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January 05, 1998 01:00 AM

PLASTICS REAP THE BENEFITS OF SURGE IN BUSINESS EQUIPMENT

Roger Renstrom
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    Growth continues to pervade the computer, telecommunications and business equipment industries and carry over to the suppliers of plastic parts.

    Copying machines constitute an exception with demand softening.

    Dataquest Inc. forecasts a 17.1 percent increase in worldwide shipments of personal computers to 97.3 million units next year. The 1997 market is absorbing 83.1 million.

    Longer term, the San Jose, Calif.-based market research firm anticipates shipments of 113.3 million PCs in 1999 and 131.4 million units in 2000.

    ``In Western Europe, we see the leading PC manufacturers — Compaq, Hewlett-Packard, Dell and Siemens Nixdorf — maintaining their dominance and their strong growth, especially in the professional market,'' said Chris Jones, an analyst in London with Dataquest's European personal computer group.

    ``The four companies have all driven down the prices of personal computers, making it harder for smaller companies to compete,'' Jones said. ``As usual, Intel and Microsoft drive the market growth, ensuring that the market moves forward as new technology comes to the market.''

    The U.S. market for cellular telephones and personal communications systems is ``adding annually about 11 million subscribers,'' said David Webb, director of the wireless technology practice at Strategy Analytics Inc. in Morristown, N.J.

    About 20 million handsets were sold in the United States in 1997 with a forecast of 50 million units in 2002, Webb said.

    ``The shift to digital technology will accelerate the shipment line,'' he said in a telephone interview. Analog systems have about 55 million users, but the technology will fade by the end of 1998 with the continued ramp up of digital systems, already counting 4 million users.

    Injection molders are optimistic about the growth prospects.

    Mack Molding Co. of Arlington, Vt., expects more than 30 percent growth in its 1998 electronics-related jobs, principally in computers and business machines, according to Jeff Somple, vice president of sales and engineering.

    The boost includes burgeoning assembly work that is coming on line as a complement to Mack's core competency of injection molding. In some cases, the added responsibility represents the culmination of years of program development with customers, Somple said.

    Mack sees electronics-industry customers wanting ``higher levels of assemblies'' and ``looking for design capabilities,'' Somple said. Customers want Mack to make integrated electronic subassemblies, sometimes involving serial-interface cables for small computers, circuit boards, audio speakers and power supplies.

    Customer interest in design resources prompted Mack in November to establish a Rochester, N.Y., subsidiary that deals with ongoing design programs.

    In an emerging trend, two polymer suppliers to electronics-related markets will operate in 1998 with metal stamping capabilities.

    Complex Tooling & Molding Inc. of Boulder, Colo., acquired Krasberg Corp. of Des Plaines, Ill., on Nov. 17, and Trend Technologies Inc. of San Jose purchased Cam Fran Tool Co. of Elk Grove Village, Ill., on Dec. 3.

    Flambeau Corp. of Baraboo, Wis., projects 12 percent annual growth in its molding business in 1998 and an industrywide rate of 5-7 percent for electronics and related markets over several years, according to Bill Flint, senior vice president.

    ``A wave of new products'' will drive the growth, Flint said, and encourage molders to align ``with the right customers as new technologies are developed and old ones disappear.''

    Flint said electrical and electronic applications offer the best opportunities for Flambeau, particularly within automotive industry efforts to save weight and improve performance.

    ``As retail prices decrease for computers, wireless phones and consumer electronics, molders will continually be pressured to reduce their internal costs and pass those savings on to the customer,'' Flint said.

    Molding for the electronics industry can be quite risky.

    ``Equipment purchased for a new program can become obsolete very fast'' if the marketplace kills a program or a new product generation's design doesn't fit a molding machine, according to Flint.

    Flint said size-saving thin-wall molding opens opportunities but ``not just any molder can enter this area. ...We as a company have invested in thin-wall technology and currently are producing parts for a cellular phone.''

    Sales of general-business computer printers is being spurred by quality improvements.

    ``People are buying new printers, but the old equipment is not being retired,'' said Alan Conrad, consumer industrial product manager for Bethel, Vt.-based injection molder GW Plastics Inc.

    Many units, typically printing 300 or 600 dots per square inch, find secondary uses, in a home office or by children, he said. That trend will continue as competition drives down prices of newer models.

    GW's Bethel plant and another in Tucson, Ariz., produce high-precision plastic gear components for cartridges on Lexmark International Inc.'s Optra S series printers.

    The line debuted in early 1997 and is considered ``the first affordable 1,200-DPI printer on the market,'' Conrad said. Industry observers believe 1,200 DPI may be the limit.

    Conrad noted that copying machines get less use because users are ``finding printers are so good.'' Communicators via e-mail and area networks ``use personal printers to print out documents,'' he said.

    Dataquest supports Conrad's comments. It projects 1997 placement of copiers in the United States at 1.62 million with the product line dropping to 1.59 million in 1998 and 1.55 million in 1999, and showing further declines in future years.

    Dataquest anticipates a 7.5 percent increase in U.S. printer shipments, to 17.3 million units next year.

    The firm's 1997 estimate is 16.1 million.

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