Manufacturers of injection molding machines said sales were flat -or even declined - in 1996, although most reported a modest rally late in the year. This year, the NPE 1997 show could delay first-half sales, as customers wait to kick the tires at the huge Chicago exhibition in mid-June.
Demand for new injection presses finally seems sated, after the feeding frenzy that saw U.S. unit shipments hit double-digit growth annually from 1992-94. The period of late 1994 and early 1995 was especially explosive, even though the Washington-based Society of the Plastics Industry Inc. reports growth for the full year 1995 slipped back to single digits, to 4.3 percent.
Full-year SPI numbers are not available yet, but interviews with machinery manufacturers in November and December indicate the boom has ended.
One analyst, Michael Paslawskyj, put it bluntly: "The era of huge annual increases is over."
Paslawskyj, vice president of business development and economic research for CIT Group in Livingston, n.J., is predicting a "mild, two-year pullback" in 1997 and 1998.
"Processors have purchased so much equipment that a period of absortpion is warranted so that actual production and capacity utilization can return to better balance," he wrote in a report issued in mid-1996. Growth should return in 1999. He tracks all plastics equipment, not just injection presses.
Paslawskyj said some perspective is needed.
"We're talking about a pullback from what has been a very high level."
William G. Pryor, president and chief executive officer at Van Dorn Demag Corp., agreed. "It's still, historically speaking, at a good level." he said.
Pryor said the U.S. market peaked at an extraordinary 7,000 presses a year. In 1995, the market was about 6,400. Pryor said the number should be closer to 6,000 in 1996 and hold steady to that rate this year.
The period just pased, with the U.S. molding industry replacing thousands of old machines with new ones, marked a period of dramatic improvement in productivity, machinery company officials said.
"We have customers now doing with 18 machines what they used to take 24 machines to do," said Michael Santa, executive vice president of Krauss-Maffei Corp. of Florence, Ky.
Santa said U.S. molders had no choice but boost productivity or lose work to foreign competitors.
One result, give the current slow market for used machines, is that molders hang onto their old machines. Even if they do not run every day, the extra machines are available to absorb new work. Santa said that means processors probably will buy new machines only for replacement, not to add capacity.
At HPM Corp., Brian Bishop, general manager of injection molding, agreed that replacement machines will drive the market in 1997.
"The industry might be at somewhat capacity as far as the number of machines, but I'm looking at replacement of machines with more efficient ones to help companies get a higher margin," Bishop said.
HPM made headlines in 1996, announcing in February that it was merging with Stadco Inc., a Los Angeles aerospace manufacturer. Then in November, HPM and Stadco announced plans to go global by buying German press maker Hemscheidt Maschinentechnik Schwerin GmbH & Co. The deal had not been completed by late December.
In other business news, Van Dorn Demag bought Newbury Industries Inc., expanding into vertical injection presses for insert molding. Van Dorn Demag relocated production from Newbury, Ohio, to its own plants, including its headquarters in Strongsville, Ohio.
Vermont development officials got the good news that Canada's Husky Injection Molding Systems Ltd. picked the small town of Milton for its new U.S. facility, which will be designed, Husky-style, into a campus-like setting.
Husky, of Bolton, Ontario, saw sales decline in fiscal 1996, to $568.2 million, down 6.7 percent from a record $608.7 million the year before. Husky's fiscal year ends July 31. Husky had experienced a large jump in its PET preform molding machines in 1995, but that market declined in 1996.
``All the other markets are still growing,'' said Michael Urquhart, vice president of service and sales. ``We're just struggling to keep up with orders right now.'' He added that PET preform molding is picking up. Husky also has introduced a general-purpose machine aimed at markets new to Husky, such as medical, technical products and closures.
``Our business is growing, mainly because we are serving new markets that are not traditionally Husky markets,'' Urquhart said.
Machinery executives are not moaning about the recent slowdown. William Gruber, vice president of U.S. Plastics Machinery at Cincinnati Milacron Inc. in Batavia, Ohio, said the machinery sector is taking a breather.
