After a two-year battering, the U.S. plastics machinery market finally could be bottoming out, according to industry analysts and new second-quarter statistics from the Society of the Plastics Industry Inc.
SPI's Committee on Equipment Statistics reported that shipments of injection presses, blow molding machines, auxiliary equipment and screws and barrels all increased in the second quarter of 2002, from the first quarter. The only quarter-by-quarter decline was for extruders.
It's only one quarter - not enough time to gauge if the second-period SPI numbers really show a ``bottom.'' Also, injection presses, extruders, screws and barrels declined when measured against the year-ago quarter.
But a fledgling U.S. rebound so far this year could be signaled by the fact that sequential gains - the first to the second quarter - are spread across four of the five sectors.
Several machinery analysts say third-quarter economic data indicates that the plastics equipment market is poised to recover. In its own second-quarter report, executives of the largest U.S.-based player, Milacron Inc., said business apparently has bottomed.
But how strong a rebound will be anybody's guess.
``Most companies are still extremely cautious about capital expenditures, and there's not going to be any major increase in [capital expenditures] this year,'' said Walter Liptak, analyst at McDonald & Co. in Chicago. ``The big question is in 2003: Can they afford to keep their [capital expenditures] so low? At some point, you have to increase your spending.''
The third quarter will be key to determine the level of new orders, since many manufacturing companies make spending decisions in the fall, several analysts said.
Washington-based SPI said the combined U.S. shipments of injection and blow molding machines and auxiliary equipment hit $287 million in the second quarter. That is a 21.2 percent jump from the first quarter of this year, and a 3.6 percent gain from the second quarter of 2001.
The data is more encouraging than the 2002 first-quarter statistics, which were released two weeks ago. In the first quarter, combined sales plunged 23.3 percent compared with the same period in 2001, and were flat from the previous period.
Other details from the SPI report:
* In the second quarter of 2002, 849 injection molding presses were shipped to U.S. customers, a 10 percent increase from the first-quarter total of 771 units. However, the unit numbers do not look as good when measured on a year-ago basis, since 1,007 presses were shipped in the second quarter of 2001, SPI said. Injection press shipments have bumped up and down for several quarters.
Measured in dollar value, injection presses were about flat from the year-ago quarter, and jumped 28.2 percent from the first quarter.
* Blow molding machine sales rebounded to 54 units in the second quarter, a 12.5 percent gain from 48 machines in the first quarter.
* Extrusion machines declined 11.1 percent in the second quarter from the first period. Extruders have fallen for the last three quarters. SPI releases only unit data for the category, which includes both single- and twin-screw machines.
* Manufacturers of auxiliary equipment enjoyed their third straight quarterly increase, hitting $76.6 million in the second quarter.
* SPI reports gains for screws and barrels from the first quarter. In the second quarter, 1,863 barrels were shipped, a 13 percent increase over the first quarter. Screws for single-screw machines grew 3.7 percent, to 1,838. Both types of components were lower than a year ago, although screws have increased in each of the last three quarters.
Predicting the future of the U.S. economy requires a crystal ball.
Capacity utilization for plastics and rubber factories is hovering around 80 percent, and many machinery executives think the rate needs to hit the mid-80s before they will enjoy a strong increase in sales.
``I think plastics machinery sales and orders have clearly bottomed, as long as the economy doesn't go into a double-dip [recession],'' said John McGinty, senior analyst at Credit Suisse First Boston. He added that most economists don't think the economy will slip back into recession.
Alexander Paris, president of Chicago-based Barrington Research, said spending on computers and semiconductor equipment is down, but industrial machinery is improving.
``For machinery in general, spending has pretty much hit a bottom. They've stabilized and started to move up,'' Paris said.
``It appears that Q1 could be the bottom. We're probably near the bottom,'' said Chris Staneluis, an analyst with Midwest Research Inc. of Cleveland.
He said automotive production, and the introduction of new models, is a positive sign. Consumer spending is holding up, but except for cars, production seems to be slowing in some sectors, he said.