the plan member so other retail items can be purchased while prescriptions are filled. For the plan sponsor, oftentimes the best cost can be found at the grocery and locally owned pharmacies. This may seem contrary to the previous mention of large-scale aggregation, but the PBMs can exact a better rate for the smaller points of sale that don’t have the negotiating power of the larger retailers. Additionally, the local pharmacy has lower overhead, and the grocery store’s primary objective is food sales, not prescription drug sales. The goals and objectives of the various points of sale create counterintuitive facts that the points of sale are best for the employee (the plan member) and the employer (the plan sponsor).
The nexus of this bewildering supply chain – identified by some as the most complex in the world – is the pharmaceutical manufacturer. Often vilified, these manufacturers operate in an environment where product failure is the norm – 96% of new prescription drug products fail! The need to recoup losses on the 4% that succeed is understandable. The means and methods to recover the loses are important to shareholders and owners as it is the goal to maximize profits. However, this stands in direct conflict with an employer’s need to manage prescription costs. Interestingly, the manufacturers do provide some means to abate their costs – once that path is discovered.
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Dismantling the Rx ladder
P rimetime television has become a stage for marketing pharmaceutical solutions – catchy slogans, music, bright colors and “everyday people” succeeding in life with help from drug manufacturers. This is top-tier advertising from some of the most profitable companies in the world. To counter the financial impact of prescription costs, most pharmaceutical commercials conclude with an offer to help; regrettably, the how and the where to get the help typically is absent. Caught in the middle are the employers wrestling with the best way to provide costeffective benefits for employees and dependents.
The PBMs serve as a point of aggregation to provide better pricing arrangements that traditionally are not available via direct contracts with pharmaceutical manufacturers. Unfortunately, as a profit-driven third party, there are instances where the goals and objectives of these intermediaries conflict with those of budget-focused employers. The contracts link the manufacturer with the retail point of sale (CVS, Walgreens, etc.) and dictate employee pricing. Under a self-funded arrangement, the PBM is the first point of contact for an employer to impact prescription drug cost, as the PBM selects the criteria that meets the plan sponsor’s operational and cost objectives. The retail points of sale, although most visible, are the primary distributors. The prices, terms and conditions have been set long before the fulfillment contracts are arranged. There are cost differences and responsibilities within the retail outlets. The large retail pharmacy chains – CVS, Walgreens, Rite Aid – widely are understood to provide the least benefit from a cost perspective. Ease of access and the cross-functional shopping experience are reasons plan members access prescriptions here.
The Pharmacy Benefit Manager (PBM) is the least discussed but most impactful in the pharmaceutical supply chain. PBMs are contracting and distribution intermediaries acting on behalf of fully insured carriers or self-funded plan sponsors.
Lastly, one of the greatest points of complexity in the supply chain is the ownership of these points of sale. The large, fully insured carriers own or have ownership stakes in retail points of sale. In fact, so powerful is the point of sale that CVS acquired the fourth largest insurer in the country – Aetna. Ownership throughout the supply chain – down to point of sale – creates beneficial financial outcomes. Unfortunately, their success may, and generally does, come at the public’s expense.
The first step to controlling high-cost prescription drugs is to be self-funded. There are a variety of self-funding methods that brokers or health benefit consultants can offer.
The second step is selecting a PBM. Given today’s competitive environment, PBMs can provide a plethora of costcontainment and price-transparency tools. Select the PBM that best matches the necessary service delivery, cost goals and objectives. The ability to alternatively source high-cost and/or specialty medications is critical. Ensuring the PBM will allow plan sponsors to choose certain prescriptions that can be sourced via the manufacturers’ programs mentioned earlier, as well as through other resources, also is critical.
Finally, ensure subsidy and international sourcing are available. The manufacturers, as well as some third-party entities, have created programs that allow plan members to receive subsidies for prescription drugs. The third parties collect specific data to determine if a plan member qualifies. Most of these programs are needs-based, meaning the amount of subsidy is based on current market conditions in conjunction with the member’s income. Subsidies can range anywhere from 20% to 100%. Alternatively, if an individual does not qualify for a subsidy, or the prescription does not currently have a subsidy program, sourcing the prescription internationally is a viable solution. This overview of the pharmaceutical supply chain only addresses the primary stakeholders. There are additional consultants, vendors and interested parties affecting the service and cost outcomes. An awareness of the system is necessary for employers to maximize the investment and advantage of a health benefit program. It is important to ensure proper mechanisms are in place to address the potential cost issues. With the rising cost of prescription drugs – several of which exceed $1,000,000 per year – the ability to meet the unforeseen need is imperative. u Will Hinshaw has dedicated over 25 years to leading organizations in numerous industries, including CAPTIV8, ARPM’s new funding strategy for members. For more information on pharmaceutical cost-containment strategies or to learn more about CAPTIV8, please contact Susan Denzio, sdenzio@firstresourceinc.com.
