Tag Archives: Rubber

The Cost of Chaos, Part 2: Oil Price & Trade War Uncertainty Continues

As we discussed in the first part of this blog series, one of the best ways to create long-term response plans to volatility is to stay informed. “Ongoing volatility” is a great way to summarize the changes in oil pricing and the status of the U.S.-China trade war. Uncertainty surrounding market and political events can mean additional time and resources devoted to weathering the “storm,” so we’re keeping track of them to the best of our abilities, and relaying what we’ve learned.

Read on to discover the latest developments in the oil market and trade war.

Oil Price Developments

Oil prices rapidly fell throughout the first months of 2019, but is on the rise once again as of the first week of April. While October 2018 saw oil prices of over $84 per barrel, in February 2019 they plummeted to around $55. However, prices have been on a surging uptick (at faster rates than predicted), and as of April 4th Brent oil prices exceeded $70 per barrel for the first time in nearly 5 months.

What’s Causing the Oil Price Increase?

A single surge isn’t proof of a trend. However, analysts cite the tight global supply as a probable cause for the price increase. Part of this may be due to OPEC’s plan to cut oil production and supply by 1.2 billion barrels of crude oil per day in April.

This limit on production is a carefully organized counter-balance to the recent months’ drops in oil prices. By restricting the supply, OPEC hopes that the price will correct itself. The measure also aims to help restore the economies of OPEC countries that depend on oil exports.

According to President Trump (stated on Twitter in February), “Oil prices are getting too high. OPEC, please relax and take it easy. World cannot take a price hike — fragile!” However, the Saudi Energy Minister Khalid al-Falih returned that the OPEC is indeed taking it easy, and emphasized that overall pricing stability is the highest priority. Price stabilization is essential for reliable supply chains. When manufacturers and distributers can predict upcoming costs, they can more accurately budget for their own processes.

U.S.–China Trade War Developments

Economic turbulence and pricing competition aren’t the only forces hitting markets. With the ongoing talks between China’s President Xi Jinping and President Trump, both domestic and international markets have been waiting to hear about the future regarding:

  • Oil markets
  • Intellectual property rights
  • Tariffs on Chinese-manufactured goods
  • Stability for domestically produced parts and equipment

Recently imposed tariffs have hurt affected industries, particularly manufacturing. These tariffs are currently at 10%, and the planned raise to 25% is currently on hold in a temporary 90-day agreement. A point of continuous debate is that China would like to remove all tariffs involved, while Trump insists that some tariffs remain for the U.S. to have leverage over China until all resulting agreements are fulfilled.

Is an End to Trade Tensions in Sight?

China and the United States have been negotiating several of the items listed above to reach compromises without imposing further tariffs or intensifying the trade war. According to President Trump, there has been “substantial progress” in reaching a deal. The progress may be enough to do away with the previously planned tariff increases from 10% to 25%.

However, if these increases are indeed imposed on the 5,700+ products outlined by the Trump administration in June 2018, the resulting pricing instability will undeniably hurt industries on both sides of the Pacific. Manufacturers that rely on rubber and polymers in particular, such as the automotive and medical technology fields, will especially feel the fluctuations within the supply chain.

Current progress in the China-U.S. negotiations has so far delayed new instability. As of April 4th, Trump has relayed that trade talks are going well, and that both sides of the table plan to continue talks and sign a final trade agreement soon. UP&R will be closely tracking this progress to provide updates on potential impacts and pricing considerations throughout the upcoming weeks.

High Quality Products During Turbulent Market Conditions

Maintaining a secure supply chain is absolutely crucial to every industry, including those of us – including UP&R – that rely on oil compounds and rubber. Although international markets may be in a state of flux, you can trust that UP&R will remain consistent in delivering the highest-quality products every time. Our rubber and plastic extrusions, rubber moldings, and die-cut parts will continue to be available at reasonable price points.

