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.
As UP&R rings in the new year, we would like to highlight some of our achievements from 2018. We’ll also present the exciting opportunities we’re anticipating for 2019 and beyond.
An Overview of 2018 at UP&R
2018 was another successful and productive year for us at UP&R. We attended a number of industry trade shows, including AAPEX/SEMA, The Precast Show, the Mid America Trucking Show, and the American Concrete Pipe Association (ACPA) Annual Convention.
We used these shows as opportunities to network with customers and industry peers, as well as to gain insights about the technological advances happening in the automotive, precast, rubber, and trucking industries. Attending these events enables us to be informed about the latest industrial trends so that we can continue innovating for our customers’ success.
One of our biggest highlights from 2018 was our acquisition of Gasko Fabricated Products, which solidified our position as one of the leading American non-mixing polymer fabricators. To date, we’ve made five acquisitions, and this was our third within four years. This acquisition brings a host of benefits for both UP&R and our valued customers, including enhanced production capabilities and increased product volumes.
Finally, our signature GOLDLINE® and other Made in USA tarp straps continued to achieve record-breaking success. The GOLDLINE® straps are the most recognizable tarp strap brand in the US, valued by customers for their strength and durability in all weather conditions.
Looking Ahead to 2019 at UP&R
Since 2005, UP&R has been consistently growing. As a result of the valuable tools and experience we’ve gained along the way, we’re expecting to break further barriers in terms of growth in 2019 and beyond. UP&R has a lot of exciting developments in the works for next year, and we’re looking forward to sharing them with you soon.
We appreciate each and every one of our customers, and we will continue to maintain the high standards of quality and service that we’ve exhibited.
To stay updated on the latest happenings at UP&R, connect with us on our Twitter and LinkedIn, or check out our blog.
To be a successful business it is important to develop new customers while still providing excellent service to your existing customers. At Universal Polymer & Rubber we are a manufacturer of rubber molded parts, rubber extruded parts and plastic extruded parts, along with tarp straps for the trucking industry. We are regularly meeting with new potential clients to review their needs and requirements and discuss how we might be able to assist them. This sales development process is not quick like some businesses might think, but requires due diligence done on both sides to make sure the fit is right. Below is an outline of the sales development process.
The Sales Development Process:
Creating the Relationship – The first and one of the most important steps of the process is creating the initial relationship with a potential new client. Getting your foot in the door isn’t always easy and can take time to build trust and understanding regarding the services your company can provide them. This can require much follow up and persistence and usually isn’t as simple as calling up and offering to be the company’s new supplier.
Providing Samples – Once the initial relationship is made, the next step is providing samples or porotypes to show the company you can meet their requirements. This can require multiple meetings to learn the exact specs of what they need, and once that is obtained more time will be used to make the samples to present to them.
Testing of Products and Materials – When the sample or prototype is presented to the client, they will then need to perform testing to make sure it actually meets all their requirements and will fulfil all their qualifications. Many times there can be back and forth at this step as changes are required. By creating a good relationship in the initial step, this can be an easier operation as both sides are looking to develop a successful working partnership.
Ramp Inventory Down from Old Supplier – All the specs have been met, the customer is happy with the product. Is the customer immediately able to buy in bulk from you? Not so fast! Most likely they have a large amount of inventory still on hand, or possibly even on order from their old supplier. More waiting time will be spent as they finish up this entire inventory and then are ready to receive the items you will be providing.
While the sales development process can take a long time, it can be worth it for both sides at the end as a successful partnership has been created. For more information on the products and services Universal Polymer & Rubber can provide for you, please contact us here.
Universal Polymer & Rubber Ltd also known as UP&R by its customers and vendors is a part of the Cypress Companies of Akron, OH. Since its inception in 1970, UP&R has reached out to customers across the globe. It has helped its customers to grow by providing a wide range of polymer solutions. UP&R focuses on manufacturing rubber and plastic extruded parts as well as rubber molded parts. These are manufactured in the manufacturing plants in Middlefield, OH and Tallmadge, OH as well as through partnerships and relationships with other manufactures in Asia, thus showing its global presence.
UP&R sells its products across three continents and into four major markets – transportation and cargo control, construction and pipe manufactures, automotive supply chain and general industrial market. 7-8% of businesses done by UP&R are exported with its major customers in China and Singapore.
If companies are to survive, then they must think globally. This is because the customers are located across the globe and they expect support globally. Another important aspect in doing business globally is the ability to provide consistency across the products. No matter which part of the globe UP&R’s products are manufactured, they have to be of the same quality. In order to achieve this, UP&R has greater control over the quality of the products that are manufactured. The management of UP&R has come up with a long distance supply chain for some products and this has turned out to be a model for manufacturers of UP&R’s size (with a sales range of $20-50 million).
Contact us to learn more about our products and services.
We have some exciting news to share with you—our newest addition to our facility is just about completed! For months, we have been working on building and growing, as ground broke on the new facility in April, and we are excited to finally have the space to move in!
As we mentioned, we first broke ground this past spring after acquiring another company. With the growth to our business, we decided it was necessary that we have additional space. The facility will act as storage and warehousing space and is an add-on to our current building. This construction project also includes new offices and conference rooms, which are twice the size of our current conference rooms.
What will this additional space do for us? First, it greatly enhances our ability to serve our customers, as we are currently utilizing three offsite warehouses to stock our products. Now, we will have everything in one place, allowing for shorter lead times. The warehousing space will allow for material flow throughout the facility as well as provide more stocking space. Due to this, we’ll be able to run more parts and cut down on production time.
We are all very excited to move on up into our new facility! To see how far we have come and the progress of the construction project, take a look at our Facebook photos!
If you work in the automotive industry, you may have heard about the possibility of returnable packaging—sending packing containers back to the supplier in order to be more sustainable and eco-friendly. It was a growing trend in the 1990’s, when more and more people in the industry were pushing for it. So where does returnable packaging stand now, and why isn’t there more of it?
While it seemed like a great idea at the time—who doesn’t want to do better things for the environment?—many soon realized that the cost of returning packaging simply didn’t make smart business sense. While it’s a fantastic idea if the supplier is located a short distance away, it’s not uncommon in today’s logistical environment for a supplier to be located hundreds of miles away. In the case of returnable packaging, someone has to bear the extreme cost associated with its return, and the cost was simply too much.
Personally, we have seen that returnable packaging is not attractive to most of our automotive clients. While we supply 20-25 tier 1 suppliers, only one of those suppliers practices this policy. For the rest, the financial burden is too much. And when it comes to the auto industry, costs are a huge driver, and the supply chain must do what’s most cost effective in order to remain competitive and keep a healthy bottom line.
Furthermore, many companies who once partook in the practice found that returning packaging proved to not always be as positively green as people had hoped. As an example, when Toyota first began implementing waste reduction programs, one of their measures included a returnable packaging system. However, shortly after its implementation, they found that while trying to be more sustainable, the opposite was happening. According to a Toyota executive, they soon realized “we were reducing a waste that was formerly recycled, and our recycling rate got worse. So our strategic indicator was telling us to not implement more returnable packaging programs.”
While we’re all mindful of sustainable, efficient business, it’s a competitive landscape, and, as in any industry, ideas that are not practical are not going to be able to become universally adopted.