Extruder makers-a diverse group that cuts across markets from construction to packaging to compounding-are generally optimistic headed into 1996. Compounding could be headed for a second-half slowdown.
For extruder makers, the biggest question mark seems to hover over the important construction market, which consumes extruded windows, siding and pipe. Consumer credit was maxed out-even before Christmas. Mortgage foreclosures are rising. That could put a post-holiday damper on loans needed for major remodeling projects. On the other hand, the Federal Reserve Board ended 1995 with a cut, albeit a tiny one, in the Federal Funds Rate on Dec. 19.
``If interest rates stay down, the building industry stays up and automobile purchases stay strong, we should have a great year,'' said Al Hodge, vice president of sales and engineering at Davis-Standard.
Like many extrusion machinery firms, however, exports mean that Davis-Standard is not fully dependent on the U.S. market. For example, Davis-Standard is a major exporter of wire and cable machines to Southeast Asia. In December, 12 officials of the giant Yizheng Chemical Fiber Co. in Yizheng, China, visited Welex Inc. in Blue Bell, Pa., which is making an extruder for the polyester fiber plant.
Krauss-Maffei Corp.'s extrusion business grew by about 8-9 percent in 1995, but Hans-Jurgen Matthesius, extrusion division vice president, has some concerns. Business slowed in the second half.
``The construction industry is not expanding right now,'' Matthesius said. ``The vinyl siding market has reached maturity, so there's hardly any investment going in.'' Vinyl windows also appeared to slow. Facing decisions on whether to buy new equipment, window and siding extruders are taking a ``wait-and-see attitude,'' he said.
James Abbiati, vice president of Cincinnati Milacron Inc.'s plastics extrusion systems, said capacity utilization is down for extruders that serve building and construction. The Fed could reduce interest rates to kick-start construction, but even if they don't, as long as rates stay the same, 1996 should be ``an OK year,'' he said.
For 1996, Abbiati is predicting ``another good year, but not a great year.'' Milacron's markets include machines to extrude sheet, windows and pipe. A year ago, resin pricing and availability of PET were concerns. Now resin prices are easing, which should help machine sales.
``Now [processors] can get some of that profit back, and certainly they're going to invest,'' said James Altimari, executive vice president of Black Clawson Sano Inc., which makes machines for blown and cast film systems and sheet in Amelia, Ohio.
Tight supplies of PET also are easing. ``It's starting to open up now,'' said Frank Nissel, president of Welex, which makes sheet extrusion systems. ``It's still a shortage, but there's some daylight coming. We've had a number of people who released orders for new machines that they had on hold.''
In 1995 business deals, Battenfeld GmbH bought American Maplan Corp., a McPherson, Kan., manufacturer of extruders for PVC pipe, profiles and siding. That will increase the North American visibility of Battenfeld, best known for its film equipment made in Gloucester, Mass., by Battenfeld Gloucester Engineering Co. Inc. Early in the year, two more companies wereacquired by the Pawcatuck, Conn.-based Davis-Standard Division of Crompton & Knowles Corp.: Killion Extruders Inc. and the plastics and rubber extrusion operations of McNeil AkronRepiquet sarl.
North American compounderswill have another choice in 1996: Toshiba Machine Co. Ltd. extruders made by Welding Engineers Inc. of Blue Bell. That deal was announced in September.
Compounding will continue to grow, but demand for new machines may cool in the second half of 1996, said Asmuth Kans, sales director at Werner & Pfleiderer Corp. of Ramsey, N.Y. W&P claims to be the dominant North American compounding extruder supplier, with about 50 percent market share.
Compounders had an overcapacity in the early 1990s, but that changed in 1994 and 1995.
``What happened in 1995 was that they ran out of capacity finally and now scrambled to acquire capacity. We had our best year ever in '95,'' Kans said.
W&P also introduced a compounding system at K'95, the Omega, that can boost output by 40 percent.
How long can it last? ``We will see a saturation again sometime in the second half of '96,'' said Kans.
Agreeing with that predictionwas Ken Nekola, sales engineer manager at Pomini Inc. ofBrecksville, Ohio. Nekola thinks the first four or five months of the year will see a carryover of business from 1995, with uncertainty after that.
``There's going to be some apprehension going into the [presidential] election,'' he said.
Nekola said 1995 was strong. ``There was a surge of interest starting in late summer. There was a lot of activity.''
American Leistritz Extruder Corp., another manufacturer of twin-screw compounding extruders, sold about 50 machines last year, about the same as 1994, said Charlie Martin, national sales manager. The Somerville, N.J., firm is targeting medical and direct in-line compounding.
``We've got a good backlog and we've got a good number of orders going into the year,'' Mar-tin said.
Farrel Corp. of Ansonia, Conn., sold fewer compounding extruders in 1995 than 1994, but thecompany is projecting an in-crease this year, said StevePeterson, director of compounding machinery.
APV Chemical Machinery Inc. of Saginaw, Mich., was renamed B&P Process Equipment and Services after a management-led buyout last year.
``We expect another good year'' in 1996, said Peter Giles, sales manager. Strong markets include powder coatings, reactive extrusion, pharmaceutical and adhesives.
U.S. shipments of single-screw extruders have been relatively flat for the last several years, at about 1,000 machines a year, according to the Society of the Plastics Industry Inc.
For Merritt Davis Corp., a single-screw extruder maker in Hamden, Conn., 1995 ``started out strong, slowed during the summer, then it picked back up again,'' said Eric Faust, applications engineer. Wire and cable business has picked up in the past few years, he said.
HPM Corp. makes single-screw extruders for custom sheet, pipe, profile and compounding. Ron Akialis, vice president of extrusion, called 1995 ``the best year we've ever had.''
``Sheet has been very, very good for us,'' Akialis said.
Especially strong: HDPE sheet lines to make truck bed liners.
HPM is booked through the first few months of 1996. Akialis said business is increasing for turnkey systems, including extruders and downstream equipment.
Welex's Nissel also reported a record year, with a 20 percent gain over 1994.
``We worked Thanksgiving weekend. We worked Friday, Saturday and Sunday,'' he said.
Echoing a refrain from the injection molding machine business, Nissel said finding components, such as gear reducers, cylinders and motors, has been a challenge.
``My biggest problem is procuring anything at the moment. Everybody is so overbooked.''
In blown film, Battenfeld Gloucester saw a 10 percent sales increase in its last fiscal year, its best-ever, ended June 30, 1995, said Robert Weeks, sales and marketing vice president. Midway through fiscal 1996, Weeks is predicting a year as good or better.
Another supplier of film production equipment, Reifenhauser Inc., is settling into its new, bigger location in Lawrence, Mass. It moved there from Peabody, Mass., in December.
Matthew Bangert, vice president of sales, sees a trend for coextruded high density polyethylene film competing against low density PE in some low-end packaging markets, such as overwrap for bulk packaging.
Reifenhauser also makes extruders for pipe, profile and nonwoven. Bangert said the latter market is booming, with products such as diaper liners, medical gowns and building wrap.
Altimari said most of the growth in machines sold for packaging growth will come from new multilayer films for food. But some other areas already have plenty of capacity.
``We've seen a plateau in the stretch and cling market,'' he said.
Through 2000, annual demand will slow slightly, according to Freedonia Group Inc., a Cleveland research firm. From 1989-1994, extrusion sales grew by 7.2 percent a year. That rate should be about 6.6 percent through 2000, according to Freedonia.