By: Bill Bregar
December 4, 2013
Rising home prices are driving remodeling, as people open their wallets to invest in their houses, driving sales of appliances, new bathrooms — and vinyl windows, pipe and siding, key extruded products.
And other extrusion markets continued solid growth. Packaging fuels sales of blown film lines and sheet extrusion lines.
Renewed growth in construction helps the entire economy. A year ago, machinery officials said the PVC replacement window business, while rebounding, suffered from very low capacity utilization. Too many extrusion lines were still sitting idle.
But now, investment in production by building-product makers is picking up for the first time since the mortgage crisis-induced Great Recession. Veka Inc., Chelsea Building Products and Associated Materials Inc. (Alside) expanded extrusion capacity in 2013.
"Windows are moving in a more positive direction of utilization," said Paul Caprio, president of KraussMaffei Corp. "First comes the spare parts sales, because people are starting up lines that they mothballed." Machine sales follow. "It's movement that we haven't seen," he said by phone from KM in Florence, Ky.
Dave Lawrence, president of plastics injection and extrusion machinery for Milacron LLC, said window profile capacity utilization is only around 55-65 percent, even as construction strengthens. "Most opportunity has been in the upgrading of equipment to improve operating efficiencies and productivity," rather than large expansions, he said. That goes for siding, as well.
Lawrence said there are "pockets of unique opportunity" in PVC and polyethylene pipe markets.
The National Association of Home Builders reported in late October that its Remodeling Market Index rose to 57 — the highest mark since 2004. An RMI above 50 indicates that more remodelers say activity is higher than report it has declined. NAHB attributed the healthy remodeling sector to an increase in sales of existing homes, and higher home values.
New construction, which plunged in 2006 through 2009, is gradually recovering. The U.S. Census Bureau said that, through August, total housing starts grew at an annual rate of 891,000. Single-family starts grew at 628,000.
Packaging is an old standby, and a fracking-driven future of stable polyolefin pricing bodes well for U.S. sheet extrusion, and blown and cast film manufacturing, said machinery executives.
The packaging market accounts for about half of total sales at extrusion systems maker Davis-Standard LLC of Pawcatuck, Conn. "This year, 2013, is going to be a nice up-year in terms of orders. And we really saw it kick up in the second quarter and it held on to that momentum throughout the year," said Jim Murphy, vice president of product line management.
Davis-Standard enjoyed a strong second half in North America, he said, and that should continue into 2014.
Dana Hanson, president of Processing Technologies International LLC,of Aurora, Ill., said sales of equipment to make PET and polypropylene sheet remain strong. "We saw a lot of activity in barrier once again, anywhere from seven-plus layers on up," he said.
Big packaging companies have consolidated, and they often exit some small market segments. Hanson said that prompts small and midsized players to invest in machinery for niche markets.
"They have to add capacity to take on some of the market opportunities that are falling through the cracks of these big acquisitions," he said.
PTi now has sold nine dryerless PET lines. "It's been a strong springboard into the marketplace," Hanson said. Next May, PTi officials plan to hold an open house in Aurora, Ill., to demonstrate new roll-stand technology that improves thin-gauge processing and stress-free sheet.
Fred Jalili said Advanced Extruder Technologies also installed a number of sheet lines this year. He said: "2013 has been a great year for us. I think it's one of the best years we had in the past 14 years."
AET, based in Elk Grove Village, Ill., expanded its warehouse space and got more involved in the automotive sheet market.
R&B Plastics Machinery LLC also benefited from automotive, said Dave Corson, director of sales and marketing at the Saline, Mich., company. "Extrusion did very well in automotive. We worked with six different automotive multilayer fuel line projects," he said.
He said R&B's work build¬ing multilayer blow mold¬ing machines gives it expertise in multilayer extrusion systems, too.
Sheet line maker Welex Inc. began assembling lines in York, Pa., home of Graham Engineering Corp., a blow molding machine manufacturer. Graham, Welex and extruder maker American Kuhne Inc. are all now owned by Graham Group.
Graham Engineering President David Schroeder said Welex made its final system in Green¬ville, N.C., which will be closed after the relocation to York. A dryerless PET sheet line was the first system built in York, and it shipped out Oct. 29.
Welex's international business is growing a bit faster than its North American sales, he said.
The three sister companies are starting to work together on technology. American Kuhne in Ashaway, R.I., is using automatic die-centering technology for medical tubing, which was developed by Graham Engineering to adjust parison sidewalls in blow molding. The process ensures concentricity.
"The medical tubing systems, especially in the last half of this year, have actually been quite good," Schroeder said.
Executives of manufacturers of blown and cast film say their companies are busy.
"We've got a tremendous amount of activity right now," said Jim Stobie, CEO of Macro Engineering & Technology Inc. in Mississauga, Ontario. "This year, the first half was quite strong. Things got a little quiet over the summer, and then around about the second half of September, things really picked up as we got into the K show."
In coextrusion, Stobie said that "nine layers has now become the standard instead of seven. It gives you so much more versatility." You can run seven-layer film on a nine-layer machine, and split some of the layers to get material savings and improved performance, he said.
Stobie said investment is freeing up. "Everybody's been holding on to their cash. But ... people are in a buying mode," he said.
Windmoeller & Hoelscher Corp. had "a bang-up year," said Vice President Andrew Wheeler. "We had a record year in printing presses and extrusion."
As 2013 winds down, he reports "very, very strong order income so our backlog for 2014 is strong as well."
W&H in Lincoln, R.I., has order books so full that it is struggling with long delivery times, Wheeler said. For W&H, three-layer lines are the biggest sellers, for food packaging, shrink film and water-bottle overwrap. The company also is selling five-layer lines.
At K 2013 in October, W&H rolled out Varex II, its next-generation line of blown film machines. Wheeler said the firm invests 8-10 percent of its annual turnover back into R&D.
Natick, Mass.-based Hosokawa Alpine America "had a fantastic year," President David Nunes said. He thinks North American film manufacturers are in a strong position long-term, because of the shale gas boom, which should result in reasonably priced resin in the U.S. And he said the fleet of blown film equipment still has lots of machines that are more than 10 years old.
"You've got the inefficient, aging machines that need to be upgraded," Nunes said. "It's a pennies business," Nunes said. "So whatever you can do to keep your scrap rates down, and labor costs down, it pays off."