A Guide to Finding a New Injection Molding Company
Quality issues, long lead times, and poor communication can signal it's time for a new injection molding company. Learn what to evaluate before switching.
There are plenty of variables that affect the cost of an injection molded part. Two of the hardest to predict are tariffs and resin pricing.
Tariffs can quickly change the economics of an overseas supply chain, while resin pricing is affected by a variety of factors that can wildly change how much you pay per part. Two different issues, but ones that are outside forces that can wreak havoc for OEMs and other buyers.
While businesses can’t stop these forces from impacting costs, they can control how they prepare for these issues. In this article, we’ll break down how both tariffs and resins affect plastic injection molding costs and how businesses can protect themselves against rising prices.
The biggest challenge with tariffs isn’t necessarily the tariff itself. It’s uncertainty.
If you know an imported component will carry a specific tariff for the foreseeable future, you can build that cost into your forecast. The problem is that you don’t really know what that rate will be when your next production order is placed.
That uncertainty makes long-term planning difficult. An initially attractive price can become less alluring if the tariff changes in six months, particularly after thousands of dollars have already been invested in tooling overseas. Buyers also need to be aware of the following problems posed by shifting tariffs.
Tariffs can make supplier price increases more painful because the higher part price can also increase the amount paid in tariffs.
For example, let’s imagine an imported part costs $1 per piece and is subject to a 40% tariff. If that supplier raised the part price by $0.50, this new price affects both the base part price and the tariff.
Original price:
$1 (base) + $0.40 (tariff) = $1.40
Increased price:
$1.50 (base) + $0.60 = $2.10
As you can see, that price increase affects both the part itself and the tariff, resulting in a $0.70 increase per part. This difference can significantly change the economics behind the original sourcing decision, especially over large numbers of parts.
It’s hard to plan ahead when a variable is so unpredictable. A tariff that’s 40% today could swing to either 20% or 60% in the near future, and both present their own challenges.
Essentially, the problem is that you don’t know what the tariff will be in six months. When you’re forecasting, you need to put in enough of a buffer where you’re in a safe position. Too much of a buffer means that you have additional funds that you could allocate elsewhere if you didn’t need to have wiggle room for potential increases. Not enough buffer and that increase poses real financial challenges.
Having that buffer is more of a security play that can limit your flexibility going forward out of necessity due to the realities of overseas part production.
Another issue that buyers should consider is what happens when initially lower pricing becomes less cost-effective. It is not uncommon for an overseas vendor to offer very low initial prices to get buyers in the door, but then upping production pricing by 30% or more after you commit to tooling.
At this point, tariffs only make that price spike worse. Changing suppliers isn’t simple either, as that would require reshoring or retooling shortly after starting production. Before committing to a supplier, ask them how they can offer substantially lower quotes and what you can expect from long-term production costs. If they want to lock you into a long-term agreement with no transparency, it’s time to look for a different injection molding company.
You can’t control trade policy, but you can change just how exposed your business is to it.
For some companies, the right response may be reshoring plastic injection molding production. A controlled, coordinated tool transfer process to bring production back to the U.S. rids your business of tariffs along with unpredictable lead timelines and other logistical challenges.
For others, overseas production can still make financial and operational sense. The better strategy is to understand the complete landed-cost picture and maintain enough sourcing flexibility to adapt if that picture changes.
Tariffs aren’t the only source of cost volatility. Resin prices fluctuate, and different materials can behave very differently in the market.
For buyers, one of the most important steps toward controlling those costs is to ensure that you know your resin options before production begins.
Specifying an exact resin grade may be necessary for some applications. However, that name-brand resin will come at a cost compared to more generic materials.
Name-brand materials carry a premium, and certain grades may only be manufactured in a limited number of locations. If the performance requirements, certifications, regulatory considerations, or existing specifications require a particular material, then that high price point is certainly justified. For example:
Generic alternatives may have a much broader supply base and can help lower costs if performance criteria don’t require a specialty resin. Instead of starting with an exact grade, it may be more productive to tell your injection molding company what the part needs to accomplish. An injection molding engineer can then help evaluate materials against those requirements to see if a generic resin is an ideal fit or if you need to go with a name-brand material.
If you do specify an exact material, it’s essential to understand its supply chain. Specialty materials can originate all over the world, with the U.S., Japan, and Taiwan all being common locations. That range can create an overlooked sourcing question.
For example, an OEM that specifies a U.S.-manufactured material and has parts molded overseas should understand how that resin gets to the production facility and how material compliance is verified. The more specific your material requirements become, the more important that traceability becomes.
Material selection can also affect long-term price stability. High-volume commodity resins tend to have broader production bases and can be less volatile than certain engineering or specialty grades.
For example, pricing for a flame-retardant Noryl® for an electronics housing can fluctuate more than more generic options. For a low-volume program, a few cents per pound may not drive the entire sourcing decision. At very high volumes, those differences become much more significant.
Material buying becomes more costly as resin consumption decreases. Low-volume resin orders below a Gaylord quantity, roughly 1,000 to 2,000 pounds depending on the material, create several challenges:
It’s also important to recognize that those higher costs can make a notable difference in pricing. For example, a resin that costs $1 per pound at 1,000-pound quantities could cost $5 or $6 per pound when only 50 pounds are needed.
This increased cost doesn’t mean low-volume injection molding isn’t viable with the right company, but it does mean buyers need realistic expectations before heading into production.
When you can’t change the price of resin, you focus on what you can control: how you buy that resin. Strategic production planning can help buyers reduce exposure to resin price increases.
Standing agreements are an excellent tool for controlling prices. Let’s say you expect to use 10,000 parts during the next year. If you establish an agreement for 10,000 parts with scheduled quarterly releases of 2,500, your supplier has likely already bought the resin for all your parts.
The key benefit in this scenario is that the supplier won’t increase your piece price if resin pricing changes between shipments. If you place four independent orders for 2,500 parts as they’re needed, each order can be subject to price changes. That extra production planning allows you to secure more stable pricing instead of reacting to every transaction.
Some injection molding companies can also provide additional flexibility with standing production agreements. For example, PharoPLAST buys material in bulk to increase savings and extends that same courtesy to customers. Those extra reserves also allow us to wait for optimal times to buy resin. If a material price is up 30%, we can evaluate if we can hold out for a lower cost so that both PharoPLAST and our customers can benefit.
Reshoring isn’t automatically the answer to every sourcing problem. Neither is offshore production. A secure supply chain depends on what matters most for a particular program.
An OEM with enormous, predictable production volumes may reach a different conclusion than a manufacturer with fluctuating demand, dozens of SKUs, and customers who can’t tolerate a stockout.
The right questions are broader than “Where is the lowest piece price?” Instead, you’ll need to ask:
The answers help determine whether domestic manufacturing, overseas manufacturing, or a combination of sourcing strategies makes sense.
Nobody can truly predict what resins will cost or what future tariff policy will look like in a year. What PharoPLAST does is help buyers build a production strategy that can protect businesses from inevitable changes.
Our belief is that transparency is where injection molding companies can add the most value. We work with buyers to look upstream, ask the right questions, and make informed decisions for production, regardless of your order quantity. This process can include any and all of the following services depending on your needs:
The right answer is one that allows us to mold your vision in a way that creates predictable, cost-effective production over the life of the program. Don’t settle for subpar solutions. Get in touch with us today to discuss how we can help you secure your supply chain.