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Are you ready to of one of your company’s TAKE CONTROL largest expenses? ARPM is combatting members’ rising insurance costs with tailored strategies that positively impact both your employees and your company. Visit arpminc.com/captiv8 to learn more. Introducing CAPTIV8, health strategiesinsurancecreated for rubber manufacturers.
“With five million manufacturing jobs still offshore, as measured by our $1.1 trillion/year goods trade deficit, there is potential for much more growth,” he added.1
Labor rates are moving up internationally, narrowing the gap between domestic and offshore prices – although higher US labor costs still result in US manufacturing costs being, on average, 40% higher than in China and 10 to 15% higher than peer countries. Tariffs have risen.
“We have had a consistent strategy to produce only in North America, and 95% or more of our raw materials are North American sourced (and always have been),” reported Rimel.
For the second year in a row, reshoring exceeded FDI by 100%, in contrast to the 2014 to 2019 period when FDI exceeded reshoring. Additionally, the number of companies reporting reshoring and FDI set a new record, with more than 1,800 companies. Reshoring was the key to the US manufacturing and economic recovery in 2021 and is expected to remain strong in 2022. “We publish this data semiannually to show companies that their peers are successfully reshoring and that they should reevaluate their sourcing and siting decisions,” said Harry Moser, founder and president of the Reshoring Initiative.
Perhaps most importantly, “international supply chains have proven to be less reliable in the last decade, particularly since the pandemic, and with shortages of both equipment (containers and trucks) and labor, logistics complications have increased risks,” said Tom Rimel, president of Stockwell Elastomerics, a Philadelphia, Pennsylvania-based supplier of specialty components.
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“Everyone is excited about buying American again,” noted Richard A. Balka, president of The Home Rubber Company and its Ivanhoe Rubber division. The manufacturer of hoses, belts, gaskets, sheet rubber and more ships products worldwide from its operations in Trenton, New Jersey.
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The idea of bringing manufacturing back from overseas appeals to national pride; counters increasing costs offshore; minimizes risks related to lack of domestic production, geopolitical uncertainties and currency fluctuations; protects intellectual property; shortens supply chains and eliminates quality issues and communication difficulties. Why reshore now?
In 2021, the private and federal push for domestic supply of essential goods propelled reshoring and foreign direct investment (FDI) job announcements to a record 261,000, bringing the total jobs announced since 2010 to more than 1.3 million, according to the Reshoring Initiative 2021 Data Report: Essential Product Industries Drive Job Announcements to Record High, a report published by the Reshoring Initiative, Sarasota, Florida.1
IMPACT
“Our components are relatively small in size and specialty (high value in use) so that labor rates and transportation costs (in the markets we have selected to serve) have never been the primary decision factor,” he explained.
Reshore or Not?
With rising costs and the supply chain disruptions caused by COVID-19, the idea of reshoring is gaining momentum.
Rising costs and supply chain disruptions encourage reshoring. By Hallie Forcino, writer, Inside Rubber
• Are produced in a highly automated process
• Require minimal secondary operations and assembly
• Serve critical applications that require a level of quality difficult to duplicate offshore
• Are essential to national security
“We are getting sales as a result of import products not landing as quickly as end users need them,” said Balka.
Rimel of Stockwell Elastomerics, reported, “Since January 2021, we have increased labor (employees) by 26%, we have added capacity (seven new pieces of equipment) and have nearly doubled the size of our engineering team to support our customer demand for high-performance gaskets and sealing materials. Five years ago, we also added a third building to our campus to support future growth.”
