The U.S. extruder business was choppy in 2003, but these days extruder makers are a bullish lot, as many report big sales gains for 2004.
Construction spending remains strong, fueling demand for key extrusion products like vinyl siding and window profiles.
In blown and cast film, food packaging continues its multilayer march forward. The U.S. government's decision this summer to levy tariffs against retail bags from China, Malaysia and Thailand has fueled a resurgence in U.S.-made bags - and some new machinery business in a once-stagnant sector.
In business news, 2004 was the year that Robert Wood, the top executive of chemical company Crompton Corp., sprung the announcement that Davis-Standard Corp. ``doesn't fit long-term'' with Crompton. That means that Davis-Standard - the largest maker of single-screw extruders and a player in accumulator-head blow molding machines and blown and cast film lines - could be up for grabs.
Wood made his surprise comments at the end of a July 23 conference call to release Crompton's second-quarter results. ``I would be very surprised if we had this business for another 18 or 24 months,'' Wood said.
Through the first nine months of 2004, Davis-Standard generated sales of $125.3 million, up 4.5 percent from $120 million in the same period a year ago. The machinery operation based in Pawcatuck, Conn., eked out a small profit of $101,000 for the first nine months of 2004.
At K 2004, Davis-Standard officials focused on selling machines, not corporate maneuvering. In the third-quarter conference, held Oct. 28, a week after K ended, Wood said Davis-Standard ``wrote several-million dollars in actual orders at the show.''
At K, in Dusseldorf, Germany, Hassan Helmy said packaging-related business now accounts for more than half of Davis-Standard's sales - up from about 30 percent five years ago. Food packaging, which uses cast and blown film and sheet lines, is one of the few markets that was not hurt by the recession, said Helmy, vice president of sales, engineering and research and development.
Extruder manufacturers that serve the construction market report their business is solid. U.S. sales of new single-family homes will hit a record of more than 1.16 million this year, according to the National Association of Home Builders in Washington. The trade association predicts that will drop 5.2 percent in 2005, as the housing market is in the process of ``reaching its limits'' and ``topping out.''
Housing starts also are expected to pull back a bit.
NAHB remains confident the booming housing sector should hold up at ``fairly robust levels'' into 2005. One wild card - high oil and natural gas prices - could actually help the vinyl window industry, once homeowners get sticker shock when they open their first heating bill, according to machinery executives.
``It could be one of the keys for the window guys to increase the insulation of the home,'' said Olivier Crave, sales manager of Krauss-Maffei Corp. in Florence, Ky.
Dirk Koch of Deltaplast Machinery Ltd. agreed. ``That market may just explode because people are looking for ways to save money,'' said Koch, sales vice president at the Concord, Ontario, company.
Koch also sees continued strength in wood-plastic decking. Deltaplast is offering some technology from Europe that does not require any pre-drying for the fibers. He added that high resin prices are promoting processors to find fillers such as rice shells, to extend their materials.
``I see some fairly steady, strong growth'' in 2005, Koch said. ``The presidential election's out of the way. People have a positive outlook.''
Crave said Krauss-Maffei had a ``great year'' in 2003, when its extruder sales returned to the level of 2000. He thinks 2004 can match the level or slightly exceed 2003. ``But we have no visibility at all. The only visibility we have is for a few months,'' he said.
For machinery, pipe extruders bought some replacement machines this year, but the industry seems to have too much capacity, Crave said.
Window profiles, siding and fence are another story. ``It was a very great year. We may see a lot of new customers to invest with new plants and new machines,'' he said.
American Maplan Corp. of McPherson, Kan., should see business improve about 20 percent this year, said Kurt Waldhauer, president and chief executive officer. ``We're going to be very, very pleased with 2004. We're going to be up significantly,'' he said.
Maplan feels the construction segment will continue to be strong. ``In talking to customers, it looks like its going to continue and expand a little bit more again in '05,'' Waldhauer said.
Most other extruder makers also are upbeat as 2004 winds down. Thomas Allen, president of Diamond American Corp. of Tallmadge, Ohio, said customers are adding new machines to expand capacity.
``What I'm seeing right now is a lot of customers that are so busy they can't shut down for maintenance. I haven't seen that for awhile,'' Allen said.
Jerry Berlyn agrees that capacity utilization has increased - he just thinks there's overcapacity in the extruder machinery business. His Berlyn Extruders Inc. is downsizing by moving to a smaller building in Worcester, Mass., and plans to outsource much of the firm's component production. Berlyn Extruders will design the extruders and do final assembly.
``The factories are just getting into the 85 percent full capacity and that's when companies begin buying machinery, but there is so much machinery-building capacity out there,'' Berlyn said. He sees ``a little uptick,'' but added: ``There's nothing exciting happening in this industry.''
Merritt Extruder Corp. of Hamden, Conn., has picked up work in upgrading existing equipment for customers, which can boost output by 25-40 percent, said Sandy Guthrie, president and CEO. ``This is capital spending but it's not expansion spending as much as it is increased-productivity spending. And we're finding a lot of business for that.''
Guthrie also reports strong growth in reclaim lines, this year from a new customer base - injection molders - prompted by high resin prices to recycle their own scrap.
The wire and cable business is finally moving past its overcapacity state and ordering new equipment, he said.
David Citron said business for American Kuhne Inc. was hot in 2003, then dropped off a bit during the first five months of this year. ``Then in June of this year it started to pick way up again, and it's been growing consistently ever since,'' said Citron, director of sales and marketing.
In October, American Kuhne shipped its 500th machine since it was established in 1997 as the U.S. operation of German extruder maker Kuhne GmbH. Citron said the firm sells extruders to processors and to makers of twin-screw compounding extruders that put together turnkey packages.
Harrel Inc. of East Norwalk, Conn., has made a name for itself in medical tubing extrusion lines. Harrel's alternate polymer extrusion process, which allows one extruder to run parts with the same dimensions with two different polymers, is catching on with medical tubing. Now the company is using the technology for a new market: corrugated tubing for home appliances.
``They need different stiffnesses in the same length of tubing,'' said President Holton Harris. ``We're talking about doing it all in one fell swoop.''