Manufacturers of compounding extruders said that 2005 was a solid year with broad-based capital investment, but several worry that compounders will get squeezed by resin price-hike shocks and close their wallets in the new year.
That could happen in an industry whose members buy resin and additives, mix them together and sell them for a markup.
Dan Mielcarek of Coperion Corp. answered, ``Yes, definitely,'' when asked whether customers postponed orders after two hurricanes roiled a resin market that was already high-priced. But the business is still pretty strong.
Ramsey, N.J.-based Coperion exceeded its budget projections in 2005, thanks to businesses such as automotive, where growth by Japanese transplants is spurring orders for compounding extruders, said Mielcarek, business manager for chemical technology and food extrusion.
Uncertainty surrounding resin late in the year has made compounders more cautious, Mielcarek said.
``I think the question [for compounders] right now is, are we at a peak and are we going to slide back down? So it's taking that extra month or two before they really pull the trigger. The other side of that coin is, there are people who already have orders they can't process and they want to know why they can't get a machine that week.''
Several other executives also described such a split-personality market.
Michael Millsaps has not heard any customers blame high resin prices.
``We've seen several projects that are coming to fruition that were kind of on the back burner. So it's been a great year for us,'' said the sales and marketing manager of Steel Works Ltd.'s operation in Edinburgh, Ind.
But Millsaps called the U.S. economy fickle. ``The last two years have been good, but there's still an air of uncertainty. In this economy, the littlest thing can shake things up,'' he said.
Millsaps said unrelenting resin prices, combined with smaller lot sizes, have caused compounders to downsize a bit and buy smaller machines. In May, JSW introduced a lower-priced laboratory extruder, the TEX 28V, at the Society of Plastics Engineers' Antec 2005 conference.
At Farrel Corp., ``We've got a couple of projects that are delayed because of the resin issues, people waiting to see if the prices decline or stabilize,'' said William Flaherty, vice president of sales.
Ansonia, Conn.-based Farrel has done well selling continuous mixers to blend filled resins. Flaherty said the company also is selling equipment to the automotive weather-sealing market, which is moving to thermoplastic elastomers instead of rubber.
Charlie Martin, general manager of American Leistritz Extruder Corp., agrees that interest in fillers could help sell twin-screw compounding machines to companies now running single-screw lines. ``If somebody has an unfilled product and they think they can go to 40 percent filled, they've just cut their resin costs by 40 percent,'' he said
Leistritz of Somerville, N.J., generates most of its sales from ``specialty, valued-added niche markets'' like direct extrusion, foam extrusion and compounding materials for medical devices. That may have insulated the company somewhat from the resin turmoil.
``We haven't felt it yet. It's not like people jerked projects out of the pipeline,'' Martin said. ``You've got to see how it shapes up.''
Century Inc. of Traverse City, Mich., reported that the hurricanes did cause some orders to ``slide'' into next year.
``Quite a few projects this year were solid, funded projects in 2005, that have moved to 2006,'' said Bob Urtel, president and chief operating officer.
Still, Urtel said Century sold machines in all of its major segments this year, including secondary compounding of engineering resins, recycling and wood-plastic composites.
Century also recently sold its second 12-screw extruder, Urtel said. He would not identify the buyer of the exotic machine, but said the company compounds elastomeric materials. Century has orders pending for two more 12-screw machines, one to another compounder of elastomerics and the other for devolatilization.
Ed Ford, vice president of Maris America Corp. in Dover, Del., said that after the hurricanes, business did settle down from very strong activity earlier in the year. But he can't blame the hurricanes. ``Nobody has turned around and told me, `Well, we're holding off on this project because of resins,' '' he said.
Maris, which started U.S. sales in 2001, saw more business from general compounding and masterbatch customers this year. Other markets include hot-melt adhesives and rubber.
``This has been a major year for us,'' Ford said. ``Things are definitely getting better than they have in the past.''
Entek Extruders also has not been hurt by the material volatility, according to Kirk Hanawalt, vice president of sales at the company in Lebanon, Ore. The subject does come up.
``It's interesting, because all our customers are complaining about it, but I haven't seen a lot of people holding off on buying,'' he said.
Hanawalt said the wood-flour market remains solid, for the stronger, major players.
The general compounding business is buying machines. ``It hasn't reached the pace of the mid- to late-90s. That was the go-go era. But there are applications that people are buying for,'' he said.
Massillon, Ohio-based NFM Welding Engineers is having a ``banner year,'' said sales engineer Michael McMahon. ``It's been across the board. We've sold machines to color concentrates, to specialty operations. We've sold machines to general compounding. ... We can't point to one area and say this is the strongest segment.''
McMahon said customers talk a lot about resin prices, but most seem to view new compounding equipment as a long-range investment,
``This too will pass, and people realize they need to look long-term,'' he said. ``They're continuing to spend money.''
