ST. VALENTIN, AUSTRIA (June 5, 9:30 a.m. EDT) — Unburdened by shareholder pressure to provide quick returns, family-owned and debt-free injection molding machine maker Engel Holding GmbH (Booth S2286) continues to invest on a massive scale.
In the next two years alone, it will invest around 90 million euros ($115 million). Much of the money will go into a new technology center for at the company's headquarters in Schwertberg, Austria, where it makes its Victory small and medium-size tiebarless machines, as well as new Speed high-speed toggle machines.
Construction of the 120,000-square-foot center, which will also house a minitheater for around 500 people, will begin in the fall and will be carried out in two stages during the following three years.
Engel's capability to make large machines on a global scale also continues to grow. As previously reported, it is on schedule to open its first Chinese plant later this year. Speaking during the company's triennial customer symposium/open house May 17-18 at St. Valentin, Engel Holding Chief Executive Officer Peter Neumann said production should start in December.
The 80,000-square-foot facility in Shanghai will make Duo machines identical to those made in St. Valentin — Engel's main plant for large machines — and in York, Pa., exclusively for the Asian market. Injection units, tiebars, pressure pads, controls and other high-value components will be brought in from Austria.
The company is currently building a sales and service center in Poland and is also evaluating new investments in Russia.
“In the long term, it's a huge potential market,” Neumann said in an interview. “We are looking for some land in the Moscow area.”
Engel will also replace some aging machine centers in St. Valentin and install more machine tools for small machines in Schwertberg. “And if things go according to plan, we will need more capacity to build the Speed machines,” he said. Engel currently has annual capacity to build 1,800 machines in Schwertberg with a single assembly shift.
The St. Valentin plant has grown topsy-turvy in recent years. The most recent expansion — the fourth in 15 years — provided space for a new automation center. Engel makes robots in Die-tach, Austria, but has reached the limits of its capacity there. Integrated production cells will now be designed and built in St. Valentin. This year the company is set to make around 1,000 standard robots and some 100 production cells, compared with a combined total last year of around 900.
Increased robot sales will be due in part to increased cost-efficiency. The just-introduced ERC 23 linear robot for example, with three servodriven axes for machines up to 450 tons, uses aluminum profiles in place of steel to give improved acceleration and a top speed of more than 12 feet per second.
“Standard robots can now be used in high-speed applications,” said automation sales manager Herbert Hofmair. List price of the ERC 23 is around 25,000 euros ($32,000).
Any limits on capacity now are down to lack of people. “We are busy hiring,” Hofmair said. “We have 22 engineers today working on production cells, and we want to double that. But finding good people is not easy.”
During the symposium, Engel presented its annual HL award for the best use of its tiebarless machines to Emmerich, Germany-based molder Schneegans GmbH, which uses a fully automated production cell to make car engine manifold parts.
“Companies like Schneegans are pushing back the borders in automation; they are taking more risks; they want to get into new technologies,” Hofmair said. “They say it is the only way they can keep business in Germany [with its high labor costs].”
High-speed machines making debut at NPE
NPE marks the beginning of a major Engel effort to break into the North American market for high-speed machines for packaging with its Speed line, launched as the macPack at K 2004 in Dusseldorf, Germany. The company now has three models, with clamping forces up to 300 tons, with a 420-ton unit debuting later this year. Processors looking for the all-important 660-ton version will have to wait until K 2007.
“It was a strategic decision for us to go into this market,” Neumann said. “Production of packaging will remain in the 'old' markets; it's not worth transporting packaging parts from China to America. We started a completely new development program, with the goal to have the fastest machine in the market.”
Engel has bench-marked its machines against its major competitors. It says Speed machines have dry cycle times at least one-tenth of a second faster — which can translate into annual savings of over $10,000 per machine.
Neumann has his eye on a major share of the European market for high-speed packaging machines, but admits the task will be tougher in North America. It will be even tougher for its macPET preform machines, launched as a brand in their own right concurrently with the Speed. (Engel for many years made machines for Krupp, later SIG, Corpoplast.)
