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 recentlydescribed 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.
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 blog, Twitter, and LinkedIn to stay up to date on current industry news and trends. For more information on our products and services, contact us today.
UP&R is proud to announce that we have just completed our fifth overall acquisition, and third in the last four years. Our continuous acquisition strategy has cemented our position as one of the largest non-mixing polymer fabricators in the United States. At UPR, we are always actively looking for additional polymer parts manufacturers that fit our perpetual approach.
Who did we acquire this time? Gasko Fabricated Products of Medina, OH! Gasko is a high-volume, die-cutting converter of polymer and hybrid materials for gaskets, seals, and diaphragms. Such modules are used for power take-off and transmission, and engine management/fuel delivery system applications in the automotive, marine, and outdoor power equipment markets.
Over time, the Medina facility will transition to our Tallmadge, OH facility, attaining synergies, economies, and shared die-cut expertise.
John Zielinski, our Executive Vice President, commented, “Customers and prospects have been asking for a wider variety in our converting, and through this acquisition, we will now be able to provide for the market’s need.”
What Sets Us Apart from the Competition
With about two handfuls of competitors within a 50-mile radius, we unremittingly set our self apart from the many other polymer companies in Northeast Ohio. Acquisition numbers from our wide-range of capabilities allow us to achieve a high-level stature. Our competitors include other rubber molders who tackle tarp straps, but similar manufacturers have limited capabilities that lead to our success as a business. At UPR, we have four different types of tarp straps including our own brands, and multiple layers to each brand.
Through our assortment of brands comes a fluctuation in price point too. Businesses, both small and large, will be able to find an answer that fits their needs.
Additional competitors include extrusion and molding, but the competition only supports one focal point – either, or – not both. Here, at Universal Polymer, we have the support to focus on rubber molding, rubber extrusions, plastic extrusions, tarp straps and gaskets, because of the diversity of our qualified, in-house, team experts. We are a one-stop-shop for all of your polymer solutions for the transportation and cargo control market, construction and pipe manufacturers market, automotive OE supply chain as a Tier II and Tier III, and the general industrial market that comprises several well-known global manufacturers.
Our one-stop-shop doesn’t only serve the end product of a tarp strap, a pipe gasket, window gasket, tire or more. When we say everything is done in-house, we mean it. From die-cutting to fabrication, both your polymers and rubbers start and end with us. UPR beats out the multiple stops that you would have to take to buy extrusions from one manufacturer and your required molded parts from another.
As a robust and elite manufacturer, there’s no worry, no wasted downtime, no hassle. All of our different parts are preplanned, engineered, designed, and already taken care of with you in mind. Every piece you need already fits perfectly together. With UP&R, you get all of the aspects of a small business manufacturer with the quality of a big manufacturer, meaning all of your bases–quality AND quantity, are covered “under one roof.”
With the Gasko acquisition, we continue to supply and have increased supplies for the automotive, marine, and outdoor power equipment industries, plus further industrial markets too.
Immediate customer-facing benefits include:
Both locations, Medina and Tallmadge, have historically specialized in fast turn-around, high-mix, high volume production, making them highly complementary. Plans include the move of Medina’s manufacturing into our Tallmadge location, an IATF-16949 and ISO-9001 certified production facility.
A Stronger Product Line for Customers – The Gasko product line, when added to our already broad product line, will enhance the total basket of goods that UP&R offers to our current customer base, and further, to market.
Enhanced Capabilities – While UP&R and Gasko have shared similar historical focus’, each excels in specific, but complementary areas. We look to offer Gasko customers a more full range of offerings – molded and extruded rubber parts, and die-cut parts, from IATF16949 certified facilities – that will provide vendor consolidation opportunities in a lean manufacturing world.
Our Ideology at UP&R
Because we put continuous improvement into our day-to-day, we get better each day. Started in 1970, we have continuously operated since inception. In 2018, our staff is proud to say that we are wiser today then we were just yesterday. And with additional resources now onboard, we’ll be able to continue forward with our successful business model.
Today, UPR stands ready to help your company compete and grow. At UP&R, we are committed to providing you first-rate service, timely service, and quality – every single time!
