This year was the third straight good one for compounding extruders, with manufacturers reporting that their sector quickly bounced back from the hurricane-induced resin crunch of late 2005.
Damage from Katrina and Rita caused the prices of most major commodities to skyrocket, even creating shortages, which put the clamps on some extruder deals and a late-year damper on what had been a solid year. Business had begun to turn in 2004, after several rough years for the cyclical sector.
Some officials were worried about a hurricane hangover into 2006, but it didn't happen, as compounding companies continued to selectively invest in machinery.
``Last year was a good year. This year's been a good year. I don't think resin prices have stopped people from adding capacity,'' said Michael Millsaps, sales and marketing manager of Japan Steel Works Ltd.'s operation in Novi, Mich.
The general compounding sector is buying machines, said Eberhard Dieterich, business unit manager of Coperion Corp. in Ramsey, N.J. ``Compounders are now the most active as far as buying extruders. These are the smaller and midsize companies,'' he said.
Dieterich is ``cautiously optimistic'' that the good times will roll on in 2007.
Down in Florence, Ky., Berstorff Corp. is ``very, very busy,'' said Reiner Bunnenberg, senior vice president. Resin issues impacted business a little early this year, but the overall year was healthy.
``The customers are, of course, carefully checking the budgets. But they are not putting plans on hold,'' Bunnenberg said. Compounders are adding capacity for glass-filled materials and carpet-fiber waste and PET recycling.
Berstoff also continues to pick up business in sheet and foam extrusion, for customers that are making commercial roofing and polystyrene insulation board.
The compounding market contributes about 20 percent of Berstorff's U.S. sales, down from 30 percent, but Bunnenberg attributed the change to strong growth in lines to extrude sheet and foam.
Millsaps said JSW continues to see a trend of compounders buying smaller machines to run smaller lots and change colors more frequently.
General compounding companies are replacing old lines more than adding new capacity, he said.
``We see a lot of activity in the nanocomposite, the reactive extrusion fields and devolatization,'' Millsaps said. Many of the projects have involved complete turnkey systems, including installation.
Kirk Hanawalt of Entek Extruders agrees that small production runs are the norm, and he said that helps even-out sales despite zigzagging resin prices.
``The way the market is anyway right now, trending toward smaller lots, more specialty, it's not like you can turn it on and off,'' said Hanawalt, who is vice president and chief operating officer at the Lebanon, Ore.-based company.
Repeat customers are buying additional, smaller extruders, he said.
The wood-plastic extrusion market remains important for Entek. That industry will consolidate, leaving fewer large makers of deck board, railing and fence, Hanawalt said, noting that will help Entek.
``We feel good about the future for us because we stress high throughput and high productivity,'' he said.
At Farrel Corp., ``We're seeing some pretty robust activity,'' said sales Vice President William Flaherty. ``The first half of the year was disappointing,'' he said, reflecting the uncertain resin situation early in the year. ``But the second half of the year is looking pretty good.''
Flaherty said extruder sales continue to be strong for masterbatch and highly loaded concentrates, a specialty of the Ansonia, Conn.-based machinery manufacturer. And he is bullish about 2007.
``We're going to have a fairly healthy backlog going into next year,'' he said.
B&P Process Equipment and Systems LLC, which manufactures co-rotating twin-screw extruders, counts PVC and powder coating among its biggest compounding end markets, said Robert Ruelle, sales manager for continuous extrusion. Sales started slow then picked up.
``The third quarter was strong, with the fourth quarter being very strong. We've been quoting a lot of projects and a lot of programs,'' he said.
B&P also is getting business from wood-plastic deck boards and other building products, through its partnership with Milacron Inc.
The firms held an open house in September at B&P in Saginaw, Mich., and exhibited jointly at the PlastEurasia trade show in Istanbul, Turkey, from Nov. 28 to Dec. 3.
Thanks to a strong backlog, Ruelle expects a good 2007, at least through the first half.
Hurricane-related resin disruptions had no impact at all on Traverse City, Mich.-based CPM Century Extrusion, according to its president, Bob Urtel. Materials suppliers take a long-term view of investments.
``We enjoyed our biggest year ever in equipment sales in 2006. We sold machines into all of our major segments,'' he said.
Business was strong in general compounding, masterbatches, adhesives and powder coating.
Compounding could take a hit from vehicle production cuts from the Big Three automakers, and that, in turn, could impact machinery sales.
``We are expecting some impact from that, but broadly, we think the market conditions remain favorable,'' Urtel said.
Ed Ford called 2006 ``an incredible year'' for Maris America Corp. of Dover, Del. Business was solid for general compounding, and masterbatch, adhesives and rubber compounding.
``The economy's been very strong,'' he said.
Charlie Martin, general manager of American Leistritz Extruder Corp., went against the grain, by saying the market for general compounding has been ho-hum in 2006.
``It's not terrible, but it's not great, either. It's just kind-of plodding along, and I think if you don't have some special products out there, it's going to be tough,'' said Martin.
Leistritz of Somerville, N.J., did have some good orders in specialty areas, such as direct extrusion, adhesives, pharmaceuticals and bioplastics - the new materials made from plants instead of oil and natural gas.
Martin thinks compounding extruder manufacturers should see a more broad-based recovery in 2007.
``I'm cautiously optimistic,'' he said. ``My gut feel tells me that there is going to be an upswing in general compounding machines, because I think there's been overcapacity for a long time. That's generally the last area to rebound.''