Still significant Services opportunities for equipment suppliers to the Plastics Industry

by NIck Frank on November 25, 2010

PSi was at the globe’s biggest and most important plastics trade show, the K2010 show in Düsseldorf. We were interested to see for which businesses Services has become as a key corporate strategy to increase profitability and customer retention.

Different levels of engagement

We saw that most leading brands present services as part of their portfolio, but it was clear that that there are still significant opportunities for many to enhance their competitive advantage through considering services.

In looking at the stands and talking to sales people, we observed 4 levels of engagement in services:

Minimal engagement in services: These were companies that purely focussed on their technology or manufacturing process, with no mention of services in their message.

Services mentioned in passing: Those companies that had no dedicated service area, but literature & presentations that indicated the availability of some service programmes.

Services in the mainstream: There were many companies having an area on the stand promoting services, which was either hidden away or not well supported.

Services a key element of the strategy: There were a few companies where services was clearly a key element of the corporate strategy in terms of visibility and emphasis.

It was interesting to see how some areas of plastic technology have adapted more to services than others.

Looking a the injection molding industry

Within injection molding we looked at approximately 13 different brands and saw that 50% of them had services in the mainstream.  There was perhaps one clear leader, but what surprised us, was that there were 2-3 well known players that had minimal focus on service.

The question for these suppliers is: Can they sustain margins based only on their product and technology?

Looking at  suppliers of integrated blow molding systems it was a similar picture, with the majority of brands highlighting services in their strategy.

Perhaps not surprisingly when we looked at mold-makers & hot runner suppliers, with a few exceptions, there was a greater emphasis on technology, despite the fact that their is a huge amount of collaboration on many projects. In this very competitive segment of the plastics industry it will be interesting to see who retains this strategy, and who will try to differentiate themselves through field & consulting services.

Looking at ancillary equipment  and other machine manufacturers again the focus tends to  be on technology & process with a few exceptions leading with services such as their field organisation, refurbishment or remote diagnostics.

However, nearly all sales people we talked to, even in companies where there was no mention of services, quoted that well known phrase. ‘Sales sell the first product and service the 2nd, 3rd’…..So are these businesses missing out?

Services as a differentiator

Our view is that as the plastic industry matures, technology will become less of a competitive edge and that plastic equipment and tool manufacturers will increasingly turn their emphasis to services to differentiate themselves from the pack.

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