How We’ve Grown Since the Beginning
Universal Polymer & Rubber started out as a tarp strap and pipe gasket manufacturer. We have remained true to our roots by building upon that initial foundation. Starting off as a smaller size business, we leveraged our expertise in pipe gasket development and manufacturing, to gain business in other interwoven product applications including window gaskets, tote gaskets, and tires. Currently, we have branched out into other markets, and through our market diversity and versatility, we have been able to learn from all markets to apply best practices from each market application to the next.
To this day, we remain one of the largest suppliers of pipe gaskets in North America.
In recent weeks there has been much talk about President Trump putting tariffs on a wide range of products. Initially, there are two industries that will be greatly impacted: steel and aluminum.
Inflation could soon be hitting raw materials which will impact packaging, transportation, cargo, the supply chain, automotive OE supply chain, and general manufacturing. Rising prices will greatly impact Japanese automakers, but on the home front, small and mid-size manufacturing companies may see the biggest challenges moving forward, as they have less room in their budget for losses.
Consumers are likely to resist the cost increases that companies will be charging. Many millennials who haven’t seen increases like this may been surprised by how quickly things are changing. This type of tidal wave can disrupt all aspects of business and at each level of the supply chain. These changes need to be addressed with small and mid-size businesses before the impact is too great to bounce back from.
As a leader in custom manufacturing for polymers, rubber, and molding, Universal Polymer thinks small and mid-size manufacturing and mom and pop shops need to be prepared themselves for the changing trade climate. Finding ways to counteract the tariffs is imperative to stay alive in today’s market as other countries fight back against these policies.
Universal Polymer & Rubber is a leading manufacturer of rubber extrusions, plastic extrusions and rubber moldings including compression moldings, transfer moldings, and injection moldings. To stay up to date on issues affecting manufacturing and to learn more about us, we invite you to read our blog, follow us on Twitter, connect with us on LinkedIn, and like us on Facebook. To learn more about how we can help you with the right product for your project, we invite you to contact us today.
When the demand for one rises or falls – the other is impacted, either directly or indirectly. The debacle of 2007 and 2008 brought the economy to a screeching halt and rubber product manufacturers all over the country felt the pinch.
But now cautious optimism is in the air. The Dow Jones has shown promising signs since August 2017. Even though small and medium businesses are uncertain about reaping the expected rewards with the administration change – the morale of the country is up.
It’s estimated that the US will see rubber revenue stretch to touch the 20 billion dollar mark before the year is up.
Automobile, Construction, Supply Chain & More:
Custom rubber parts and extrusions are indispensable.
The automobile industry has grown at a telling rate and it alone is set to consume about $28.6 million worth of transfer coating rubber coated fabrics. Despite the widespread penetration of foreign tire brands, U.S. based businesses are still holding on to the lion’s share of the dollars pie. These two factors will work synergistically to boost rubber demand in the very near future.
Construction and housing also happen to be large and thriving rubber markets. Vendors and workers in the sector are looking forward to 2018 because the running year has seen a record number of building permits fly from the local municipality offices. This can only mean one thing – large hauls of channels, connectors, display components, door gaskets, door seals, edgings, face plates, finned tubes, furniture parts, gaskets, insulation, sealants, seals, spliced gaskets, signs, toy parts, tubes and tubing delivered to the chugging housing engine.
Supply chain & transportation do not lag far behind. Their cumulative share is an impressive 8% of the GDP and providers in this market look to rubber manufacturers for component parts, tie downs, and durable tarps.
Serving Beyond Expectations:
Universal Polymer & Rubber Ltd. operates from a place of integrity. We have strategically expanded our production capacity and our ability to fulfil custom design demands with an eye to this inevitable surge in the rubber industry.
We are already positioned – both in terms of reputation and equipment sophistication – to be a reliable partner to vendors who will soon need to order larger shipments of rubber molding and extrusion items than ever before.
To keep up with the changes and to ride the surf when the wave finally arrives, please follow us on Twitter & LinkedIn.
For almost half a century Universal Polymer and Rubber has been a market leader in the domain of rubber and plastic extrusions and custom created products. During that time the business has placed a great emphasis on client satisfaction and in 2017, when most production units in Ohio are struggling to stay afloat, we have not only managed to expand our operations but have also been recognized as a “Made in USA” success story by the renowned publication Construction in Focus.
