The hard-pressed U.S. injection press market has fallen again this year, and now faces the bleak prospect that 2009 could be even worse.
``Nobody knows what the future holds,'' said Peter Gardner, who handles Niigata press sales for DJK-Global Group.
Overall U.S. shipments totaled 2,862 units in 2007, below the psychological level of 3,000. When 2008 ends, the market faces another double-digit decline, to around 2,300-2,500, or even lower, according to machinery officials interviewed for this story.
Several of the obstacles facing injection press sales have been around for several years: auctions, brutal price competition, orders postponed, projects delayed. Nothing really new — but economic fears are magnifying them, making them more intense.
With the U.S. economy facing a severe recession and manufacturers hanging on to cash, when auctions of closed-down plastics factories continue to dump machines on the market, when even Santa Claus could tighten the belt around his ample belly — now is one tough time to ask people who sell injection molding machines: Where is the bottom?
Economist Bill Wood thinks 2009 will be worse. ``I think the bottom actually is going to be in 2009 for injection molding,'' he said.
``I really can't see a scenario, at this point in time, where injection molding machinery would be better than this year,'' Wood said in late November. ``I have to say next year will be lower than this year.''
Wood said plenty of underused molding capacity and used machines mean that once the economy does improve, sales of new plastics machinery still will lag.
``Even if it starts to turn around by the middle of 2009, they're not going to need new equipment until three to six months after that,'' said Wood of Mountaintop Economics and Research Inc. in Greenfield, Mass.
For a leading indicator of increased capital investments, Wood said to watch for higher spending on placement screws and barrels, and molds. ``And then after that, people will start to more-aggressively replace old machines,'' he said.
But for economists, all bets are off if General Motors Corp., Ford Motor Co. or Chrysler LLC files for bankruptcy protection. GM's stock has fallen to the lowest level since 1946.
Automotive is a huge market for injection molding machine sales. U.S. car and truck sales have plunged this year.
``GM, if it goes down, they're going to pull down a lot of other industries with it,'' said Kevin Brady, sales director of plastics machinery for L.K. Machinery Inc. in Holland, Mich.
Gerry Sposato of HPM was blunt: ``If you have any type of turmoil in the Big Three automotive group, it will send shock waves through the plastics marketplace. You'll have a ripple effect down to Tier 1, Tier 2 and Tier 3 suppliers,'' said Sposato, vice president of sales and marketing at the company in Mount Gilead, Ohio.
In the United States, the plastics machinery business was down even before the U.S. financial meltdown spread into a global crisis and credit crunch in September.
Interviewed in October and November, most injection press leaders said good-quality customers can get credit to buy their machines — but it takes much longer than normal.
Engel Machinery Inc. primed the pump by offering zero percent financing on its E-max all-electric press. Stephan Braig, president and chief executive officer, said the firm wants customers to replace old machines with energy-efficient electric ones.
Historically, he said, leading molders used to replace presses after about eight to 10 years of use. ``Now … we see many of our customers using equipment for 15 years. Now it's very difficult to produce in a competitive manner if you have high energy costs and if you don't have the newest technology,'' Braig said.
Engel's sales into automotive have actually held steady, as some plastics suppliers have won business with U.S. plants of Japanese and European automakers, he said.
But overall, auctions — most of them at shuttered automotive molding plants — have slammed sales of new machines to that market. The mega-auction of the year was Progressive Moulded Products Inc., a Canadian auto supplier with 10 factories that closed down last summer — leaving a whopping 250 injection presses to be sold at a series of auctions. Most of them were relatively new Nissei machines.
The final two plant auctions are coming up: Dec. 10 in McAllen, Texas, and Jan. 14 in St. Joseph, Mo., said a spokesman for Infinity Asset Solutions Inc. of Concord, Ontario.
All those nearly new Nissei presses punched Nissei America Inc. in the gut, when it comes to new equipment sales, said Richard McGranahan, western regional manager. ``It hurt us big-time. I, myself, lost eight machines to that auction,'' he said from company headquarters in Anaheim, Calif.