Other recommendations include checking in with existing customers that also rely on offshore production to provide them with a path to bring back business. Moser says it’s important to discuss what-if scenarios like “What happens if China tries to take over Taiwan?” or “What happens if Germany’s factories encounter a shortage of natural gas this winter due to the Russian invasion of Ukraine and related trade Rimelsanctions?”explained, “With geopolitical risks (China, Russia) seemingly increasing, regional manufacturing strategy and developing additional ‘local’ supply chains reduce risks. These risks are both from logistics (goods being able to pass through hotspot areas) and supply of base/raw materials.”
• Were developed domestically and are highly engineered
For manufacturers that want to help their customers reshore, several steps can be taken to ensure a successful transition.
• Rely on raw materials available locally
• Have a high freight cost relative to labor cost
• Are expensive to transport due to size, weight or other feature
Successful reshoring Being competitive is key. “Competitive means price competitive,” stated Moser. To become price competitive depends on automation, workforce development, higher productivity levels, supply chain resilience and governmental action. Although reshoring may not be practical for every product and service, it does make sense for agricultural products and products that: • Serve a niche
Although neither Stockwell Elastomerics or Home Rubber are reshoring (they never offshored), they are expanding domestic operations to accommodate new business. Home Rubber currently is putting together a significant equipment investment package.
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However, the decision to reshore should not be made lightly. Reshoring is an extremely complex endeavor that ties into almost every current political issue – immigration, environmental sustainability, war, inflation, globalization, tariffs and trade deficits. “Although international logistics problems have shown us that wholly relying on goods and transportation that we don’t control is risky, I’m not convinced reshoring is a sustainable answer,” said Balka. He explained, “As soon as we’re back on normal footing, everyone will return to buying solely on price. It’s a nice thing to advertise you’re selling a domestic product, but very few end users are willing to absorb additional cost. Plus, I don’t believe the US has the capacity to reshore more than a very small percentage of the goods and services needed to drive our GDP. Even if we could build more plants, where are we going to get the people to run the plants? If wages continue to grow, are we as an economy going to be able to be competitive with the rest of the world? If I look at the cycles of the past 50 years, more and more has gone offshore. What is my basis for the confidence to invest huge sums of money on domestic production?”
“RESHORING IS AN EXTREMELY COMPLEX ENDEAVOR THAT TIES INTO ALMOST EVERY CURRENT POLITICAL ISSUE...” IMPACT
Implementing higher levels of automation is imperative since it can minimize headcount and help control labor costs. Automation also positively impacts productivity, which Moser said has only increased 0.5% per year for the last 12 years in the US vs. 6% per year in China.
First of all, Moser recommends “doing the math.” This means considering total cost of ownership including factory price plus duty, freight, carrying costs and inventory. What investment in infrastructure, equipment, hiring, training, operation and shipping will be required? Can tooling be recovered? Are current prints and process specs in-house? How much time will each step toward reshoring take? Moser advised also streamlining and automating processes. He said, “The old system was not competitive. The new system must operate smarter.”
• Can improve lead time by reducing transit time/distance
www.arpminc.com 35 RUBBER IN MOTION Once business has been reshored, its essential to tout the success. Public acknowledgement not only proves competitiveness but demonstrates also to employees that the company is stable and not losing work to offshore operations. This knowledge has also a positive impact on potential workers. From a national perspective, Moser explained successful reshoring depends on the federal government taking steps to: • Encourage apprenticeships and workforce development • Maintain the current corporate tax rate • Retain 100% immediate expensing for equipment • Establish a value-added tax • Change interest rates in step with global markets • Reduce the value of the US dollar vs. other currencies Moser concluded, “Reshoring helps the country. It restores the American dream.” u Resources 1. Reshoring Initiative, “Data Report: Essential Product Industries Drive Job Announcements to Record High,” Press Release, May 31, 2022. LE T US D O T H E DI RTY WORK S O YOU C AN QU I C K LY M OVE F O RWAR D. Performance release agents and mold protectors for rubber molding. Let us help you stay lean and clean. CH E M TR EN D C O M
PolyFlex Products also has changed its pay rates to $15 per hour for general labor and adjusted its policy for paying temporary employees. The company paid a higher rate of $16.50 to temporary employees but offered a slightly lower rate of $15 for a full-time role, with the promise of a onedollar raise at the 90 day mark, pending good performance.
“It’s been a struggle. The price of materials is going up. We’ve gotten quite a few new jobs in, which we’re quoting differently. And we’re negotiating new terms and new prices with long-term customers, but it’s a slow process.”