We have over 50 years of rubber and plastic extrusion experience, with specialties across many industries. Although political tension, oil market fluctuations, and international trade uncertainties may create worrisome headlines, you can always rely on Universal Polymer & Rubber. Contact us today to learn more about our capabilities and services.

The Cost of Chaos: Economic Challenges Going Into 2019

The start of 2019 carries with it several uncertainties from 2018: for example, the instability of the global supply chain caused by the United States’ trade war with China, and volatile oil prices brought about partly by ongoing situations within Venezuela and the Middle East. Despite efforts by the federal government to alleviate some of the negative effects of these events, many small and medium-sized businesses must continue seeking new ways to adapt to an unstable global market.

Here we outline these causes of uncertainty and how they impact businesses like UP&R:

Volatile Oil Prices

Oil prices have fluctuated dramatically over the last 12 months, disrupting supply chains for manufacturers that rely on this resource. For example, between mid-September and late November 2018, oil prices dropped from approximately $74 per gallon to just $50 per gallon in a span of six weeks. This creates a frustrating situation for oil consumers, who in turn have a more difficult job ascertaining when to purchase oil and how much of it.

Forbes recently described two key factors that may have caused this latest drop in oil prices:

Uncertainty in Future Price Outlook 

Oil traders base their pricing as much on their perceptions of the oil market’s direction as they do on the oil’s value itself. If traders expect an increase in oil supply, they quickly lower their prices to undercut their competitors. Similarly, if oil traders have reason to believe demand will rise or oil supply will fall, they raise their prices accordingly.

In late 2018, a boom of American shale oil production coincided with an increase in Arabian drilling to counteract an unexpected thaw in sanctions imposed on Iran. This created fears of an oil supply glut, as American, Arabian, and Russian companies stepped up production to prevent their market share from going to Iranian producers. While quick decisions like these are impossible to fully predict, it’s important to monitor the political situation surrounding the oil trade (as well as other commodities markets that make up a particular supply chain) to best anticipate when to procure.

Slow-Changing Supply and Demand

Other markets can balance out changes in supply and demand fairly quickly. For example, the cotton industry can easily account for changes in demand because it’s based on an organic substance that’s relatively quick to produce. If cotton’s in high demand, farmers can simply plant more of it and expect to see the positive effects within the upcoming seasons.

The same cannot be said for oil suppliers. Oil is a more finite resource, and it can take over 10 years to develop new wells. Only very large price changes can rebalance the supply and demand for oil. For this reason, it’s harder for the supply of oil to adapt to changes in the market, which ironically makes its pricing more volatile. If oil traders anticipate that they may need to sit on vast stocks of oil while demand is low, they’ll price it more cheaply to move as much of it as possible. For this reason, it’s also important to monitor changes in the oil market so that you can buy oil when nobody else is.

How This Affects Us

Because UP&R products consist mainly of oil-based compounds, we’ve had to shake up our strategies to account for worldwide fluctuations. We take extra care to monitor the latest fluctuations in the oil market. Oil prices directly impact our ability to provide cost-efficient rubber products. Therefore, recent volatility in the oil market means that small- and medium-sized businesses have to devote more resources – one notably being the amount of time invested – to monitoring developing situations instead of focusing on their products and branding.

The Trade War With China

In early June, the Trump Administration imposed tariffs on over 5,700 products that the United States regularly imports from China. Although intended to bolster United States production, these tariffs perplexed American manufacturers who rely on Chinese-made parts. This latest round of tariffs particularly affected UP&R because Chinese manufacturers create many of the rubber and polymer components that we turn into finished products. UP&R is diligently working to protect its margins in a this time of trade war uncertainties.

Although the long-term effects of the trade war are yet to be seen, in the short term, many small- and medium-sized businesses have had to raise prices in response to price changes in their supply chain. While most of these price changes don’t affect consumer-oriented products, they have driven up costs particularly in the automotive and medical manufacturing fields. These industries rely heavily on rubber- and plastic-based products to build gaskets, seals, brake pads, and tires (for automotive applications) and extruded plastic tubing and device housings (for medical equipment). UP&R also has been forced to raise its prices as this industry operates on rzor thin margins, and any increased must be calculated into the selling price.