After the poor economy and auctions, sales for 2008 are off 30 percent from the year before, McGranahan said. ``I think we'll be satisfied if it's about the same for 2008,'' he said. ``We're hoping higher.''
The spate of auctions are clouding the picture, said Dan Preston, national sales manager of Fortune International Inc. ``There's been such a glut of late-model machines that have been auctioned off that it's really hard to tell, because people aren't buying junk, they're buying late-model machines,'' he said.
Preston said plastics machinery has been ``way down'' in 2008, but business is fairly stable at Somerset, N.J.-based Fortune, thanks to its business in metal-cutting machinery.
Paul Caprio thinks the 2008 total for U.S. presses could slide to 2,200. ``The thing that we've been through in North America overall is, for the past two calendar years, we have seen successive 20 percent drops in machine orders. It's a tougher marketplace,'' said Caprio, executive vice president of KraussMaffei Corp. in Florence, Ky.
He thinks the market could fall below 2,000 presses next year. ``The next calendar year is going to be extremely difficult for all segments of our economy, and injection molding sales are not going to do something to bypass the economy. So I expect that we will drop again in 2009.''
All-electric molding machines now account for more than half of all presses sold in the United States. KraussMaffei has a new product to sell — the general-purpose AX press, built through a partnership between KM's German parent and Japan's Toshiba Machine Co. Ltd.
The uncertainty about 2009 threatens to overshadow the biggest machinery business stories of 2008 — the Japan-German linkup when Sumitomo Heavy Industries Ltd. bought Demag Plastics Group, and the purchase of the Battenfeld injection press operations by auxiliary equipment maker Wittmann Kuntstoffgeräte GmbH.
Nearly all machine executives contacted for this story said customers are taking longer to pull the trigger.
For Niigata, business was up until the end of September, said Gardner, vice president and general manager with DJK in Wood Dale, Ill.
``Suddenly, because of the financial crisis and the news of it all, and the looming election, everybody was just sitting on their hands. We've got a lot of projects that were not canceled, but [are] kind of put on hold right now,'' Gardner said.
Even processors with increasing business are avoiding press purchases now, said Michael Wecker, U.S. vice president of injection molding machines at Wittmann Battenfeld Inc.
``If they're a two-shift shop, they'll run their third shift right now,'' he said. ``Or they'll add the extra weekend day of production, to squeeze all they can out of their existing equipment.''
To meet the challenges facing machine makers, Wittmann Battenfeld of Torrington, Conn., will focus on special technology like micromolding and multimaterial. The company also is redesigning its all-electric machine, using Wittmann's own experience with servo-drives.
Friedrich Kanz, president of Arburg Inc. in Newington, Conn., said, ``People are just careful before they spend the money. They want to have all their ducks in a row with their customers, to take as [little] risk as really necessary.''
At Milacron Inc., Glenn Anderson is ``cautiously optimistic'' the U.S. market has hit bottom. Customers are conservative, but when they buy, they want machines right away.
``Customers aren't buying on speculation anymore, they are placing orders after they have firm orders, and then they want the equipment very, very quickly. It's putting pressure on our lead times,'' said Anderson, vice president and general manager of injection molding for the Americas.
Sales manager Bob Columbus said JSW Plastics Machinery Inc. in Elk Grove Village, Ill., has sold presses into medical, electronics and commodity-products molding. ``We've lost various orders because people have bought used JSWs at auctions,'' he said.
Bolton, Ontario-based Husky Injection Molding Systems Ltd. exited the large-tonnage press business this year to concentrate only on presses for PET preforms and packaging, its core business.
Jeff MacDonald, vice president of marketing, said Husky is working with customers on molds and hot-runner systems to improve their operations. ``We won't see big capacity buildups, but people are looking to reduce costs based on what they have in the factory floor,'' he said.
Even though some packaging industry officials think single-serve containers, including bottled water, could be under pressure next year, MacDonald sees a silver lining.
``The appearance of the package is still very important, but consumers are a lot more conscious of the price tag today. So the cost-saving activities, in terms of lightweighting and cycle-time improvements, are where Husky and our customers are seeing growth in the coming year,'' he said.
