AKRON, OHIO (Nov. 24, 10 a.m. EST) — As autumn turns to winter, something new is turning up in compounding machinery circles — a sense that things are getting better.
After three or four years, the drought in compounding extruder sales appears to be finally ending, according to seven machinery executives interviewed in mid-November. During the bad years, customers put investment plans on hold. Among the few bright spots were the wood-flour business for decking and the ever-present small independent shops.
Now, machinery executives say they are beginning to quote some jobs for major compounders.
“The general compounding business is starting to come back,” said Paul Roberson, vice president of business development at NFM Welding Engineers Inc. “Instead of cautious optimism, it's cautious investment. I do see people spending money.”
Roberson pointed out that extruder buying in the late 1990s created too much capacity when compounding went south a few years ago. So even as compounders get busier as the U.S. economy heats up, “you still have to go a long way to get that capacity sucked up.” But he said the company in Massillon, Ohio, started to see its parts and rebuilding business pick up earlier this year, showing that customers had pent-up demand to get production running.
He said NFM's investment in a demonstration laboratory for wood-flour compounding has paid off. At NPE 2003, the company showed its turnkey machinery.
For the machinery industry, the big news for 2003 was the decision by the largest player — Coperion Corp. — to end 27 years of U.S. manufacturing of Werner & Pfleiderer machines. Coperion laid off about 70 people in Ramsey, N.J., including some big names like 40-year W&P veteran Asmut Kahns.
On a more positive note, Oregon-based Entek Extruders announced it will spend nearly $6 million to expand its machinery plant in Lebanon, Ore. And Japan Steel Works Ltd. opened a U.S. sales and service hub in Edinburgh, Ind.
Coperion's president and chief executive officer, Jan van Bakergem, said W&P production would return to the German headquarters plant in Stuttgart, Germany. Ramsey will continue to build electrical components and refurbish gearboxes for extruders. The change is part of a plan to decentralize the company by setting up geographic centers to support Coperion's businesses.
The leaner Coperion will hit its projections for this year, said Dan Mielcarek, business unit manager for chemical technology and food extrusion. He also is responsible for wood-flour composites, thermoplastic elastomers and Coperion's direct-extrusion partnership with Davis-Standard Corp.
“With our restructuring we made our targets. That's substantially down from our business in previous years, but the restructuring allowed us to set targets that were more reasonable to the 2003 market,” he said.
Sales expected to rise
Coperion officials think sales will increase by about 20 percent next year. “We expect most of that business to come from the smaller compounders,” such as color concentrates makers, Mielcarek said. The company continues to get orders from the wood-flour market.
Meanwhile, as the year ends, an official of one competitor, Berstorff Corp., is “reasonably optimistic.”
Berstorff, which closed its fiscal year Sept. 30, saw a sales increase of 30-40 percent for twin-screw compounding extruders in 2003 from the year before, according to Peter Hunziker, vice president of sales and marketing at the company, based in Florence, Ky.
Hunziker said Berstorff gained some market share in a year when the U.S. market was still pretty stagnant. But he said the overall market is finally waking up.
“We have seen a gradual improvement over the course of the year, from the first to the last quarter, and we sincerely hope that this tendency is going to continue,” Hunziker said in mid-November. “We're starting the year with a good backlog. And as we speak, we have a number of projects on the compounding side, and also the sheet extrusion side with in-line compoundiing, that look rather positive.”
Berstoff is stressing its in-line sheet extrusion machinery. The lines can turn out roofing membranes, sheet for thermoforming and other high-volume products.
American Leistritz Extruder Corp. has touted direct extrusion for years. “It has continued to remain strong, said Charlie Martin, general manager. “But it's not like there's 100 installations; there are three, four, five or six installations in North America.” One trend, he said, is toward direct coextrusion, with systems mixing twin-screw extruders and single-screw machines to make one product.
American Leistritz of Somerville, N.J., also has invested in extruded foam and profiles with long-fiber reinforcements.
But Martin is not convinced that general compounding is picking up. “It was slow and the orders were at not-great pricing,” he said. “Some color guys are still doing well and we've done well in the market. It was a nice little charge for us this year.”
Peter Giles of B&P Process Equipment and Systems LLC said the Saginaw, Mich.-based company saw some improvement this year, from a mix of smaller and larger companies. “Things are moving in the right direction. We're continuing to develop new projects. People are returning our phone calls more and more,” said Giles, business manager for twin-screw extruders. “Things are going to be a little bit better next year. I'm not overly optimistic, but I think things have picked up.”
At Century Inc. in Saginaw, Mich., President Bob Urtel is seeing increased quoting from the United States — and now, from Asia, thanks to a cooperative agreement announced at NPE 2003 with underwater pelletizer maker Gala Industries Inc. A Century/Gala compounding line should begin production in May in China, he said.
Back home, compounders are sinking money into existing machines with new gearboxes for higher output. “They're starting to refurbish some machines they've been running hard for a long time,” Urtel said. Larger customers also are opening their wallets. “Some of the majors have bought machinery lately for both general compounding and reactive extrusion.”
Century also opened a laboratory in Houston to serve resin companies.
JSW opened its Indiana technical center in March, in a down market and three years after its licensing deal expired with Davis-Standard. The twin-screw extruders are made in Hiroshima, Japan.
“We have sold several extruders since March, which was better than I thought we would do. We have been involved in some major projects,” said Michael Millsaps, sales manager.
The company offers some special technologies, such as machines for devolatizing and de-watering, as well as general compounding.
For JSW, 2003 is ending on a strong note. “We've been almost at a frenzied pace these last three months,” Millsaps said.
Sales have rebounded this year for Farrel Corp., which makes extruders and mixers in Ansonia, Conn. Sales increased 18.5 percent through the first nine months of 2003, to $35.2 million, from $29.7 million for the same period of 2002. However, orders declined 7 percent from the year-ago period.
Farrel does not break out sales for its twin-screw compounding extruders.