Quality Rubber Solutions at UP&R

Despite an uncertain trade climate and the roller coaster ride of determining when to buy oil, we at UP&R seek to provide the same high-caliber products and services that our customers have come to expect. We’re confident that we can weather this storm of economic factors without affecting our clients’ bottom line.

If you would like to learn more about our work or quality rubber and polymer solutions, contact us today.

How New Chinese Tariffs Impact Small-Mid Sized Manufacturers

Recently imposed Chinese tariffs on U.S. rubber imports will have significant impact on the small to medium American manufacturers that support industries such as automotive, medical equipment, petrochemical, and plastics. As part of an increasingly contentious trade war, the latest Chinese tariffs call for a 25% increase on an array of goods, such as those used in rubber and polymer component fabrication.

The Harmful Impacts of a Trade War on Small Businesses

Small- and mid-sized manufacturers in America specializing in rubber moldings, extrusions, and injection-molded parts will be forced to find ways to counteract the adverse effects of rising inflation on raw materials. Petroleum is a primary component for synthetic rubber and polymer production, so the most recent tariffs mounted by China will no doubt force small manufacturers to increase their prices to compensate.

In early June, the Trump administration launched its first wave of tariffs against Chinese-manufactured equipment, including the injection and transfer molding machines commonly used for extruded rubber and plastics. This has only compounded the difficulties of the situation for smaller manufacturers, causing them to seek alternate sources for the rubber fabrication machinery they rely on to create products and components. The long-term effects are expected to influence manufacturers serving in the custom and OEM markets, including those facing downward pressure from larger partners that have also been affected by tariffs from both sides.

In automotive production, rubber-based and plastic-based products such as gaskets, seals, brake pads, and tires are on the front lines. Medical equipment companies rely on custom extruded plastic tubing, pump parts, and device housings. With another round of 25% tariffs recently finalized by the Trump administration, small and custom manufacturers must brace for the additional escalations that will inevitably follow.

Plan Ahead, Avoid Potential Pitfalls

The trade war could potentially expand into industrial chemicals and fluoropolymers that are used in rubber gaskets and extruded plastic profiles, as well. Many of those materials are chemically formulated for high-temperature ranges, corrosion resistance, and anti-weathering, making them a crucial requirement for operations with harsh environments. A domino effect in pricing will no doubt impact buyers down the supply chain in a range of industries. Fortunately, however, many small business manufacturers are doing what they can by shifting resources to other markets, reducing production, and tightening profit margins.

Industry at UPR

At Universal Polymer & Rubber, our team is committed to staying on point for our clients, leveraging seasoned and innovative methods to ensure that we maintain the same service standards despite the trade war impact. We work hard every day to apply our years of small business manufacturing expertise to finding ways to ensure that our clients get their products on-time, within budget, and without sacrificing quality.

Follow our blogTwitter, and LinkedIn to stay up to date on current industry news and trends. For more information on our products and services, contact us today.

Learning & Evolution Continues in Manufacturing with Industry Trade Shows

Manufacturing at its Strongest Since 2004

The long-promised acceleration in US manufacturing may be just around the corner.

2017 closed strong. In fact, the numbers peg it as a favorable year of the likes of 2004 when the depredations of recession hadn’t tarnished profits.

With the morale running high, it is a golden time for all providers to grow, evolve and get equipped for the spike in demand that may follow soon.

And what better way to learn, network and be seen than at some of the most popular, progressive and authoritative trade shows in the country?

Universal Polymer & Rubber Ltd. Is on the Road

February and March will see us rubbing shoulders with manufacturing luminaries – sharing insights, presenting innovations and probing areas that rubber and plastic moldings and custom extrusions fall short in.

These occasions always spark fresh activity at Universal Polymer & Rubber as we return to the drawing board to brainstorm and improve industry solutions.