Rick Shaffer, president and general manager of Netstal Machinery Inc. in Devens, Mass., said some packaging and medical producers are replacing older presses to reduce energy consumption and improve performance.
U.S. consumption of bottled water has been ``softer than anticipated,'' and one reason is public concerns about its environmental impact, according to Shaffer.
In October, Negri Bossi USA Inc. dedicated a 25,000-square-foot headquarters in New Castle, Del. Like other people, Bill Duff, national sales manager, said molders are holding onto their machines longer.
``The age of machinery out there is probably getting a little long in the tooth,'' he said.
Duff thinks injection molding equipment will rebound in the third quarter of 2009 after the NPE show. ``I think you'll start to see things turning around,'' he said.
Negri Bossi machines are made in Italy, and Duff said the stronger dollar against the euro helps reduce U.S. pricing. ``This allows us to go back and start gaining market share,'' he said. ``That's where we can grow.''
Kevin Gipson, national sales manager at MHI Injection Molding Machinery Inc., which sells Mitsubishi presses in Bensenville, Ill., thinks the machinery industry will see consolidations and more shared-technology agreements in 2009. ``There will also be a focus on companies returning to their core business, or the focus shifting to more value-added technologies,'' he said.
Gipson said Mitsubishi has increased its market share, despite the economic downturn.
One of those linkups, the marriage of Sumitomo-Demag, will be on display at NPE 2009. ``We expect, like everybody else, the first half will probably be a little slow, but overall going into next year, we'll be well-placed,'' said Jim Mitchell, vice president of sales and marketing for the company's U.S. operation in Norcross, Ga.
Mitchell said the last half of 2008 was ``a little soft,'' but medical, a Sumitomo strong point, continues to be strong. Most molders realize they have to upgrade equipment to compete in the global market, he said.
``We're seeing a lot of smart decision-making by the guys that have survived,'' said Glenn Frohring, vice president of sales and marketing at Absolute Haitian Corp., which sells Haitian machines from China. ``We're seeing some smart customers out there looking at some of the products and the energy savings of the new machines. They understand it'll lower their operating costs and keep them competitive. But this is not a huge, vibrant market.''
Processors are ``hesitant'' to buy, but they're looking, said Ronald Zara, national accounts manager for Toyo press sales at Maruka USA Inc. of Rockaway, N.J. This is a good time to invest, he said.
``Now is the time for people with good balance sheets, if you're in good shape, to work toward knowing what you're competition's doing and planning for the future,'' Zara said. ``We're going to get through this.''
Robert Koch, president of Boy Machines Inc. in Exton, Pa., said Boy has some large projects under way, but some sales have been delayed. ``The selling process is longer because it's taking longer for customers to obtain financing,'' he said.
Because of personnel cutbacks, customers are relying much more on suppliers. Boy now offers a full package, from molding press to the mold, to auxiliary equipment and automation. ``That's a significantly growing part of our business,'' Koch said.
Boy is selling presses to packaging, micromolding and medical molders.
Medical is the most important market for Plustech Inc., which sells Sodick machines in Schaumburg, Ill. Plustech is getting repeat business with large medical companies. ``Seventy percent of the machines we're selling are for medical molding,'' said Len Hampton national sales manager.
Robert Knaster, vice president of Plastic Metal USA, said auctions are fueling the machinery market. He said the company in Oyster Bay, N.Y., has done well with the Italian-made NPM Multipower hybrid press, a high-speed, but energy-efficient machine that features three electric motors and an accumulator.
Wilmington Machinery Inc. is selling structural foam molding machines for the materials-handling market. Next year at NPE, the company from Wilmington, N.C., plans to introduce a dedicated structural foam production cell for making plastic pallets, complete with press and robots, said Jeff Newman, vice president of sales and marketing.
A new player in the U.S. and Canadian market, Dutch press builder Stork Plastics Machinery BV, is forging ahead despite the economic uncertainty. Stork opened SPM USA a year ago in Shirley, Mass.
``Packaging and medical are two segments that are keeping their head above water and doing OK,'' said Tony Thompson, sales manager.
Stork will exhibit at NPE 2009 — its first time showing machines at an NPE.