Extruders sold into general compounding slowed down this year, but specialty compounding stayed solid, according to extruder manufacturers. Looming on the horizon for 2008: a slowdown in two important, high-volume markets of automotive and construction.
U.S. automotive sales in 2008 are projected to drop below 16 million vehicles, for the first time in a decade. Automotive ``has had a very tough year,'' said Peter Fukuyama, sales and marketing manager of Japan Steel Works Ltd. compounding extruders. Some capital spending has been postponed, and Fukuyama said customers need a better feel for the economy before they make future machinery decisions.
``I think that the market will share itself out in the second quarter of next year. At that point, it will be very clear what the market will do,'' he said.
JSW, like other compounding extruder suppliers, has sold machines into niche areas such as reactive compounding, where materials are partially reacted in the extruder to make cross-linked resins, alloys, adhesives and other materials. ``That's been a very good, strong market,'' Fukuyama said.
General compounding was slow for American Leistritz Extruder Corp., but Charlie Martin said the company's specialty in direct extrusion, and markets such as pharmaceutical, continues to pay off.
But Martin said even though there are fewer overall units sold in the U.S. market, customers are buying complete systems for specialized materials - and that includes automotive. ``Automotive is down, but you could get one order for automotive that's $1.5 million, and that might be the only machine sold to automotive that year,'' he said.
The stakes are higher. ``For machine makers, it's become a high-drama market,'' said Martin, general manager of Leistritz in Somerville, N.J.
Farrel Corp. of Ansonia, Conn., enjoyed a good year, and a healthy backlog for both plastics and rubber machinery should make 2008 busy, according to William Flaherty, vice president of worldwide sales and marketing.
Flaherty said the backlog makes him confident for the first half of 2008. After that his crystal ball gets cloudy, mainly because of automotive and construction. ``The concern is what we see in the second half of '08, and what will be carried forward into '09,'' he said.
The weak dollar should help Farrel export its compounding extruders and mixers, and also fend off competing machines from Europe, he said.
Krauss Maffei GmbH makes its compounding extruders in Hanover, Germany. ``With the weak U.S. dollar, we have to make sure that we just really maximize the U.S. content as much as we can,'' said Reiner Bunnenberg, vice president of extrusion.
The U.S. operation in Florence, Ky., has done final U.S. assembly for several years. Now officials are using their contacts at U.S. suppliers to find components to ship back to Germany. ``We're looking at what we can source in the U.S. to help Germany lower its costs,'' he said, interviewed at the company's booth at K 2007.
Bunnenberg said compounders have added capacity in the southern United States and Mexico. Special applications remain strong. One example is foam insulation, where manufacturers are moving to carbon dioxide as a blowing agent, and away from hydrochlorofluorocarbons. ``This requires new equipment, because the CO-2 is very difficult to mix into the melt, so you have to have a very good mixer'' and cool down the hot melt while maintaining pressure, he said.
Jan van Bakergem said the strength of smaller, specialized compounders is good for Coperion Corp. Three years ago, the company in Ramsey, N.J., moved to set up decentralized, regional hubs. Now Coperion has six hubs in the United States, one in Canada and one in Mexico.
``There are a lot of smaller type of good projects going on in the interior of this country, but you have to find them. Nobody comes and rings you up anymore,'' said van Bakergem, president and chief executive officer.
Plastics compounding and color masterbatch work have been solid this year, van Bakergem said. He also reports polyolefin investment in the southern United States.
``Overall we are still happy. We're still growing it and that's clearly showing in plastics-related activity. This has been one of our top years right now,'' van Bakergem said.
Century Extrusion made news in October when it bought Nanjing Ruiya Polymer Processing Equipment Co. Ltd., its partner company in China. It's still too early to say when Century, of Traverse City, Mich., will import compounding extruders from China for sale in the United States, President Bob Urtel said.
``We're moving now from concept to action, so we've got to have a thorough design review and a market introduction plan,'' he said.
Century enjoyed its strongest year ever in 2007. Startup compounders are moving ahead with investment in equipment. Larger, general compounding operations have been more cautious.
``For us there's been a lot of quoting activity in the general compounding market, and we've converted a fair share of orders,'' Urtel said. ``There seems to be a longer time line between pulling the trigger and the quote. That's really been in the last six months or so. We've had customers that had projects that were hot, but they cooled off a bit. But they say they're not dead.''