This year will be no different.

We are looking to not only foster relationships but also a deeper understanding of what we can do to serve client industries that much more efficiently.

The first stop is the Precast Show, held over February 22nd & 24th at the Colorado Convention Center. It is an endeavor by the Precast Organization to bring together contributors and stakeholders who regulate and disrupt this key market. Precast and rubber may seem to belong to different worlds, but the strength of the former often relies on the flexibility of the latter as rubber is the sealing element of choice that maintains the integrity of complex precast structures.

We will be at booth 521, ready to engage with precast aficionados.

Next,  from March 22nd to 24th we’ll be at the Kentucky Exposition Centre participating in the largest annual heavy-duty trucking event in the world – The Mid America Trucking Show.  The perception of trucking has transformed rapidly over the past decade and it is in part to shows like the MATS where educational seminars and live product demonstrations infuse the raw power of trucks with the cutting edge technological strides made in the fields of AI & Big Data.

The outlook for truck sales is optimistic for the next several years and we look to be right in the middle of the upsurge.

Finally, the American Concrete Pipe Association (ACPA) Annual Convention will be happening in San Diego over March 24th through 27th. We look forward to learning more about the technological improvements driving the industry.

 

Stay in Touch

If you’re like us and want to stay abreast of breakthroughs in the world of manufacturing, follow us on the blog, Twitter & LinkedIn.

Or you can contact us for a custom quote.

UNIVERSAL POLYMER SOARS WITH RUBBER TECHNOLOGY ADVANCEMENTS AND RUBBER EXTRUSIONS

The extrusion process is the mainstay of the manufacturing industry. It is relatively affordable and leads to the production of precisely shaped two-dimensional objects in a continuous line or flow. It allows manufacturers the freedom to create end deliverables in large batches and then serve multiple customers by cutting the extruded products to the desired length and shipping them out to the buyers.

Extrusion allows strict adherence to customer specifications. Since the process in itself is not dependent on a plunger or a clamp (as is injection molding), it can accept brittle raw material as input and work with it for a satisfactory result!

Rubber is no different. The elasticity of rubber renders it impervious to stress. It can return to its original form without any signs of distress and thus extruded rubber offerings are immensely popular all over the world. From insulations and seals to gaskets and power equipment parts, they hold their sway because of their robustness and pliability – a unique combination.

THE ACTUAL RUBBER EXTRUSION PROCESS:  

Extrusion processes never vary too greatly. Thus rubber extrusion is intrinsically similar to plastic extrusion because it relies on the speed of the rotation screw of the machine to push the raw material down the length of the extrusion passageway and uses heat and pressure to melt the rubber.

But there is a major difference between extrusion and other rubber manipulation techniques. The initial lump is always un-vulcanized. So that the drawing of the products from the die is easy and the deliverables align beautifully with the original request by the buyer.

The soft extruded offerings are then cured to provide stability and strength.

UNIVERSAL POLYMER AND RUBBER L.T.D. OFFERINGS:

Universal Polymer and Rubber is an ISO 9001 certified company that is widely renowned for the quality of its service and the best practices followed by its experts to display mastery over a wide range of rubbers and polymers.

Its extrusions meet ASTM, SAE, and Mil specs depending on the nature of the order and the type of raw material being used. It has collaborated with construction, automotive, transportation, glass and window, drainage pipe, and other outdoor industries for well over four decades and takes care to ensure that post vulcanization shrinking or swelling doesn’t impact the dimensions of the manufactured deliverables adversely.

Please contact info@universalpolymer.com for a custom quote.

