For plastics machinery, these are tough times the toughest U.S. capital spending environment in my 15-plus years of covering the machinery beat for Plastics News.
The U.S. injection molding press sector was struggling even before the financial crisis hit this fall. Now, the economic world has turned upside down, with calls for government bailouts now reaching the Big Three automakers. Who knows what's going to come next?
That feeling of uncertainty pervades the machinery industry. You can read all about it in this week's Plastics News. I interviewed about 55 machinery executives in October and November for the issue. To borrow the financial term, there is a definite lack of ``clarity'' right now.
People trying to sell new injection presses are bedeviled by used-machinery auctions that don't seem to be slowing down. Let's lay it on the line: When it comes to the U.S. market, 2009 will be a survival-mode year for injection molding machines. Economic pressures will make it even more urgent to source parts from low-cost countries like China and India.
Extruder sales had been relatively healthy in recent years. But with the U.S. housing collapse, this is a hard time to sell extruders for making building products like windows and siding.
Packaging and medical should hold up, although lately I've been reading stories that medical spending could even decline did you ever think you'd see that? as people lose their jobs and health care. The mix of packaging certainly will change, as consumers look to save money at the grocery store.
Here are some observations and predictions as we head into 2009:
c I polled every company executive in the injection, extrusion and blow molding sectors on the impact of the credit crunch. About 25 percent of companies report they have lost orders or had orders postponed because customers had trouble getting financing.
c Expect big changes for injection molding machinery manufacturers. In the United States, we've got an oversupply of homes and automobiles, and the same can be said for injection molding machines. As the global economy slows down next year, some press makers may not survive.
c Some injection press firms probably will scale back, focusing on their strongest technologies. Husky Injection Molding Systems Ltd. did that this year, as it stopped actively making large-tonnage presses to concentrate on packaging and PET preforms. Right now nobody is going to argue about the decision to get out of big automotive machines! Other injection machinery companies may follow suit, as leaders decide not to be all things to all people.
c NPE 2009 will be even more important than ever, and for the global plastics industry, not just the Americas. The timing is important. President Barack Obama will have rolled out his economic action plan. When NPE comes around in June, we should have a good idea about the state of U.S. and global economy precious clarity that is lacking here in the last days of 2008.
There are a lot of good reasons to attend NPE next year. Certainly, NPE is a technological showcase, and investment and industrial modernization is a critical way to reduce costs and survive global competition and the roiling economy. But I think the social aspect is even more important now, reconnecting with other people after all the turmoil.
Kevin Brady of L.K. Machinery Inc. said it best: ``I'm looking forward to NPE breathing some life back into our market.''
Bregar is an Akron, Ohio-based senior reporter for Plastics News.