Effects of the US-China Trade War on Plastic Injection Moulding Companies

There is a trade war that is currently going on between the United States and China. This is going to affect the plastics industry, especially plastic injection moulding companies with China sites like ours.

Since companies like Kore Industries supply to North American injection moulders, we’ve done some research and looked into what they have to say in their USTA filings.

What does Plastic Moulding Companies have to Say about the Trade War?

Plastic processors who get some of their moulds from China, argue that there are many negative effects that will harm their negotiations if the tariffs are reinstated.

Effects-of-the-US-China-Trade-War-on-Plastic-Injection-Moulding-Companies.jpg

  • Plastikon Industries, Inc. requested for a “one-time exclusion” for the moulds they ordered from China. This is a project that began in 2017 for a US automaker and was set before the tariffs were discussed. The company argued that a 25% tariff will bring significant economic hardship. It can force the cancellation of a multiyear contract, which means job loss to 600 workers in their Kentucky plant.
  • Other plastics companies, including Keter U.S. Inc, a plastics houseware maker, made requests similar with Plastikon’s and cited that higher tooling costs will make manufacturing in the US lose jobs and be less competitive in the market.
  • International Automotive Components Group North America submitted 10 requests for mould exemptions, saying that their customer, Ford Motor Co., specifically chose its Chinese mould supplier. Furthermore, they argued that the mould making industry in the US is not capable of meeting its standards.
  • Faurecia U.S. Holdings, Yanfeng Automotive Interior Systems LLC and Forteq North America Inc. also submitted a number of requests for mould exemptions stating reasons such as increased costs of vehicles and slow vehicle development.
  • Custom injection moulder, Sajar Plastics, said businesses face longer lead times when moulds are built by US moulding companies, which take 18-20 weeks for each mould to be built compared to the less than 4 weeks it takes Chinese companies.
  • Mack Molding Co. stated that “many domestic mould shops have a workload that prohibits us from getting fast deliveries on tooling to support our customers” which leads them to have their tooling built in China.

As you can see from a small excerpt from the numerous submission turned in by the plastic processors, there are certainly legitimate concerns on the tariffs.

Mass-production-of-plastic-injected-parts.jpg

In essence, here are the main points of their arguments against the tariffs:

  1. Higher tooling costs would lead to economic hardship and eroding US manufacturing competitiveness in the international market
  2. Longer lead time and slower development

However, we at Kore believes that how long this trade war is going to last is somehow not so important.

RELATED SERVICES: Precision Injection Mold and Molding

“With the tariff, we believe China-based tool shops that creates great value and customer experience would survive.”

Alternatively even in the absence of tariffs, the China-based shops that are not differentiated and has substandard service to the customers would perish.

We would point out in the filings that many contract manufacturers and injection moulders are planning or already sourcing from alternative low cost countries such as Eastern Europe, Vietnam, Thailand, to western countries such as Canada and Portugal.

These countries are all competitive in their own space with respect to China. For example, costs of larger injection moulds build in Canada can be comparable to the ones built in China. So it’s really not about where the moulds are fabricated but the type of moulds.

It’s all about value creation through specialization.

We at Kore Industries believe in specialization and we specialize in:

With the precision gear moulds, the multi-shot moulds to the multi-parting line stack and Tandem moulds we are able to compete globally, with or without the tariffs.

If you have concerns about how this situation will affect your business and what steps you should take, simply send us at Kore Industries a message through the Contact Us/Get A Free Quote button and we will discuss your queries without any obligation on your part.

RELATED SERVICES: Precision Plastic Gears

GET A FREE QUOTE Today!

Contact us

Comments are closed.