Traditional plastics manufacturers maintain flexibility
Survival for Leominster companies requires creativity
It has become conventional wisdom that the future of Central Massachusetts manufacturing is in high-tech products and high-tech production methods.
And, indeed, in the Pioneer Plastics City of Leominster, there is an influx of medical device manufacturers with clean rooms populated by technicians in hairnets and gloves.
But, spread among these newcomers, there are dozens of companies that make simpler plastic products: dog bowls, black combs, 5-gallon buckets. In an era of increasing international competition, how do these companies survive? And how long can they keep going?
Manufacturers, and others with a connection to the industry, say there are no simple answers to that question.
Job shops
"It's tough," said Ted Borden, who works with local plastics companies as senior vice president in commercial lending for Sovereign Bank. "It's a tough environment out there."
"I think when you talk about these companies in the Clinton and Leominster area, you're talking about firms that either are job shops," meaning they are highly customized and offer a high degree of responsiveness to customer demands, he said, "Or else they just are cost effective."
For Rod Sparrow, owner of Leaktite Corp. on Francis Street in Leominster, which employs about 80 workers, the way forward lies in a mix of both those attributes. The company was founded in 1945 as a manufacturer of metal pails. It soon switched its material to plastic, and eventually added in wallpaper trays and tray liners, but its main product remained the same.
"You can't get any more basic than pails," Sparrow said.
But, in fact, the product is not that simple. The company, which makes all the orange buckets you find at Home Depots around the country, can also add specialized touches for retailers, including custom imprints for individual stores.
"That really separates us from everyone else," Sparrow said. "We're willing to decorate the buckets, offset print their name."
Automated delivery
Just as important as customized service, Sparrow said, is keeping prices low enough that companies can give the buckets away as calling cards if they want. The company keeps labor costs down by increasing automation and using temporary workers during the summer, when demand for home-renovation supplies is high.
"It fills a void when you're busy, and when you're slow you can basically cut them out," he said.
Sparrow said Leaktite has not been hit hard by overseas competition because the weight and bulk of buckets makes them expensive to transport. But it does have plenty of challengers within the United States.
"It's difficult to compete with other parts of the country," he said. "The south, the midwest, and the southern states in the sun belt area."
One advantage of being in the northeast, Sparrow said, is that there are always many trucks coming into the area to deliver goods to large population centers, and they offer good deals on their return trips to keep from going back empty.
At Cardinal Comb & Brush, which employs about 65 people at its Leominster headquarters, the business strategy has nothing to do with customization. The company devotes about two thirds of its capacity to its traditional line of combs and brushes, but it is growing faster in additional areas like housewares, industrial application products and even subcontracting packaging services for other companies.
"It's very competitive, and it's very low margins, but if you have enough volume you can do OK," said owner Anthony Mazzaferro. "We've been showing a small profit."
Unlike Leaktite, Cardinal faces plenty of international competition. But Mazzaferro said it is not as daunting as it seems. Over the past two years, he said, the costs of buying from China - fueled by that country's inflation and an unfavorable exchange rate - have been rising faster than his production costs. At the same time, shipping from Asia has gotten more expensive.
Still, Mazzaferro said, the availability of cheap labor elsewhere in the world has pushed him to focus on less labor-intensive products. For example, Cardinal has an easier time selling plain black combs destined for barbers, universities and prisons than it does with packs of multi-colored, multi-sized combs that must be sorted and packaged for retail sale.
Mazzaferro and Sparrow said they have plenty of worries about how their costs stack up to those of manufacturers elsewhere - chief among them expensive utilities and skyrocketing health insurance prices - but neither said they have any plans to make the huge investments necessary to try to compete in medical manufacturing or other high-tech areas.
"We feel what we do is what we want to continue to do," Sparrow said. "We'll try to do it better, more economically."
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