5 Golden Rules from Those Who Have Braved It All:
Manufacturing may be the lifeblood of the nation, but that doesn’t render businesses in the industry immune to the cycles of supply and demand.
There are challenges to be circumvented. And brands that can’t establish themselves as purveyors of quality items falter and fail.
Companies that set themselves apart from the competition do so on the dint of hard work, a desire to learn and evolve an insightful understanding of industry dynamics.
Here are 5 hard won lessons from the veterans at Universal Polymer & Rubber Ltd. to help you ace running a manufacturing company:
1. Be Practical and Rooted in Facts: It is easy to get carried away by the avalanche of rumors and fallacies saturating the industry grapevine. Hyperventilating over a future scenario that may or may not transpire isn’t the best use of time or resources. Projections, estimates and market predictions are handy tools to have, but only when they resonate with the take and understanding of your company and client base. Instead of chasing “what ifs,” manufacturing businesses must address known issues like the growing skill gap in the industry and the dwindling interest in core manufacturing as a career choice for graduates with well thought out, strategic actions like participation in and promotion of Manufacturing Day.
2. Be Discerning when it Comes to Staffing: Talent shouldn’t be hoarded – even in manufacturing where there is a real absence of qualified candidates. Benched employees lose their finesses and also suffer from disengagement. They negatively impact the morale of the rest of the workforce. However, rapid expansion is a possibility given the trend of reshoring over the years. A fine balance between staffing and the business level is required. It is the worth the investment to create a pipeline of “just in time” recruitment possibilities to ensure the best utilization of labor.
3. Understand that Acquisitions Take Time to Produce Results: Acquiring assets is a great way to rapidly increase sales. How?
A. The acquired assets transfer their goodwill and clients to the parent company.
B. The acquired assets may possess complementary skills that help companies penetrate a whole new market full of possibilities.
Universal Polymer & Rubber has made multiple acquisitions and learnt from each undertaking. The most important take-away is the fact that all good things need time to mature. Acquisitions are no different. They have to be assimilated and worked on before they can positively influence bottom-line numbers.
4. Pay Attention to Details: Manufacturing is a highly competitive industry. Maintaining a legacy of quality is essential. To this effect companies must constantly improve following the principles of Kaizen. Certifications like ISO 9001:2008 and ISO 16949 offer benchmarks of excellence and provide guidelines that reduce waste, bring down defects and boost customer satisfaction.
5. Balance Long Term & Short-Term Goals: While it is great to have a 50,000-foot view of the business operations, it’s the day-to-day activities and meticulousness in executing them which keep a company strong and profitable. A game changing business not only stays abreast of latest technological breakthroughs, it incorporates the insights in everyday activities for tangible results.
Chaos and uncertainty aren’t ideal conditions to operate in, but they’re facts of life in our business. To that end, we do everything we can to see our customers through to the other side.
This year has been an unpredictable one for us. Months that are typically busy have been slow, while historically slow months have been booming. In these tough economic times, everyone is cutting inventory. Many times companies aren’t placing orders to manufacturers until they get orders from their customers—and they want to make sure their customers don’t see any delay. It’s always a challenging position to work under the gun, and while we don’t prefer it, we’re here for our clients. In these unexpected busy periods we’ve come through.
Uncertain price points are also a reality. Here at universal we work with synthetic rubber. 75-80% of that rubber is petrochemical based—in other words, oil based. Ingredients such as polymers, process oils and carbon black are used to form the rubber compounds we work with, each ingredient with their own suppliers. Over the last ten years we’ve seen the number of those suppliers cut in half. Less suppliers means less competition, which means higher prices and increased price inelasticity. All of this leads to an aggravating situation: when oil prices go up, so do petrochemical prices, but when oil prices go down, petrochemical prices are slow to follow. Our clients see the news about falling oil prices and call to ask why we haven’t lowered our prices to match. And while we can’t make
While we can’t do anything to lower prices, we do everything we can to shield clients from sudden increases due to a rise in oil prices. We control all of the variables we can within our four walls to maintain consistent pricing.
So while the times aren’t ideal, the service you get from Universal Polymer and Rubber is. We’re here to get you top quality products when you need them, for a fair price.