Officials of injection molding machinery makers said their industry has largely escaped damage from the credit crunch. But a bigger challenge looms: a global economic slowdown.
``Green'' was the buzzword at the Fakuma trade show in Friedrichshafen, as companies touted the energy savings of their machines with banner signs and news releases. Down in the trenches of the Oct. 14-18 event, discussions centered on an uncertain future.
``Up until now, we haven't had any case where our customers said, `We cannot get credit, and thus, we cannot buy a machine.' Whether this will be the case tomorrow or the day after that, of course, we cannot say,'' said Helmut Heinson, managing director of sales at Arburg GmbH + Co. KG of Lossburg, Germany.
Most injection press executives interviewed at Fakuma said customers have not specifically blamed a problem getting financing for a decision not to buy machines although realistically, most firms would not trumpet that particular type of news.
The German economy had strengthened this year, but now is cooling off. Slowing economies in the United States, China and other key export markets will be felt in the plastics machinery factories of Germany and other European countries.
The U.S. financial crisis has spread to Europe, where governments are following the American lead by pouring money into the banking system to restore credit. During the same week as Fakuma held along the shores of bucolic Lake Constance, where Germany, Switzerland and Austria meet European leaders hashed out a coordinated bank bailout.
That followed a move by the U.S. Congress to approve a $700 billion bailout plan on Oct. 3.
Peter Neumann, top executive of Engel Holding GmbH, gave a quick disclaimer when asked about how the global credit crunch will hit spending on capital equipment. ``I'm not a politician, and I'm not a financial expert,'' he said.
Neumann said the press maker in Schwertberg, Austria, has not lost orders because of the credit issue. But some customers have delayed projects to shore up credit including some big companies, where financing is not normally an issue, he said.
Neumann, chairman of Engel's managing board, called credit problems ``a new issue.''
``You talk at first, for sure, about technology, about demands of the machines. But then, very often about, `How can you finance this?' And I'm really hoping that we have gone through the deep valley already. I don't know if this is OK now, or it's another valley which starts again. It's hard to say,'' Neumann said.
Bernard Merki said Swiss press maker Netstal-Maschinen AG has not lost any business because of customer credit problems. But fears of an overall slowdown have made customers careful about spending, he said.
``People are more cautious. They are unsure about the economy. And that's the normal psychological behavior, what we're seeing now,'' said Merki, president and chief executive officer of the NÃ¤fels, Switzerland, firm.
Dietmar Straub, CEO and chairman of KraussMaffei AG, said no customers have told the Munich-based company about credit issues. ``We have not seen that specifically,'' he said.
Echoing that view was Alfred Schiffer, managing director of Boy GmbH & Co. KG, the small-press builder in Fernthal, Germany. ``We have not had any customers, as of today, where there's a finance problem,'' he said.
Schiffer said the automotive molding market did slow down this summer, reflecting softness in car sales.
Tougher credit requirements could make it more important for machinery makers to help customers secure financing, or be more flexible on payments, said Friedrich Kanz, president of Arburg Inc. in Newington, Conn., the German company's U.S. operation.
``Usually when we have a customer who wants to buy a machine and equipment from us, if the customer is serious we find a solution on the financial side,'' Kanz said. ``The bottom line is, we always have found a solution if the customer wants to buy equipment.''
Even before the credit crunch, the U.S. market was having problems. U.S. shipments of injection molding machines dropped below 3,000 units in 2007, to 2,862 half the level of the last boom period, a decade earlier. According to several U.S. machinery officials, injection presses could fall again, to end 2008 at around 2,500.
Michael Wecker, U.S. vice president of injection molding machines at Wittmann Battenfeld Inc., said that no molders have cited financing as a reason to put off buying at least not yet.
U.S. processors are tightening their purse strings. ``If they're a two-shift shop, they'll run their third shift right now. Or they'll add the extra weekend day of production, to squeeze all they can out of their existing equipment,'' Wecker said in an interview at Fakuma. ``We haven't seen financial reasons people saying we're not buying because we can't get financing. That hasn't come up yet.''
The U.S. press-sales slowdown started in late 2000, as work moved offshore to China and other low-cost countries. But these days, general economic uncertainty is to blame, he said.
``Anything they can do not to have to spend the big dollars is what they're doing right now,'' Wecker said.