George E. Danis, CEO of Plastic Molding Manufacturing (Hudson, MA), is a man with a mission. Several missions to be exact. In an interview with PlasticsToday, Danis provided some insights into his strategies for success in 2020, how politics plays a role in small- to mid-sized manufacturing businesses and why manufacturing is important to the United States.
PlasticsToday: What worries you about the political atmosphere?
George E. Danis, CEO, Plastic Molding Manufacturing (PMM): The uncertainty. In general, the lack of an industrial, economic strategy over the past few years and even in the previous administration has confused the industry. It will take some time to really settle down, and that is obviously more difficult when we have a confused administration. On the morning of Dec. 3, 2019, President Trump announced that it may take until after the 2020 election to settle the trade war. Remarks like this leave business people like myself uncertain about what’s going to happen tomorrow.
Our government is taking the short-term view and businesses cannot survive that way. [The government] doesn’t care about the long-term outlook. It’s based on thinking there is paradise in the future. Most administrations speak of “hope,” but hope does not bring in any new business or income to pay our employees.
PlasticsToday: How is Plastic Molding Manufacturing doing, and what are you looking forward to in 2020?
Danis: We are very busy currently. We have an exciting year ahead and it’s a very important year for making sure we maintain our competitiveness. We are looking to increase our investment in automation and grow our revenue, as well as grow our employee base.
|A strong advocate of reshoring since the 1990s, Plastic Molding Manufacturing CEO George Danis believes it’s the only way for manufacturing—and our country—to succeed.|
PlasticsToday: Recently, you purchased Phillips-Moldex. How does this fit into your strategic plans for 2020?
Danis: Over the last 10 years we have acquired seven companies. A few were consolidated into our other molding facilities, creating a total of four plants plus Phillips-Moldex, which we acquired on Nov. 8, 2019. We look forward to further welcoming Phillips-Moldex to the PMM family and working toward improving its profitability.
PlasticsToday: As far back as a couple of decades, I had predicted that small-sized, family-owned molding companies would have to attain size/scale or they wouldn’t be able to compete with larger molding operations that have developed through M&A. Are many of these smaller companies having problems?
Danis: Yes, absolutely, I agree. The important element is that manufacturing businesses require a very high capital outlay and, therefore, it’s very difficult for someone to start a business, finance it and grow economies of scale to induce confidence with customers and vendors, and have the infrastructure needed to be successful.
To remain a manufacturing nation, we need longer payment terms on capital equipment. For example, if we can borrow $1 million and pay Federal Reserve interest rates of less than 0.5% and have a long pay back—say, 10 years rather than five—that will encourage small- to medium-sized companies to invest. It’s simple logic to assist manufacturing companies like a lot of our overseas competitors get from government. Manufacturing is the foundation of our economy. As a business owner we have to sign [for loans] personally and pay today’s going interest rate, which is now over 5%. That makes it difficult for us to be competitive with the Chinese or other foreign nations.
Also, the inability of our government to formulate a policy for the capitalization of companies [is a problem]. Allowing depreciation of capital equipment over the first 12 months instead of the longer term, which may be five years, would allow manufacturing companies that are struggling to re-invest in new equipment, automation, productivity and quality.
PlasticsToday: How have you met these challenges and succeeded?
Danis: We have been able to build a strong company by consolidating many of our operations and through customer service to stay ahead of our competition, which tend to be small family-owned companies. I don’t have more clarity into the problems than everyone else in manufacturing, but we’re working very diligently to consolidate because that’s what the industry is doing to compete globally.
PlasticsToday: What’s the primary cause of the failure of many small molding companies to thrive, and why should we care?
Danis: The failure of these small companies is not the ideal situation for the future of our country, because it eliminates that local competitiveness and the ability for small businesses to grow and employ more people in their communities. As a result, you have business owners and entrepreneurs looking to exit the industry rather than investing in U.S. manufacturing.
PlasticsToday: You’ve long encouraged the reshoring of manufacturing to the United States, yet you are also a big fan of working with Mexico and Central America to make this region much stronger.
Danis: Yes, my long-term plan is to convince the industry and companies to bring back their products from offshore or re-tool in the U.S. However, due to the lack of a technical labor force, companies are forced to buy a lot of tools from outside the United States, and these imports have resulted in local job losses, tariffs and businesses leaving our country.
Reshoring has been our objective since the 1990s, when manufacturing was leaving the United States. It is the only way for manufacturing—and our country—to succeed. The unfortunate thing, which makes me unhappy, is that we could have had a much more futuristic policy and had manufacturing economic sovereignty independence, if we cultivated our neighbors from Mexico all the way to South America, where now we depend on China.
A transportation rail link that would reach the southernmost tip of South America to transport goods would greatly help the manufacturing industry. This would allow us to be more competitive in the global market. Transportation today has uncertainty involving navigating through the Pacific Ocean, which takes more than a month and is not cost effective [compared with] bringing products from China.
This is a long-term strategy to reenergize our manufacturing industry with labor that exists from Mexico to the tip of the Americas that would create employment and as a result the whole continent would prosper. We need to help our neighbors to prosper and eliminate the corruption and drug wars by bettering the economy of the people there, and not have immigrants feel the need to come to the U.S. to make a living.
This is one initiative both our industry and our government leaders should have cultivated years ago rather than going to China or other overseas countries or debating building a wall.
PlasticsToday: What are your plans for 2020?
Danis: Our future plans call for improving our processes, organization and infrastructure to be more competitive and be first for our customers, and look for more companies to acquire. We are planning to acquire two more plastic molding manufacturers in 2020. We currently have four to five companies we’re analyzing, but our concern is that they are struggling. We’ve been able to reverse the trend of these companies we acquire because of our low overhead.