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December 01, 2006 01:00 AM

Despite high hopes, machine sales stall

Bill Bregar
Senior Staff Reporter
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    One overriding theme of our machinery outlook special report in the Dec. 4 issue is this: Despite the rebound of the U.S. plastics industry, selling machines is still as hard as ever.

    Customers are cautious. Buyers pore over every last detail, and deals take longer to close.

    “There are good weeks and down weeks. Opportunities are out there and projects are looming. It's more difficult to get them off the street than it has been,” said Glenn Anderson, Milacron Inc.'s general manager for North American injection molding.

    A lot of people in the machinery sector said the same thing.

    Granted, peddling capital equipment was no cakewalk back in the bad old days of late 2000 through 2003. But at least everybody knew it was bad. Today, with high levels of factory utilization and plastic part production, new machinery should be flying off the shelves.

    But that isn't happening, at least not in the important injection molding machinery area. In fact, it looks like the U.S. injection press market will have taken a step back in 2006, after stabilizing in 2004 and 2005.

    We suspect one reason for the high capacity utilization is that a lot of really old machines got pulled out of production in recent years. Just how old is the U.S. fleet of, say, injection molding machines? It would be great to put some hard numbers on it. This would be a valuable research project for some industry trade association — say, the Society of the Plastics Industry Inc.

    People who sell equipment say there are plenty of aging machines still out there making parts. Smart plastics processors know they have to invest in new technology to boost efficiency and output, to tightly control every pellet of resin.

    Plastics News senior reporter Bill Bregar interviewed more than 50 machinery executives at companies that make injection molding machines, extruders, blow molding machines and blown and cast film lines.

    In that broad of a sampling, it's hard to make sweeping statements. Some manufacturers are doing well, as are some end markets, especially packaging and medical.

    The overall plastics machinery market got some good news in 2006 — lack of major hurricanes in the Gulf Coast! A year ago, skyrocketing resin prices — and even some shortages after hurricanes Katrina and Rita in August and September of 2005 — put some capital investment plans on hold. Machinery officials feared that would cast a pall over the first quarter or two of 2006. But that didn't happen, they said.

    No doubt, resin prices have affected processors' profitability. That's one big reason many are taking their time — and checking their finances — before pulling out the checkbook.

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