Milacron Optimizes Capacity with Contract Business
Contract manufacturing, once just a tool to use excess capacity at Milacron, becomes a vital diversification strategy
By Sarah A. Webster
Editor in Chief
Milacron LLC—still often referred to by its legacy name “Cincinnati Milacron” and still based in Cincy—got out of the metalworking tools and grinding business in 2004. Ever since, it has focused its efforts on being a world leader in plastics machinery, mold technologies and industrial fluids. The company, now owned by the private equity firm CCMP Capital Advisors LLC, has been rapidly expanding, acquiring Mold-Masters (Toronto, Ontario) earlier this year and giving credence to its tagline: “Now More than Ever, Your Most Complete Partner in Plastics.”
Today, Milacron consists of Milacron Plastics Machinery (injection, extrusion and blow-molding); Mold-Masters (hot runners); DME Co. (mold technologies); Milacron Aftermarket (parts and service) and CIMCOOL Fluid Technology (metalworking fluids and services).
But a little-known part of the Milacron business has also been growing, too. About a decade ago, Milacron planted the seeds of a contract manufacturing business to offset the cyclical nature of the machinery business, which is highly sensitive to the ups-and-downs in the economy.
The strategy is now regarded as vital to the company. Milacron’s contract manufacturing business, known as Milacron Contract Manufacturing, has provided a relatively stable source of revenue, especially during tough times, and it’s also been a steadily growing source of revenue.
“We have a pretty cyclical business,” said Mark Vanzant, director of Manufacturing and Engineering, Milacron. “This was a strategy we arrived at 10–15 years ago to help us kind of balance our manufacturing loads. …
“Using [the] machining facilities we already have, we look for business that requires similar capabilities.”
Most often, that has been customers with big, high-tech parts, including those in the oil and gas, wind, agriculture, mining and locomotive sectors, among others. Milacron also provides parts to other noncompeting machine builders who sometimes do not have enough capacity to meet orders.
“Our niche is low volume, high technology,” said Jim Kinzie, plant manager, Milacron, Mount Orab Operations.
Kinzie, who has worked in various positions at Milacron during his 42 years with the company, explained that the large vises, injection screws and fabricated or cast-iron bases that Milacron manufactures for its plastic extrusion, blow-molding and injection-molding machines makes Milacron especially capable to make smaller lots of large items. “The machinery to make the parts is pretty much the same,” he said.
Vanzant added: “We have capability up to about 60-ton parts.”
Milacron’s contract business has grown to more than $8 million in sales annually, which Vanzant called “a small part of total sales, but an important diversification tool.”
The company learned how important that diversification was during the Great Recession, when the machinery side of the business took a severe hit. During that period, the contract manufacturing business made up nearly 40% of the shipment’s out of the Mr. Orab plant. “It was a boon to us during that period,” Vanzant said. And while Milacron still had to lay off workers, he noted that without the contract business: “It would have been worse.”
Today, Milacron has come to consider this contract manufacturing business, once meant only as a offset to use excess manufacturing capacity, as highly important to the overall business strategy.
“We will subcontract Milacron work to maintain our contract business,” Kinzie said, explaining: “Once you lose it, you won’t get it back. The problem with turning it on and off is losing customers. We try and keep the contract work growing no matter how business at Milacron is doing. We need to be able to fall back on that.”
The contract manufacturing business does have some boundaries to its growth, however. Milacron will not compete with its machinery customers. Because those customers are typically in plastics, however, and Milacron is typically selling metalworking services, this has not been an issue.
“We do not compete with our customers,” Vanzant said. For example, he noted, “We do not do molds.”
Optimizing Manufacturing Capacity
Milacron has two large factories that make a variety of small and large parts required to make plastics machinery. There’s a 500,000-ft ² (46,500-m²) facility in Batavia, OH, as well as a 190,730-ft² (17,738-m²) facility about 15 miles away in Mount Orab, where the majority of contract manufacturing work is performed. “The equipment we have in our facility is a wide range, from small parts to large parts, geared to make the parts required for extrusion, blow molding and injection molding machinery,” Kinzie said.
Milacron offers precision CNC milling, grinding, turning and hard-facing operations, as well as a number of secondary and finishing operations, such as whirling, heat treating, deburring, coating, freezing, testing and more.
At Mount Orab, the facility consists of five connecting buildings. Each building has a different type of operation. One makes small parts you can pick up with your hand. Two plants make large parts that are moved by crane or with a forklift. A fourth building does heat-treating and other specialty processes. The fifth does long and skinny, shaft-type work, which is where the company makes its screws for the injection business. Among its many machining capabilities, which are listed in detail on the company Web site, Milacron also does whirling, a specialty operation. The whirling machines (made by Weingärtner in Austria) have a ring with a series of different types of cutters. As the ring spins, it travels down the shaft. The process is somewhat similar to turning, except instead of one cutter working at a time, there are maybe six–eight cutters working at a time. “It removes a considerable amount of stock,” Kinzie said.
Among Milacron’s greatest assets in securing contract business, however, is the company’s sizeable, highly-skilled and flexible manufacturing workforce of about 230 workers, 175 of whom are machinists. “We have a higher skill set. All of our machinists must be able to read their own blueprints, do their own setups,” Kinze said. “The rest of the people are support people, manufacturing engineers, production control. … We do our NC programming in house.”
With their large, highly-skilled workforce and varied technical capabilities, Milacron also does some machine refurbishing in its contract manufacturing operations.
Managing the contract manufacturing business has not been much of a change or difficulty for Milacron, Kinzie said.
That’s because the plants already operated on a contract- or customer-focused basis internally, with different parts of the business placing orders to the manufacturing operations.
“It’s not easy, but we try and treat every order as if it’s from an external customer,” Kinzie said. “We have five different internal customers because the businesses for the injection, extrusion and other business units, they all submit orders to us.” That makes the contract customers “just another customer,” he explained.
Because most Milacron jobs are smaller and custom, versus large automated operations, Kinzie said, “We do an awful lot of capacity planning. We move around the machinery. … We have the ability to move people around. We have to be very flexible.” And fast. “We’re able to provide that customization as rapidly as possible.”
Milacron uses J.D. Edwards EntepriseOne ERP software to manage its capacity and other operations.
Typically, the machinery side of Milacron forecasts its sales about six months in advance, leaving the machining operation to book its excess capacity. Virtually all machines are built to order, with very few stock machines. ME
This article was first published in the October 2013 edition of Manufacturing Engineering magazine. Click here for PDF.