“There is a virtual monopoly,” Neumann said. Bolton, Ontario-based rival Husky Injection Molding Systems Ltd. has no intention of ceding its position in packaging, and Engel is doing its best to stay on top in automotive. The latest weapon in its armory is Dolphin, a two-component molding system based on a Duo machine and a spin-stack mold for making interior trim with integral thermoplastic elastomer foam skins.
Dolphin is a codevelopment with Swiss mold maker Georg Kaufmann Formenbau AG in Busslingen, and materials suppliers BASF AG of Ludwigshafen, Germany, and P-Group in Ferrara, Italy. P-Group, which supplies the polyester-based elastomer, initiated the project two years ago. Potential processors and users got their first view of the technology at the open house.
With skin and structure both made in thermoplastic polyesters, Dolphin's key advantage over thermoplastic/polyurethane combinations is the recyclability of the parts. Costs should also be lower, since parts are made on a single machine.
Parts are foamed using Trexel's MuCell process. One notable aspect of the Dolphin technology is that, unlike with virtually every MuCell part made to date, it creates no swirl marks on the product surface, so no painting or in-mold decoration is required.
Electric machine prices coming down
Engel has named its colors firmly to the mast of electric machines and is on track to get costs down to within touching distance of comparable hydraulic machines. Costs for the E-Motion have been cut by 15-20 percent in the past 12 months, thanks to improvements in assembly costs, increased volumes, improvements to servodrives, and a “value analysis” to ensure the machine is not overengineered.
For example, “Most customers said they didn't need the swing-out injection unit, so it is no longer standard,” said Engel Austria President Georg Tinschert. “The machines are more compact now, but there is no less value to the customer.” The goal is to get a further 10 percent savings in the next two years.
“We have to cut our prices because we are in major competition with the Japanese, and the yen keeps going down and down,” Neumann said. “The yen has lost around 20 percent in value against the euro in the last two years.” In addition, interest rates are higher in Europe and the U.S. “In Japan, money costs nothing. Payment terms in Asia are six to 12 months.”
Engel will have three electric machines running at NPE. Models currently go up to 300 tons, the most recent additions to the range being larger models with toggles and tie bars. A 400-ton model comes out later this year, and a 550-ton model should be ready for early 2007. Multicomponent versions are already available up to 165 tons. Within their size range, electric machines account for around 10 percent of company sales, and the aim is to push this to 15 percent this year.
“Our declared goal is to be the top European supplier of electric machines,” said Neumann. The company is currently second behind Ferromatik Milacron. This year, Engel will make 200-250 E-Motions. By comparison, world market leader Fanuc will make around 4,000.
Sales at Engel took a dip in its last financial year, but the company still managed to gain a 0.5 percent share in a global market that the company says fell around 10 percent. Group sales of 545.9 million euros ($698 million) were 6.9 percent off the previous, record year, and unit sales of 2,725 were down 7.7 percent.
Neumann put much of the blame for the fall on the slack global market for smaller machines — a market that has shown signs of recovery in recent months, however. Incoming orders grew by more than 20 percent overall in the first quarter of 2006-07, with growth slightly better in small machines, helped by a big order from Lego.
Heading into NPE with some optimism
Walter Jungwirth, president of Engel's North American operations, said he was optimistic about prospects for the market.
“Capacity utilization [in North America] is up at around 86 percent, which is very positive. On the other hand, we have a very challenging situation in the automotive industry, related to the Big Three. But I think this also represents a challenge for injection molding companies. Now a lot of people are looking for new technology, cost-saving measures, be it multi-material molding, be it water-assisted molding … in the last few months we have had a lot of interesting discussions.
“I think more companies are realizing the advantages of investing in the best sort of equipment. We can show that the cost of the machine only accounts for around 4 percent of the total cost of a part. I think it's much more important for molders to focus on uptime, on efficiency, on maintenance and on training. Companies are a little bit blinded by initial investment costs.”
Jungwirth said Engel “has established itself firmly in the No. 2 position in the United States, covering automotive, medical, technical markets, teletronics and, starting now, packaging.
“At the NPE, our focus is technology in the field of automation, all-electrics, and packaging. Engel is very optimistic about the future because we have the right products.”