``It had a very strong period of growth, and it seems to have taken a little bit of a respite,'' he said. When the final 1996 numbers are in, Gruber thinks they will show ``a significant downturn on a year-to-year basis, looking strictly at the number of units in the U.S. market.''
Speaking about the overall industry, Gruber said ``unit shipments could be off in excess of 20 percent on a year-to-year basis. That's a pretty significant change.'' But the decrease will not be as severe for sales measured by dollars, because companies seem to be selling more high-ticket machines, such as big presses for automotive and housewares. He predicts ``steady improvement'' this year.
Most executives said sales improved in the second half of 1996.
Wolfgang Meyer, president of Battenfeld of America Inc. of West Warwick, R.I., said the industry declined about 8-10 percent for the year.
``We are basically back to a level of 1994,'' he said.
Pryor, interviewed in November at Plastics Fair Charlotte, said, ``The market is starting to pick up again.'' Like Gruber at Milacron said, Pryor noted that large machine orders ``are starting to come back.''
SPI numbers show shipments of very large-tonnage machines, with clamping forces of 1,200 tons or more, have been about 100 units for several years — more than twice the number of the early 1990s.
The trend toward large machines with two platens, instead of the standard three platens, continued as a way to make machines smaller and reduce cost. In December, Husky announced its new two-platen Moduline E-Series machine, with hydromechanical clamping from 1,000-4,400 tons.
Because they are difficult to ship overseas, the domestic market for very large presses is dominated by U.S.-made machines. According to SPI, U.S.-made machines outsold imported machines 5-to-1 in the two largest-tonnage categories, from 750-1,119 tons and 1,200 tons and higher. Imports fared much better in smaller-tonnage presses.
The strength in big machines generated some new domestic capacity. Japanese press maker Ube Industries Ltd. began assembly at a new plant in Ann Arbor, Mich., last year. Officials of Van Dorn Demag disclosed that its German parent, Mannesmann Demag Kunststofftechnik, plans to build large Ergotech machines in Strongsville.
However, not everybody agrees with the glowing outlook for large presses, at least not in the short term.
For Engel Machinery Inc., the strongest growth recently has come from the small and mid-sized machines.
``I find the large machine business slow, because you've got lots of capacity and you've got lots of players,'' said Vice President Kurt Fenske.
Engel, with plants in Guelph, Ontario, and York, Pa., sold 600 machines in the last year in North America. Fenske said 1996 ``has been a slow year in terms of machine orders, almost starting at the beginning of the year. But it picked up speed in early fall, like in September and October. Right now it's going as strong as ever.''
Mid-sized machines also have sold well at Sandretto Plastics Machinery Inc. in Middleburg Heights, Ohio.
``We sold more in the middle range than we have previously,' said Tony Firth, vice president of sales.
Another trend — more controversial than the big-machine issue — is declining market share for machines imported into the United States.
Although the credibility of SPI data is weakened by the omission of a couple of major Japanese players, the trade group reported that in 1995, U.S.-made presses widened the gap over imported machines. CIT Group's Paslawskyj thinks imports will continue losing market share, dropping below 50 percent, to fall to about 33 percent by the year 2000. If it happens, that would be the lowest share for imports since 1985.
Paslawskyj thinks machines made in Japan will lose the most.
``Even though the yen is off its peak, it's still strong,'' he said.
A strong yen forced most Japanese suppliers in recent years to hike prices.
Paslawskyj also points to new Japanese transplants on U.S. shores, including Ube's new Michigan factory and a Mitsubishi Heavy Industries Ltd. assembly operation in Hopkinsville, Ky.
Not surprisingly, officials of three Japanese companies disagreed with the declining-market share prediction.
``[Imports] might go down a little bit, but not to one-third [of the total market],'' said Ted Newsome, vice president and general manager of the company that sells Shinwa Seiki presses, Methods Plastics Machinery in Sudbury, Mass. ``We're back to the yen levels of the last NPE [in 1994].''
The currency moderation allowed Toshiba Machine Co. America last year to roll back prices to the level of late 1994. Toshiba still sees about a 50/50 split between domestics and imports, said Tim Glassburn, vice president of the firm's plastics machinery division.
