Press makers invest in China to meet growing demand for electrics

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Steve Toloken Simon Ho from Cosmos Machinery stands by an all-electric press at the APPlas trade fair in Shanghai

SHANGHAI — China's plastics molding companies are increasingly buying all-electric injection presses, and that's prompting machinery makers there, both foreign and domestic, to make significant investments to tap demand, according to interviews at the APPlas trade fair in Shanghai.

The country is already the world's largest market for all-electrics presses, with an estimated 6,000 to 8,000 of them sold annually.

But demand is continuing to grow, industry executives say, driven by injection molding factories in China looking to the more expensive all-electric machines to help upgrade — for example, by reducing their energy consumption, mitigating rising labor costs or improving precision manufacturing capabilities.

Local machinery makers say they have an additional goal — they want to replace the imports, which are mainly from Japan, that currently dominate China's all-electric market.

Haitian International, China's largest press maker, is building a 120,000 square meter factory in Ningbo dedicated to electrics; its smaller rival Cosmos Machinery Enterprises Ltd. late last year launched its own all-electrics.

Not wanting to be left out, foreign firms are also boosting their Chinese capacity: American machine maker Milacron LLC is planning a big expansion of its East China factory substantially geared for all-electrics; Austria's Wittmann-Battenfeld plans to set up electric press manufacturing for some of its EcoPower models in Kunshan, near Shanghai, next year.

Some new entrants are popping up as well, like Taiwan Union Plastic Group, which started assembling electrics at its facility in Hangzhou this year, and was showing the machines at APPlas, trying to offer a budget alternative to the Japanese.

Traditionally Japanese press makers have supplied most of the electric presses in China, and companies like Toshiba and Nissei led among foreign firms investing in electric press capacity there.

Some companies see all-electrics eventually replacing most hydraulics in the smaller tonnage market, generally under 500 tons.

"We are convinced that full electric solutions will take the lead in the next few years, especially for small and mid-clamping forces," said Helmar Franz, chief strategy officer for Ningbo-based Haitian.

The company said its new factory for its Venus brand electrics in Ningbo will have capacity for up to 10,000 machines a year.

While precise figures are not available, several executives said they believe the electric press market in China is growing faster than the general market, driven by manufacturing of smartphones, computers and other electronics, along with precision markets like medical, optical and LEDs.

Jonathan Ching, managing director of Wittman Battenfeld (Shanghai) Co. Ltd., estimated that half of China's current small tonnage market is all-electric, roughly double what it was five years ago: "The all-electric machine is a trend here."

Toni Bernards, general manager of Milacron's China factory in Jiangyin, said adding more capacity for its Elektron-brand of all-electrics is a substantial part of reason to expand Jiangyin. He agreed the electric market is growing faster than the general market.

Milacron has been making Elektrons in China since 2009.

The growth of electrics play to one of the country's manufacturing strengths, churning out iPhones, Samsung tablets and a huge share of the world's electronics for export.

But there are also opportunities in the domestic market, said Simon Ho, marketing manager for Hong Kong-based Cosmos.

Chinese smartphone companies like Xiaomi, for example, are capturing market share making budget phones with retail prices in the range of US$100, and companies in those supply chains are looking for less expensive but capable electrics, he said.

Cosmos also sees opportunities globally, and plans to exhibit its Ge series at both Germany's K 2013 trade show next month and NPE in the United States in 2015, he said.

He noted that half of the U.S. injection press market is all-electrics and he argued that U.S. companies are open to Chinese imports. In the first half of the year, the United States ranked as the third-largest export market for Chinese plastics equipment, behind Turkey and Indonesia, he said.

Thus far, Cosmos has produced about 50 all-electrics, including a large order to a medical device molder in Sichuan province, he said.

While precise figures are not available, industry officials said imports account for over half of China's electric presses, a contrast to the general plastics machinery market, where about 75 percent of the equipment is made in China.

China imported about 6,600 injection molding machines in 2012, with probably 4,500-5,000 of those all-electrics, according to information supplied by Cosmos, based on data from the China Plastics Machinery Industry Association.

Here's the breakdown: About half of the 6,600 imported machines are from Japan, with the vast majority of those being electrics.

Of the remaining half, about half of those are electrics from other countries, which would suggest about 3,000 electric imports from Japan and 1,500 from elsewhere, Cosmos estimated.

That would leave 2,000 to 3,000 all-electrics machines per year made in China, including both from Chinese companies and local factories of foreign firms, including the Japanese.

Japanese firms have been ramping up in China. One of them, Kawaguchi Ltd., was showing Chinese-made all-electrics at APPlas.

The company started making them in Shanghai three years ago, and followed that by setting up a factory in Hebei province to make its larger tonnage hydraulic molding machines two years ago.

Demand has grown quickly, and now both factories make 300 to 400 molding machine a year, equal to the company's production at its Shizuoka, Japan, headquarters, said Masanori Kawaguchi, executive vice president.

Chinese companies are boosting their production too. Haitian, for example, said it sold 445 of its all-electric Venus models in the first half of the year, up from 352 in the first half of 2012. The company says it has sold 3,000 Venus machines since launching them in 2007.

But not all of that is China production. The company makes Venus in both China and Germany, and the company does not break down the origin of the presses or how many are sold in China.

Anecdotally, however, Haitian does seem to be selling sizable numbers in China. In presentations to investors in August, it said one Shenzhen-based electronics molder ordered 65 Venus machines in March and April, for example.

Haitian's Franz said he believes use of all-electrics will rise globally, as global competition forces companies to upgrade. But he also said it's important for electric machines to become cheaper.