Ohio Manufacturing

The rebound in manufacturing since the Great Recession began in 2009 has been incredible, and it has helped to spur on our country’s economic recovery. Throughout the United States, some states are more involved in the manufacturing sector than others. Here in Ohio, we are one of the top five states in the country in regards to manufacturing, meaning our state is one of the leaders in the economic recovery of our country. Here are ten facts you should know about manufacturing in Ohio:

  1. In 2013, Ohio had a manufacturing output of $99.83 billion of goods, the fourth-largest output in the nation. Ohio has been in the top five by manufacturing output every year since 2008.
  2. This output accounts for 17.66% of the total gross state output.
  3. If Ohio’s manufacturing sector was its own country, it would rank 64th in the world, with a greater output than countries like Belarus, Sri Lanka, and many more.
  4. Manufacturing employed over 682,600 people in 2014, the third most of any state.
  5. Since 2009, Ohio has added over 68,000 new manufacturing jobs.
  6. Manufacturing jobs in Ohio pay well – while the average annual compensation for all non-farm employment was $46,654 annually in 2014, for manufacturing, the average compensation was $69,951.
  7. Ohio is home to numerous large manufacturing companies – Procter & Gamble, Marathon Petroleum, Sherwin-William, AK Steel, Goodyear Tire & Rubber, and Crown Equipment are just a few that have headquarters in the state.
  8. All together, including us here at Universal Polymer, there were 13,045 manufacturing firms in Ohio as of 2012.
  9. Ohio’s top manufacturing industries are transportation equipment, fabricated metal products, machinery, food and manufacturing, and plastics and rubber products, in that order.
  10. From 2009 through 2013, Ohio ranked either first or second every year in regards to manufacturing growth of sites that created 50 jobs, had 20,000 square feet or more of manufacturing space, or had over $1 million in investments.

As you can see, Ohio is an extremely successful and important state when it comes to manufacturing, and at Universal Polymer and Rubber, we are extremely proud to be part of it. We look forward to Ohio continuing to be a national powerhouse in the manufacturing sector. If you want to know more about Ohio manufacturing or you are interested in being part of it through a career in manufacturing, get in touch with us or The Ohio Manufacturers’ Association at www.ohiomfg.com.

Mixing the Right Batch – The Importance of Rubber Chemists

Manufacturing rubber compounds is a lot like baking a cake: it all comes down to having the right recipe. And just like any good recipe comes from a good chef, a high quality rubber compound is devised by a skilled rubber chemist.

A rubber chemist’s job starts when they receive an ASTM specification from a manufacturer. That spec dictates the needs of the finished rubber compound, from required hardness, strength and elongation, to necessary ozone and temperature change resistance. From there, the rubber chemist sets about crafting a compound that meets three challenges:

  1. Design for Application: The compound must satisfy the requirements of the ASTM spec.
  2. Design for Manufacturability: The compound must retain its desired characteristics after being processed in the manufacturer’s facility.
  3. Design for Market: The compound must be the lowest cost possible while still achieving 1 and 2.

Creating a compound that meets the necessary requirements on paper is different than creating one that satisfies real world conditions. Ensuring the manufacturability of a rubber compound means walking it through the manufacturing process it will undergo—be that extrusion, molding or some other process—and seeing how the compound reacts in use. A skilled rubber chemist understands compounds, chemical interactions and end use applications—in short, they understand the process of turning raw rubber into a finished part.

To begin their work, a rubber chemist will mix rubber in one or two pound batches, testing each until they hit upon a compound that satisfies all three design challenges. From there, they’ll typically move up to a full batch, then continue to scale up. As they do they’ll make sure that the proper mixing time, mixing temperature and weigh ups (the weights and percentages of each component of the rubber compound) are observed. A rubber chemist will follow their compound through the mixing process,  and often through the rubber manufacturer’s own trial process as well.

Rubber chemists play an integral role in the manufacturing world. Wherever a rubber part is involved, the process of manufacturing that part began with a rubber chemist. Right now there is a shortage of skilled chemists in the rubber industry. The ones who have reached retirement age are often paid to stay longer as anxiety builds about a shortage of new chemists entering the field. As we discussed in a past blog, the task of motivating the next generation falls to all of us currently working in manufacturing. Spurring students to pursue  careers in rubber chemistry will ensure that the rubber manufacturing industry stays strong for years to come.