The personal computer industry continues to prove itself strong and viable, which is good news for hundreds of plastics processors. Several changes occurring in the PC world may have an impact on U.S. processors, but mostly for the better. Customer demand remained high throughout 1995. Explosive growth in the home computer market helped increase PC shipments 21 percent during the third quarter in 1995, compared with the same period in 1994. Analysts said Christmas sales increased as much as 40 percent compared with the period last year as buyers clamored to get Intel's fastest Pentium microprocessor and Microsoft Corp.'s new Windows 95 software.
However, predictions are for an industry slowdown during the first quarter of 1996 due to high inventory levels. Manufacturers had beefed up supplies to prepare for holiday shoppers.
Research from Dataquest Inc., a San Jose, Calif., market-research firm, predicts year-over-year PC shipments in the United States to be down about 14 percent in the first quarter before rebounding.
Kimball Brown, an industry analyst with Dataquest said, ``I think we will see a slowdown in the consumer line, just because there have been so many sales.'' Third-quarter PC shipments by Packard Bell of Sacramento, Calif., increased 26 percent over the third quarter in 1994. Compaq Computer Corp. in Houston saw unit shipments grow 21 percent in the third quarter.
Information from International Data Corp., a Framingham, Mass., market-research firm, shows Palo Alto, Calif.-based Hewlett-Packard almost quadrupling third-quarter shipments to an estimated 305,000 units.
Acer America Corp., a unit of offshore PC manufacturer Acer Group of Taiwan, shipped 66 percent more PCs in the United States during the quarter.
Only IBM Corp. and AST Research Inc. failed to record significant gains. IBM showed a 2 percent third-quarter increase in shipments of PCs over the same period in 1994. AST of Irvine, Calif., has been plagued with lost revenues and decreasing market share over the past year, the result of product delays.
Although PC sales on the home front are due to stabilize, Asian sales are expected to increase. Manufacturers are looking to the emerging markets in Southeast Asia, China and Latin America, where the middle class is blossoming, to push sales to new highs. Dataquest's research predicts that Asia's PC market will nearly triple in units shipped in the next three years, from 6.2 million in 1994 to 18.5 million in 1999.
Between 1992 and 1994, PC sales in these emerging markets grew by 83 percent, almost twice that of U.S. sales, and account for $22 billion, or nearly one-fourth of worldwide PC sales, according to International Data.
However, most of the PCs sold in countries like Russia and China are local brand names assembled by firms from imported components. The big winners are the component makers (such as Intel), assemblers of large networks (such as Hewlett-Packard) and PC makers (such as Compaq) that have plants abroad.
Acer's target is Latin America. With partnerships in Argentina, Colombia, Chile, Peru, Venezuela, Uruguay and Mexico, Acer Computec Latino America gives the firm a unique advantage. ACLA's Mexican partner led Acer's global sales with 148,613 units, claiming 29.2 percent of the total Mexican PC market. Latin American sales in 1994 were $220 million.
The firm's 1995 goal was to reach sales of $350 million in Latin America.
Production for auxiliary equipment will be strong through 1996. Epson America in Hillsboro, Ore., plans to expand manufacturing capacity and hand over work to its custom molders to handle a predicted demand increase for its printers.
Hewlett-Packard added several major retail store chains during 1995. With production last year running 50 percent above 1994, the company is stocking inventory to prevent shortages. H-P shipped nearly 10 million inkjet printers in 1995.
Molders who serve the computer and business equipment industries were running flat-out in 1995. Most said they were pushed by the computer original equipment manufacturers for increased production, which for some meant purchasing more molding equipment.
``We can't keep up with it, but that's the nature of the industry,'' said Ed Christensen of Complex Plastics Cos. in Boulder, Colo. He predicts a strong 1996 with significant growth. ``OEMs are building as fast as they can both in mainframe and peripheral businesses.''
Mark Schaefer, vice president of sales and marketing for Mc-Kechnie Plastic Components Inc. in Minneapolis, said that firm experienced 27 percent growth in the U.S. and European computer markets last year. He said he sees continued growth, mainly fueled by demand overseas.
Changes in the way PC manufacturers produce their wares may mean changes for processors who supply the major computer makers. Previously, manufacturers built products based on a sales forecast of consumer demand. The problem is that second-guessing what consumers will buy sometimes proves costly. Overestimating results in millions of dollars in inventory that is difficult to move at any cost; underestimating demand means shortages that can drive customers to another brand.
The answer to that problem is to assemble the units after receiving a retailer or reseller order. One industry report notes that at IBM's PC division, 95 percent of all its units are built to order. Hewlett-Packard builds 80 percent of it units to order, and Compaq is moving toward manufacturing 100 percent to order.
A Compaq spokeswoman said the company has been going through a total re-engineering.
``The manufacturing process, how we build, how we order material, everything has been changed,'' she said.
A big change has been the altering of Compaq's factories to build some products in a ``cell configuration'' in which three people build a complete central processing unit, allowing the company to do more build-to-order products. Although Compaq will continue to have some progressive lines on its higher-volume products, the firm is implementing the cell concept at its plants throughout the world.
Compaq continues working with suppliers on things such as just-in-time delivery of components, but the spokeswoman could not say that Compaq's changes will make any immediate difference to its suppliers.