The U.S. plastics industry continues slowly but steadily to gain steam as it heads into NPE 2006, North America's triennial plastics exhibition in Chicago next month.
Total production of plastic products in the United States grew 3 percent in 2005 compared with the previous year, buoyed in part by a robust 5 percent growth rate in the fourth quarter, according to data from the Federal Reserve Board.
Additionally, U.S. shipments of primary plastics equipment last year increased by 6 percent in value terms, to $1.05 billion, compared with 2004, according to numbers submitted by companies participating in the Society of the Plastics Industry Inc.'s Committee on Equipment Statistics.
The study includes product shipped to U.S. customers both by manufacturers and importers of such equipment.
Meantime, U.S. plastic product output will continue to grow at a 3-5 percent clip in 2006, according to economist Bill Wood, president of Mountaintop Economics & Research Inc. in Greenfield, Mass. Wood, speaking in Naples at the May 7-10 spring conference of SPI's Machinery, Molders and Moldmakers divisions, noted that output has languished with a growth rate of no more than 1-2 percent annually during the past four to five years.
``I think this will be a good year,'' Wood said in an interview at the conference. ``It won't be so good that you can be stupid and still get rich,'' but the industry will experience steady, sustainable growth. Despite some uncertainties, such as midterm elections and continuing geopolitical unrest, Wood currently sees nothing likely to derail the modest but manageable improvement.
Wood regularly analyzes the data collected by CES. While release of the group's 2006 first-quarter report was delayed, Wood offered some preliminary insights into those January-to-March numbers already submitted by CES' 85 participating member companies.
He said injection molding machinery makers have reported a 5 percent increase in value of shipments compared with 2005's first quarter, despite about a 5 percent decrease in the number of units shipped. That implies that machine prices have increased and/or buyers are purchasing a higher percentage of more expensive, sophisticated presses.
Wood also noted a modest increase in value and unit terms for auxiliary equipment.
On the downside, early reports from makers of blow molding and extrusion equipment indicate a sharp decline from year-ago numbers. But Wood said some extruder makers say they are having strong first quarters, so he would not be surprised to see the numbers improve and possibly even be revised.
He also suggested that while some U.S. mold makers are doing well, overall mold activity appears to be down so far, but the sector should improve as capital spending continues to increase. His own research suggests that some of the mold makers suffering the most are those serving the automotive sector.
Statistics for 2005
CES also published a summary of 2005 year-end data that underscored the mixed nature of U.S. plastics machinery markets.
Injection molding - Manufacturers and importers shipped a total of 3,706 injection presses to U.S. customers last year, down 2 percent from 2004. But in value terms, those same shipments rose 9 percent to $850.9 million. To put the numbers in perspective with the pre-recession boom days, SPI reported U.S. shipments of 6,420 injection presses in 2000, valued then at $1.23 billion.
Extrusion - Poor fourth-quarter performance drove down the annual numbers for the extrusion machinery sector. October to December shipments last year tumbled 32 percent to 214 units, according to CES. As a result, U.S. shipments of single- and twin-screw extruders for all of 2005 totaled 858 units, down 10 percent from the previous year. Total value of those products for the year fell 14 percent to $114.7 million.
Blow molding - U.S. customers last year took delivery of 102 blow molding machines valued at $80 million. That represented a 2 percent decline in units, but a 4 percent increase in value terms, compared with 2004.
Auxiliary equipment - This sector reports the value of order bookings rather than unit shipments to CES. Despite a slight decrease in fourth-quarter bookings, the annual number last year rose 5 percent to $350.9 million.
Components - Suppliers of screws and barrels used in injection molding and single-screw extrusion machines reported they shipped 4,062 units in the fourth quarter, and 16,454 units for the entire year. CES noted that comparable year-ago statistics are not available, due to a change in the number of firms providing data. The components business, considered a leading indicator of industry health, remains in an expansion phase, and growth ``is predicted to accelerate gradually in 2006,'' the CES report said.
Wood noted that overall spending nationwide on industrial equipment was up strongly in the first quarter this year. ``It's not quite back up to pre-recession levels, but it's getting close,'' he said. While the plastics business represents only a fraction of that broad sector, the positive trend is encouraging, he said.
Capacity utilization at U.S. plastics plants nationwide has been rising steadily for the past two to three years and continues to track upward, Wood said, though he acknowledged that part of that increase may be attributable to the shutting down of inefficient or excess capacity.
One key trend is that the value of plastic and rubber product shipments, as tracked by the U.S. government, is increasing at a faster rate than output. The dollar value for shipments of such products - which are predominantly plastic - has grown 5-6 percent a year for each of the past three to four years, Wood said. That growth has a strong impact on the types of equipment being sold, since higher-priced, sophisticated machines often are needed to manufacture the types of products increasingly being made in the United States.
``In spite of sharply higher resins prices and surging competition from low-cost imports in recent years, the U.S. plastics industry continues to expand,'' Wood said. ``Production volume lost to overseas has been replaced by higher-value-added products. This has been achieved through increased investment in equipment and technologies that enhance productivity and efficiency. This scenario will continue for the foreseeable future.''