Auto drives up North American injection press sales

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Messe Duesseldorf For eight days in October, Messe Dusseldorf became the center of the plastics industry's world, as 219,000 visitors jammed the K 2013 trade show.

The U.S. market for injection molding presses grew about 5 percent in 2013, a far cry from the double-digit jumps in the years right after the recession. Machinery executives are OK with that since the important automotive sector is still buying — and they say signs point to a sturdy North American manufacturing sector ahead.

And the shale-gas boom could drive stability in resin pricing and help draw more production to North America. In October, the United States passed a milestone: The country now produces more oil than it imports, for the first time in two decades.

Already, exports of U.S.-made cars are up. Will the U.S. become a manufacturing powerhouse and an export machine? What was unthinkable just a few years ago is suddenly … thinkable.

"I think the fundamentals point to continued growth," said plastics economist Bill Wood. "The fundamentals point to continued increases in employment. Income, spending and automotive has been good. But I think there's even room in the upside there. There's still this pent-up demand for new cars."

About 15.5 million vehicles will be sold in the United States this year. But the average car on the road is 11 years old. Automotive analysts think 2014 will top 16 million, marking a fifth straight year of growth and reaching the pre-recession level.

The robust automotive sector lifted press sales from 1,285 in the depths of 2009 to orders of 3,307 last year. Machinery leaders say 2013 orders should be about 3,400 to 3,500, an increase of about 5-6 percent from 2012.

So is 3,000-plus the "new normal?"

"I don't know what really a new normal would be, because if we start manufacturing stuff like we should, we're really going to have to ramp up and get serious," Wood said.

For now, most machinery sector officials think 2014 will be about the same as 2013, maybe up a bit. Pretty solid.

"We would agree with the 3,500-plus estimate for 2013, as every quarter since Q3 of 2012 has been better than the previous one for the industry," said Dave Lawrence, president of Milacron LLC's plastics machinery and DME mold technologies. "2014 looks to be another strong year for our industry, as we anticipate growth in the 2-3 percent range, with a potential shift in market mix to larger-tonnage machines."

"I've seen a lot of expansion," said Bob Columbus, regional sales manager at JSW Plastics Machinery Inc. in Lake Zurich, Ill. "I got several multiple machinery orders for the automotive industry, from people that are expanding."

Columbus visited several plants this summer that won business coming back from China. "Lots and lots of people are very busy," he said

Large-tonnage press maker Ube Machinery Inc. is booked all the way through next August, said David Bernardi, senior sales and marketing manager.

"What I have seen, and continue to see, is that automotive has been a driving force. They're busier. In many cases our customers don't have the capacity to make everything they would sell. Things are very, very busy," he said. "And I don't see any slowdown. Right now we've got a whole bunch of projects that we're bidding on."

Ube, in Ann Arbor, Mich., has hired 15 new employees this year and plans to hire more, Bernardi said. He said automotive molders also are hiring, but it isn't easy. Instead a core group of technically skilled people are "churning" around from molder to molder, he said.

Skilled workers: Help wanted!

Ube isn't alone. Other machinery companies are hiring. Machinery executives are not crystal-ball economists, but several worry that the shortage of skilled technical workers could restrain the plastics industry's growth moving forward.

Mark Sankovitch thinks the U.S. injection press market could settle in between 3,000 and 4,000 units over the next 10 years — hitting 4,000 only if manufacturing grows enough to become a major contributor to gross domestic product. But a lack of skilled workers to replace people who retire could limit the industry, he said.

For example, say an automotive molder wants to build a plant with 35 injection presses, and hire 200 plant workers and maybe 25 skilled people. Where are they going to come from?

"We might see GDP growth but it's not going to come from manufacturing. Because I feel there are not enough skilled people available to ramp up a business," Sankovitch said.

For 2013 and the new year, automotive continues to buy machines, although the frenzied restocking after the recession has now slowed to a more normal pace. Mid-tonnage machines seem to be picking up and large-tonnage presses have tapered off, he said.

The packaging sector is showing increased interest in all-electric machines, Sankovitch said.

Automotive this year generated about 65 percent of orders at Florence, Ky.-based KraussMaffei Corp., President Paul Caprio said. A normal rate would be 50 percent.

"We don't see any slowdown. It seems really good. It's the best it's ever been, for us," he said.