PolyFlex Products tested this strategy on five employees from temp agencies and have retained all five. However, there’s risk involved when hiring temporary employees. “Temp employees outshine regular employees until they get hired,” said Kimbel. “Suddenly, they’re missing days or being unsafe or having problems on the floor with other people. That’s always a risk you take. So, we’re trying to work out the kinks right now.”
Most businesses have raised pay rates multiple times over the past two years in an attempt to remain competitive. Suzie Thomas, accounts payable, reported that Eclipse Mold, Inc. has implemented three substantial wage increases since 2019, anywhere from two to four dollars. And those changes have applied to long-term employees as well as new hires, though the exact rate – within a specified range – is determined by seniority and good standing. The company is currently exploring what a wage ceiling might look like for long-term employees. “It’s hard because there’s a point where they’ll cap out. We haven’t done that yet,” said Thomas.
Employers in virtually every industry are struggling to attract and retain high-quality employees. Large and small businesses alike are scrambling to overhaul their wage and benefit structures to remain competitive in a highly volatile employment market. Many companies have found themselves locked in constant competition with other local businesses over a singular pool of employees and workers. Leaders and human resources professionals in the rubber industry are experimenting with a variety of solutions and changes to deal with these ongoing challenges.
A primary struggle for many rubber companies is the challenge of offering a competitive rate. In the Detroit area, for example, multiple Amazon facilities and the “Big 3” automotive manufacturers are major competitors, especially for smaller companies and tier suppliers. “Now that the larger companies are back in production, they’re making offers to our employees that we can’t compete with. One of the Big 3 has taken three of our people in the last two months,” said Audra Kimbel, human resource manager for PolyFlex Products, Inc. “Those were key positions for us. We’ve been able to backfill them, but you’ve got to start the training all over again. A leadership change does bring a fresh perspective, but when it comes all at once, it doesn’t give you a whole lot of time to adapt.”
Employee Benefits: Rising Costs vs. Necessary Incentives
Many companies are struggling to balance wage increases against the overall rising costs of doing business. “Obviously, with everything else going up, so are our costs,” said Thomas.
By Maggie Olson, writer, Inside Rubber
Businesses also are being forced to consider their employees’ expenses in their calculations. “I started tracking daycare expenses, fuel costs and food prices back in March,” said Kimbel. According to her research and records, the cost of sending a single three-year-old child to daycare in the Detroit area, the 14th largest metropolitan area in the United States, is around $340 per week. For some employees, childcare costs
36 Inside Rubber // 2022 Issue 3
“EVEN A ADVANTAGESMALLOVER
However, the program hasn’t attracted much interest. “So far, just one person has taken me up on it, and he wound up having to resign,” said Kimbel. “I brought it up in a meeting, asking people to compare it to their car payment. You could be making money by following through with this program. But people just didn’t want others to know where they lived.”
LOCAL COMPETITORS CAN MAKE A DIFFERENCE IN A BUSINESS’S ABILITY TO RETAIN ITS EMPLOYEES AND HIRE NEW ONES.”
PolyFlex Products also has seen positive results from offering more flexibility. “We have had such a great review on that,” said Kimbel. Some employees have adjusted their shifts to start earlier or later based on bus schedules and their families’ needs. According to Kimbel, these flexible options have contributed to employee retention. The staggered schedules also have led to better coverage for truck pickups. While these flexible and creative solutions may not yield dramatic results, the outcomes can be positive. Even a small advantage over local competitors can make a difference in a business’s ability to retain its employees and hire new ones. In any case, refusing to stray from traditional methods of hiring and doing business doesn’t appear to be the appropriate strategy for successful recruitment. Remaining open to change and fresh thinking can help rubber industry leaders weather the ongoing challenges of the labor shortage so they can maintain progress toward their business goals. u
Flexible scheduling has proven to be an effective solution under some circumstances. Many companies offer staggered start times, shorter shifts, swing shifts and other creative solutions so that employees can catch a bus or use a shared family car. Eclipse Mold has begun offering part-time, fourhour shift options for the first time. “We’ve never done that before,” said Thomas. “We’ve always had very strict eightto-four shifts. But now, if someone wants to four hours or six hours, I’m saying, ‘Let’s see what we can do.’”
