Plastics processors are, on average, more productive than they were six years ago. Their quality performance is better, their overhead costs are lower, they are getting a better return on capital, and in some respects they are more profitable. However, their labor costs are significantly higher as a percentage of total costs.
Those are just some of the conclusions one might draw by comparing the results of SPI’s just-published 2001 Financial and Operating Ratios Survey of Plastic Processing Companies with data from the same survey in 1995. This handy benchmarking tool surveys around 100 plants.
The numbers indicate that processors became more productive from 1995 to 2001. Net sales per employee increased an average of 7%; net sales per employee hour grew 26%. Value added per employee hour is up 35%. Non-production expenses (SG&A) are down from 14.5% to 11.5% of sales.
Quality is up, too: Customer complaints on orders shipped are down from 2.5% to 1.8%. Percentage of product that did not meet customer specs dropped from 2.4% to 1.1%. And on-time deliveries rose from 92% to 93.4%.
On the other hand, total employment costs/net sales rose 13%, and total employment costs per pound shipped jumped 21%. Since wages remained around 16% of sales, the difference is evidently a surge in fringe benefits.
Gross profit margin (19.8%) stayed about the same over six years. However, operating profit (EBIT) was up from 4.8% in 1995 to 5.3% last year. Pretax return on invested capital rose dramatically—from 9% to 12.8%. But net after-tax profits were down from 3.5% to 2.1%. The recession might have had something to do with that.
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