Caprio characterized U.S. press demand as "normalized" compared with a year ago. "I would say it's not as frenzied," he said. "We're not missing deliveries and are keeping up with the pace. But it's still at a very high level."

Arburg Inc. President Friedrich Kanz agrees with Sankovitch about the skills shortage possibly limiting economic growth. "That really needs to be addressed [so] that you have enough technicians and engineers to support all this production. Because the technology and the level of production is permanently growing," he said.

But Kanz said if molders are pushed by their customers to boost production, they have little choice but to make capital investments and expand.

Arburg will build a new U.S. headquarters in 2014, at Rocky Hill, Conn., not far from its longtime facility in Newington, Conn.

"It's pretty solid right now and the outlook also is very, very positive here in the United States," Kanz said.

Ohio witnessed signs of the U.S. market's renewed vigor this year, as both Sumitomo (SHI) Demag and Absolute Haitian Corp. held open houses at new technology centers — Haitian at Parma and Sumitomo Demag in Strongsville.

Absolute Haitian President Glenn Frohring said customers are looking at energy savings more closely. "When guys are making capital equipment purchases, they're taking a stronger look at the total cost to operate," including the cost of energy and spare parts.

Frohring said Absolute Haitian customers this year are buying machines to fill in tonnage gaps, to get a chance at more business. "There's a strong shift to rebalancing the fleet," he said.

2014 likely to be another good year

Tony Firth, vice president and general manager of Negri Bossi North America, said core markets like medical and food packaging have remained stable, but the big growth has come from automotive. "At some point that's going to taper off, but there's no particular sign of that now," he said. "I think next year's going to be pretty similar to this year, maybe even a touch better."

Negri Bossi is based in New Castle, Del.

North American orders have increased 10 percent at Husky Injection Molding Systems Ltd. in Bolton, Ontario. "We've been encouraged by our order performance in North America in 2013, and are expecting the gradual recovery to continue into 2014," said Michael Urquhart, vice president of global sales for packaging systems.

In November, Husky announced it had bought Swiss mold maker Schöttli Group, beefing up its position in medical and complementing Husky's existing closures business.

Medical and packaging are also major markets for Netstal Machinery Inc. in Florence. "We don't see next year slowing down. It's going to be hard for us to repeat the performance of this year, but there are some pretty large projects that we've been able to get," said Netstal General Manager Mike Sansoucy.

Medical generates about 60 percent of sales at Sodick Plustech Co. Ltd., which sells precise machines sporting a two-stage injection setup, said Len Hampton, national sales manager at Sodick's U.S. unit in Schaumburg, Ill. But the company is picking up more business in electrical connectors, automotive and micromolding.

"We've gained a considerable amount of market share, typically high-end applications," Hampton said.

Marko Korneef said business has increased in all markets for small-press specialist Boy Machines Inc. in Exton, Pa. "This year compared to last year is definitely going to be a better year. It's up across the board," he said. "I hope that it's going to continue. Right now, I think everybody's getting a little bit leery because of Obamacare and other things that are on the horizon."

Sales are up about 10 percent in 2013 for Toshiba Machine Co. America, said Tom McKevitt, vice president and general manager. The company in Elk Grove Village, Ill., is winning orders for its all-electric presses and larger-tonnage machines with servo-driven pumps, he said.

MHI Injection Molding Machinery Inc., which sells Mitsubishi presses in Bensenville, Ill., has sold large-tonnage machines to automotive this year. "It's kind of leveling somewhat, but there still is growth," said Tom Geddes, national sales manager.

Geddes said the used market has dried up for presses 1,000 tons and larger. That helps new-press sales.

"It just seems like the faucet's turned on," said Dane Bales of Cincinnati Process Technologies, which does retrofit machine controllers and now sells and services presses from Asian Plastic Machinery Co. Ltd.

"This is driving our sales, especially for large-tonnage machines, People will find ways to make them more productive, and a lot of times that means upgraded controls," Bales said.

Meanwhile, the Cincinnati firm is hiring sales people, engineers and field service technicians to boost the visibility of Asian Plastic injection presses. "We're new in the U.S. market. So there's still hurdles, just in terms of recognition," Bales said. "It's kind of a long and slow process getting the name recognized and seeing more opportunities to getting people aware of the equipment."