PolyFlex Products has offered two solutions to the issue: a partially funded carpool program and flexible scheduling. Commute with Enterprise is a program that groups employees by zip code or other criteria to share a vehicle for commuting purposes. Thanks to reimbursements from the Michigan Department of Transportation (MDOT), the cost of Commute with Enterprise is $120 per month for PolyFlex employees. That payment includes a vehicle, regular scheduled vehicle maintenance and a gas card. The employees in the pool can share the vehicle for regular errands as well, such as grocery shopping and healthcare appointments.
www.arpminc.com 37 account for their entire paycheck – or more. “Their money is going to daycare,” said Kimbel. “They’re not earning anything. They’re losing more money. That has become more of a reality that we haven’t addressed yet.”
Recruitment professionals have experimented with a variety of additional benefits to incentivize new hires – with mixed results. “A lot of entry-level people have state benefits,” said Thomas. “Benefits are not a high priority for people in my area. More paid time off would be the only benefit that would actually attract people.”
Different types of cash incentives have proven to be slightly more effective, though the results are not dramatic. PolyFlex Products began offering a $500 bonus to any employee who referred a new hire who stayed on for at least 90 days. “We thought it would have more of an impact,” said Kimbel. But some employees have taken advantage of the program. “One guy has referred four people,” she said. Some companies have implemented more flexible workfrom-home policies. But for some roles, that benefit is irrelevant. “People on the floor have to be here,” said Kimbel. “They can’t work from home.” Kimbel shared that PolyFlex Products is exploring the possibility of a program to help employees offset the rising costs of fuel. The program would award a weekly “appreciation allowance” to employees who worked their full schedule, at least until gas prices drop below four dollars per gallon. Gas prices are not the only transportation barrier affecting recruitment. Many major public transportation providers are experiencing similar hiring struggles and have cut back on routes due to a driver shortage. In the Detroit area in particular, this has led to a gap in the bus schedule that affects second-shift workers. “That’s a huge issue for us right now,” said Thomas. “People are saying, ‘I can’t do second shift because I can’t get home.’” Thomas has been working directly with the local transit authority to add a bus stop that would accommodate second shift, but until more drivers are available, the problem remains. “If they don’t have anyone to drive a bus, they can’t get home,” she added.
38 Inside Rubber // 2022 Issue 3 ACE Laboratories 27 www.ace-laboratories.com Akron Rubber Development Laboratory, Inc. (ARDL) 16 www.ardl.com ARPM Leaders of Character Program 33 www.arpminc.com/events ARPM Membership 39 www.arpminc.com ARPM Publications 22 www.arpminc.com Barwell Global USA 12 www.barwellusa.com Blair Rubber Company 17 www.blairrubber.com CanCarb 5 www.cancarb.com CAPTIV8 .................................................................. 31 www.arpminc.com/captiv8 Chardon Custom Polymers ...................................... 13 www.chardoncp.com ChemTrend............................................................... 35 www.chemtrend.com Grainger...................................................................... 2 www.grainger.com IceMiller .................................................................... 25 www.icemiller.com PartnerShip............................................................... 25 www.partnership.com/ARPM REP Corp. 35 www.repinjection.com Rubber Division, ACS 19 www.rubber.org Sigmasoft Back Cover www.sigmasoftvm.com Smithers 29 www.smithers.com EVENTS CALENDAR For the most up-to-date information and to register for events, visit www.arpminc.com/9-10events.Peer Networking 30 ARPM Connects Northeast 3 Home Rubber Plant Tour 16 Finance Forum 5-7 Benchmarking and Best Practices Conference 12 ARPM Connects at the International Elastomer Conference OCTOBER NOVEMBER20222022AUGUST2022
L i s t e d i n R u b b e r a n d P l a s t i c s N e w s " T o p 5 R u b b e r I n d u s t r y A s s o c i a t i o n s Y o u S h o u l d K n o w . " V i s i t a r p m i n c . c o m f o r m o r e . J O I N T H E N E T W O R K T O D A Y ! B e n c h m a r k i n g | I n d u s t r y S t a n d a r d s | T r a i n i n g | N e t w o r k i n g | a n d m o r e . . . T H E I N D U S T R Y N E E D S Y O U A S S O C I A T I O N F O R R U B B E R P R O D U C T S M A N U F A C T U R E R S
