DUSSELDORF, GERMANY — The hot-runner business is expanding 10-12 percent a year, by some estimates, and only about 30-40 percent of molds are made with hot runners now. Sounds like a good market to be in.
Yes and no.
The maturing technology and large number of competitors are combining to put significant pricing pressure on the industry, and forcing many companies to focus on products that cut price rather than introduce dramatic new improvements in technology.
``Price points, we see, are starting to come down in certain sectors,'' said Tim Stojka, president of Fast Heat Inc., based in Elmhurst, Ill. ``It's like any technology that matures.''
The changes prompted Fast Heat to introduce a new Micropoint nozzle for high-cavitation, small-part production with commodity resins: ``It's a little less high-end. It's got a really unique design that processes small parts better,'' Stojka said.
Still, many major manufacturers in the tight-lipped industry said during interviews at K'98, held Oct. 22-29 in Dusseldorf, that they recently have undertaken or are planning significant plant expansions to keep pace.
Fast Heat plans to build a new factory in 1999 on the same scale as its plants in the United Kingdom and France.
Ewikon USA Inc. plans to set up a hot-half assembly and repair plant in Elgin, Ill., and its German corporate sister, Ewikon Heisskanalsysteme GmbH & Co. KG expanded its Frankenberg plant 18 months ago.
Mold-Masters Ltd. of Georgetown, Ontario, in the past two years has doubled manufacturing at both its Canadian and German plants and opened new production in Spartanburg, S.C.
Incoe International of Rodermark, Germany, is expanding its German manufacturing capabilities. And Gammaflux LP plans to begin manufacturing one of its new controllers in Europe in 1999.
Husky Injection Molding Systems Ltd. recently opened its Bolton, Vermont hot-runner manufacturing plant, and the newly named Dynisco Hotrunners said it has fully merged last year's Eurotool acquisition with its Kona unit.
Beyond all that new production, several factors are driving the pricing pressures. The 1980s saw innovation in products but that has slowed this decade, and many companies have entered the marketplace, said Fast Heat's director of product development and management, Bob Ameel.
Hot-runner systems also are getting much more reliable, so mold makers no longer need to pay more for reliability, Stojka said.
Dario Vetter, marketing manager for Mold-Masters, said the company has started making its nozzles by metal injection molding to cut part costs by 25 percent and improve heat transfer.
``We've noticed low-priced systems coming into our established market share,'' he said. ``What we were finding in developing markets looking at hot-runner systems, the companies need to buy lesser-cost items. They couldn't justify in their minds the higher cost.''
A hot-runner controller manufacturer that had focused on the high end of the market, Gammaflux of Sterling, Va., unveiled its GLC 2K off-the-shelf control system and exhibited its CC 100 low-end controller for the European and Asian markets. Those systems target much cheaper markets than its more traditional, sophisticated controllers.
``What we are seeing today is a greater emphasis on value and simplicity,'' said Lee P. Jones, director of global marketing for Gammaflux. ``People are looking for ways to produce products for a lower cost.''
A minority of manufacturers interviewed, however, said they were not seeing as much price pressure among companies that need more sophisticated systems.
``Our product is a high-end product,'' said David Boxall, general manager of Ewikon USA in Elgin. ``We have not experienced pricing pressure that a general-purpose hot-runner maker like Fast Heat would see.''
Timothy Triplett, chief executive officer of American MSI Corp. in Moorpark, Calif., said companies making health-care products, for example, still need very sophisticated hot runners.
Another trend mentioned almost universally by officials is shorter lead times for mold makers looking for control systems and hot runners that are easier to use or simply plug in ready to go, like a complete hot-half system.
Roughly 65 percent of Ewikon's sales in the United States are complete hot halfs, up from probably 25 percent several years ago, Boxall said.
Observers also are watching closely the impact of injection molding machine makers building hot-runner controllers directly into the press in a space-saving move. Putting controllers on the machine is a ``huge threat'' to controller manufacturers, according to Arnold Vermeijden, marketing manager for Dynisco Hotrunners, based in Bensheim, Germany.
But American MSI's Triplett said that machine controllers cost 25-50 percent more and have much less flexibility. Still, he said his company will do much more business selling its controllers directly to machine makers in the next few years.