After a down year in 1995, when the yen hurt Niigata Engineering Co. Ltd., 1996 ``is probably going to be our best year ever,'' said Robert Columbus, general manager of the company's U.S. base in Elk Grove Village, Ill.
Several other executives reported higher sales in 1996, despite the overall down market.
Krauss-Maffei's Santa said sales at the Florence, Ky., company grew about 35 percent in 1996, after hitting nearly 60 percent the year before.
``It came out of real good results out of three industries — the CD market, the medical market and the packaging market,'' he said.
The packaging machinery segment will become more crowded this June at NPE, when Sandretto's Italian-made Metalmeccanica press will make its U.S. return. Sandretto will show a Mach 3 high-speed packaging press.
MIR SpA, another Italian supplier, reorganized its U.S. sales representatives. The operation in Leominster, Mass., is improving distribution and spare parts.
``MIR's really a well-kept secret. The equipment is certainly competitive with the machines out there,'' said John Pirro, branch manager.
Officials of small-machine makers Boy Machines and Arburg Inc. said electronic connectors and medical parts were strong in 1996.
Boy President Robert Grundmann said business improved in the second half, ``but it certainly wasn't revolutionary.'' He thinks business should improve this year, ``but I'm sure it's going to be a lot better.'' Boy is based in Exton, Pa.
Arburg has been pushing its larger machines, from 100-220 tons.
``We saw a substantial increase in that part of our business last year, and we expect to see that trend continue,'' said Andrew Lord, executive vice president of Arburg in Newington, Conn. He predicts business will increase 3-4 percent this year.
After a big jump in 1995, Autojectors Inc., a vertical-press maker in Albion, Ind., experienced a flat year in 1996. Unlike other companies, Autojectors did not see business slow down until the third quarter, said President Bill Carteaux.
Sales are off for new small-tonnage machines but, when it comes to verticals, used machines with updated controls, are still in demand, he said.
``Actually it's given us a chance to catch our breath,'' Carteaux said. Autojectors opened a second Indiana factory last year.
Thermoset press maker Bucher Inc. had a surprise — companies are buying new machines. President Taras Konowal 1996 was ``very good. Actually the thermoset area we've seen growth in has been mainly replacement of very, very, very old equipment.''
``The other part of the growth is turnkey packages, mostly in the automotive industry,'' he said.
Bucher, of Buffalo Grove, Ill., sells automated systems that load pellets and inserts, mold the parts, then unload them for finishing.
Bucher also is riding the packaging wave with its recent move into thermoplastic injection presses.
``It's been very good, better than we expected,'' according to Konowal.
Netstal-Machinery Inc. President Werner Christinger said long lead times coming out of 1995 made 1996 difficult, because some machines were not available for sale.
The market for machines to mold compact discs, a key one for Netstal in Fitchburg, Mass., was cool. But the introduction of digital versatile discs this year should boost sales. Christinger said Netstal expects to introduce machines for molding DVDs this year.
The low-pressure injection molding niche has grown for Wilmington Machinery of Wilmington, N.C., mostly because of pallets, said Kemp Shepard, vice president of marketing. ``We have a backlog through the middle of next summer,'' he said.
Automotive molders have shown interest in a new system from Hettinga Technologies Inc. of Des Moines, Iowa, said Chairman Siebolt Hettinga.
``We just developed a method where we can mold three different fabrics, without sewing, into a door liner,'' he said.
Hettinga looks forward to NPE, which he said attracts top executives from processors ready to embrace new technology.
Husky's Urquhart said his company will have an exhibit measuring 14,400 square feet, almost twice as large as at NPE '94.
``I think what NPE does for us, at least, is not actual orders written at the show, but you're getting exposure to a lot of people who haven't dealt with you in the past,'' he said.
Obviously NPE stimulates interest in new technology. But some machinery officials say customers hold back planned purchases until the show.
Tom Jarrold, corporate spokesman for Cincinnati Milacron, has been to 10 NPEs.
``A certain percentage of people hold back buying machines. They wait for that time so they don't miss anything,'' he said.