Weakness continues for the U.S. plastics equipment market, as all machinery sectors declined in 2007. The drop was led by a 17 percent plunge in injection molding machine shipments, by units, according to a report from the Society of the Plastics Industry Inc.
Injection press shipments apparently fell below the 3,000-unit threshold in 2007.
Overall shipments of all types of primary machinery and auxiliary equipment, when measured by units, declined by 13 percent in 2007, Washington-based SPI said. The drop was 12 percent in terms of dollar value.
Every segment was down for the year: auxiliaries, blow molding machines, extruders, injection molding machines and components, covering screws and barrels.
Injection presses, blow molding machines, and components registered double-digit declines.
Leading the way was the injection molding machine category, the largest sector. In 2006, SPI reported U.S. shipments of 3,455 injection presses. SPI's new report does not give a specific unit number for all of 2007, but said the total number of units shipped was 17 percent lower that 2006. That means shipments-whatever the exact number - fell below 3,000.
During the booming late 1990s, U.S. shipments were about twice as large, topping 6,000.
Economist Bill Wood said weakness in the U.S. machinery business will persist through the first half of 2008, before gradually rebounding in the second half. In SPI's March 11 report, Wood cites a healthy level of plastics industry capacity utilization, which held steady in the 86-87 percent range during most of 2007. Also, production of plastic products continues at a good level.
The weak U.S. dollar, now trading at record lows, also will promote exports of both plastic products and equipment, said Wood, who runs Mountaintop Economics & Research Inc. of Greenfield, Mass. He analyzes the numbers for SPI's Committee on Equipment Statistics.
``As long as the operating rates stay near this range, the market demand for new machinery and tooling will rebound quickly as the growth in the overall economy starts to accelerate in the second half of 2008,'' Wood said.
He noted serious problems in housing. But he said that, over the longer term, high energy and resin prices remain the biggest threats to a pickup in machinery.
The injection press segment is hurt by ``the continuing travails'' of U.S. automakers. That, combined with resin and energy costs, is constraining the profitability of domestic injection molders - slowing their ability to invest in new equipment, he said. He predicts that resin and energy prices will moderate later this year, however.
Injection presses suffered a weak fourth quarter, SPI said. Shipments totaled 722 units, down 13 percent from the 827 units shipped in the fourth quarter of 2006.
Here is a look at other sectors:
Extruders - For the year, SPI reports a small decline of five extruders for the segment, which includes both single-screw and twin-screw extruders. Measured by dollar amounts, the value of 2007 shipments was slightly higher than the 2006 level.
SPI said the severe recession in residential construction will slam pipe, siding and windows, and hurt extruder sales. Packaging will hold steady, and declining resin costs gradually will help profitability - and could spur investment in extrusion equipment late in 2008 and into 2009.
Blow molding machines - Shipments declined 12 percent, by units, from the 2006 level. Measured in dollars, the value of the machines increased 3 percent. SPI pointed out that the blow molding segment is small, so the numbers can swing greatly. Sharp increases in resin prices over the last two years have hurt blow molders of packaging, although overall packaging demand continues to grow.
Auxiliary equipment - SPI said total bookings of auxiliaries were down 6 percent from the 2006 level. The forecast calls for weaker conditions to persist through the first half of 2008, followed by a return to growth in demand in the second half.
Components - Total shipments of screw and barrels were down 10 percent in 2007 from the year before. As machinery demand picks up in the second half of 2008, components should follow.