Quality and strategic investment – recipe of success at Karsai plastic company

-Mr. Karsai, you founded the predecessor of Karsai Műanyagtechnikai back in 1988 in Kisfalud, Székesfehérvár. In your opinion, would it be harder to launch a company in today’s industrial climate?

-I do not think it would be more challenging for the younger generation today to get a company going. It is certainly not easy today, but it was not easier in the ‘80s either. Endurance is key, it always has been – an entrepreneur must be just as committed and tireless today as 30 years ago. All in all, launching a company is not harder today.

It is even easier from certain standpoints. In the ‘80s, Soviet-type economic planning did not provide favorable conditions for starting a business. For example, interest rates on a loan could have been as high as 25-30 percent back then. The survival of a young company is much more likely today.

-The holding got up to speed quite quickly. What led to this breakthrough improvement in the company’s life?

-In 1989, we bought our first Swiss-made rapid injection molding machine, and not much later the second one as well. At that time, it was not recognized how much more capable these machines were, so the risks were high, but we bought two more shortly afterwards. With four machines, we could scale up production, and the superior performance of the technology of rapid injection molding was noticeable.

Was it more challenging to establish the technology or a sales network?

-I remember most plastic factory halls being covered in oily grime and residue at the time, and the manufacturing of high-quality plastics was not yet common. We recognized these two phenomena and set our goals accordingly: our site always has to be very clean, and excellent quality needs to be achieved. We have been doing our best to achieve a development in quality.

In 1993, we already had a complex manufacturing management system, which we replaced with SAP in 1997. Whenever there was a chance to get a new certification, we acted quickly – Karsai Holding was the second firm of Hungary’s Transdanubia region to receive the ISO 9001 quality management certification. From then on – thanks to our predictable and reliable operation – we have been showing a strong presence on the market.

-How long did it take the company to start manufacturing packaging for the pharmaceutical industry? Serious regulations have to be met in this field.

-It took us a long time. If we develop a packaging, and the customer decides to take it, usually another year passes before they will actually be used for the packaging of medications. A series of tests have to be done beforehand, which – among others – measure the thickness of the walls, and the overall stability of the packaging over time. These usually take six months.

-Was it hard to get into the competition of the pharmaceutical industry?

-Serious competition is good for us. Back then, we had to beat players that had been suppliers in the field for a long time. Our advantage was producing locally, so that we could be more flexible and faster to react. That way, our customers did not have to build a large stock of our products.

-Aside from products for pharmaceutical applications, what else does Karsai Holding make at the Székesfehérvár plant?

-Our profile is laboratory technology and the pharmaceutical sector. We have begun to operate by the so called “nextdoor policy”, that is why we have a location in Veresegyház and Körmend, where we supply local pharmaceutical companies. All of our greenfield investments were made along this strategy. In Tiszaújváros, for example, we supply Jabil. Our acquisitions, such as in Orosháza or Budapest, were mainly driven by market opportunities.

-The automotive industry has been through a lot of changes and facing many difficulties over the past two years. How has all that been affecting the factories of the holding in the auto industry?

-Two of our firms are present in this field – one in Tiszaújváros and another in Kiskunfélegyháza. We had to make radical changes at both to be able to adapt to the market, but there was no need for mass dismissals, we have found other ways to avoid loss. We are stable, and restarting production will not cause any problems.

Currently we have 440 customers, which is quite sufficient. We are of course sad about losing any of our customers, but we can manage these situations, and even the current poor performance of our automotive partners. The key is flexible capacity management – we have installed machines or workforce where needed because of the stalling automotive sector.

-Tooling is an especially interesting topic in this industry. Do you make your own tools?

-Our company has three tool making factories. The Orosháza plant is an expert at vacuum shaping and making press machines, while the Kiskunfélegyháza and Székesfehérvár locations specialize in injection molding tools.

-Is it challenging to find qualified workforce today?

It is not an unsolvable task, but we do need to train our young employees, and that takes time.

-What sort of Industry 4.0 innovations have you implemented?

-We can monitor the processes of the machines at our Székesfehérvár shop floor in real time. There are nine computers overlooking the processes in our control room, making the production management team able to intervene any time. This system is a successor of the one we used to use in 1993. We also have an ongoing comprehensive development project, which aims to implement monitoring for all systems of the holding.

-Which field of innovation is the company focusing on?

-Mainly product development. The reason for that is that the customer does not always know exactly what they want, so we need to proactively show them what plastic products are capable of. This happens in the auto industry as well, but this sector is much more limited, there is not much room for innovation by suppliers.

-The price of energy and raw materials has raised significantly over the past period. How are you managing the situation?

-Everything has gotten brutally expensive indeed, but I am not worried about being able to pay for more expensive raw materials. Many regions are competing for partnerships with large firms and customers in general, and Hungary can easily lose out. In Poland, for example, there is much more self-made energy available that can be used by local players. These dangers could lead to real problems in a couple of years.

There is a counterproductive phenomenon in the supply of raw materials, which would be advisable to analyze with MOL (a Hungarian multinational oil and gas company) decision makers: is it really useful to provide multinational manufacturers cheaper raw materials than Hungarian companies? This puts us at a disadvantage, even though we do not necessarily buy smaller amounts than them. On top of that, multinational companies take large portions of the materials abroad, but if they run a Hungarian subsidiary, they are still eligible for the discounts. We, on the other hand, keep all that value at home.

-What advantages do Hungarian players have despite this situation?

-I would probably mention our lower labor costs and that we tend to be more hard-working.