The North American profile extrusion market has been one of the most stable sectors of plastics processing in recent years, thanks in part to healthy construction and automotive markets. But the threat of imports, especially windows and doors, should not be taken lightly, according to a recent study based on interviews with about 100 profile extruders.
North American profile extruders generated about $11.3 billion in sales in 2003, and the market will grow at an average annual rate of 6 percent through 2008, to $15.1 billion, according to the study from Plastics Custom Research Services of Advance, N.C.
``Profile extruders have not taken the hit that injection molders have taken. There's been an amazing consistency on growth rate, year to year. If two-thirds of that business is building and construction, it would stand to reason,'' said PCRS President Peter Mooney, the study's author.
Growth has come in decking, fencing and railing, he said.
``The companies with custom, proprietary and captive profile extrusion operations have managed to come through this period with sales growth close to their long-term trend line,'' he wrote. ``This is largely due to the fact that two-thirds of their output is directed to the building and construction sector which, along with the automotive market, has stayed strong throughout this difficult period.
``Moreover, here in 2004, even the rising cost of materials has not impacted negatively on residential construction spending.''
Now, the U.S. economy finally seems to be out of the woods and has regained robust, sustainable growth, Mooney said.
Other significant growth markets include signs and displays and exports, which are projected to grow through 2008 at a 10 percent average annual rate. Mooney attributes the growth in signs and displays to store remodelings and plastic replacing wood and metal.
The weakest areas are electronic/electrical equipment and furniture, which still are declining.
Firms like Plastics Design & Manufacturing Inc., based in Englewood, Colo., are riding the wave of the burgeoning deck, fence and railing markets. Deck and fence each generated about $200 million in 1999 sales, and each group grew to about $400 million in 2003. By 2008, decking will increase to a $600 million market and fencing will grow to $644 million. Railing will grow from $40 million in 2003 to $100 million in 2008, the report predicts.
``For us, it's been a godsend,'' PDM President Keith Giacchino said in a June 7 telephone interview. His firm recently began selling its own line of high density polyethylene fencing products. ``It's an easy sell. It'll increase our sales by about 60 percent this year, just the fencing portion.''
PDM already is increasing its extrusion capacity from two lines to four. Officials are noticing a trend toward hybrid systems, in which a PVC frame is used with HDPE fence pickets.
``There is lots of capacity in that market for PVC framing systems, and they're easier to install,'' Giacchino said. ``Business in general is picking up quite a bit, but fence by far is having a huge impact on our business. As long as volume and demand [are] there, we'll continue to expand our capacity.''
Mooney said U.S-based profile extruders are benefiting from a return to growth of industrial products and accelerated growth of exports. However, imports are a threat to future growth as competition from China increases.
``In our 2000 report we made no reference, nor did our survey respondents, to imports of profile extruded products,'' he wrote. ``Today, four short years later, the prospect of future penetration of imports, specifically China imports,'' is a top concern among domestic profile extruders.
Mooney's 2000 report noted that the demand for profiles in China's building and construction market was booming. The country already had 20 factories making twin-screw extruders and associated equipment to satisfy that demand, and the Chinese plastic window industry was projected to grow 15-30 percent per year out to 2005. That exceptional pace was due in part to evolving market mandates and government regulations. China mandated the use of extruded PVC window frames to avoid tapping into scarce wood resources.
``At that time, the presumption was that most of Dalian Shide's output would be consumed within China, although some profiles would be exported to other parts of Asia, Russia, South America, Eastern Europe and South Africa,'' Mooney wrote, referring to extrusion giant Dalian Shide Plastic Industry Co. Ltd. of Dalian, China.
Mooney is skeptical of wood-plastic composites.
``There's still a lot of need for new formulations,'' he said in a June 4 phone interview.
Potential drawbacks include the cost of investing in processing equipment, plus performance issues related to structural strength, moisture penetration and ultraviolet-light stability.
``I don't want to be totally negative on it; obviously, it's done well. There are certain areas where it is ideal, but I'm skeptical as to the exterior use,'' he said.
