• PT Youtube
  • PT Facebook
  • PT Linkedin
  • PT Twitter
8/1/2007 | 1 MINUTE READ

Squeezing Out The Middle Market

Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon

A moment of silence, please, for the final passing of Van Dorn.

A moment of silence, please, for the final passing of Van Dorn. Once the leading U.S. builder of injection machines, its name had faded away. This month, Demag Plastics Group will terminate manufacturing at the former Van Dorn headquarters in Strongsville, Ohio. All Demag machines will come from Germany, China, or India. Only the Titan large presses retain a trace of Van Dorn DNA, but they are not part of the three “core” lines of machines in Demag’s strategic plan.

Demag CEO Klaus Erkes explained that plan last month and provided an interesting rationale for Van Dorn’s demise, which may hold a lesson for molders as well. He noted that since 2000, North American injection machine sales fell from 7500 to 3200 units/yr as manufacturing migrated to Asia and Latin America.

Dr. Erkes used simple diagrams to characterize the current “shape” of regional injection machinery markets. He pictured Asia as a pyramid with a broad base of demand for low-priced, standardized machines and a narrow peak of high-end, customized machine demand. Dr. Erkes’ view of the European market is just the opposite—an inverted pyramid reflecting the predominant demand for high-end machines. Where it gets really interesting is Dr. Erkes’ picture of the North American market—an hourglass shape with a pinched waist. That middle market, he said, was Van Dorn’s niche, and it shrank drastically as local molders sought to compete with the rest of the world, either through investing in sophisticated technology or by cutting all expenses—including machinery—to the bone.

Domestic molders should study those diagrams. You can go up-market or down-market, but you don’t want to be caught in that vanishing middle.