Technology news is a staple of trade shows, but at NPE2009, the economy was the big story.
Injection molding machinery executives, after five days of talking to customers in the massive halls of McCormick Place, said the U.S. economy appears to be bottoming out.
They sold some machines, exceeding expectations. Attendance was down officially by about 28 percent based on total registrations, but off as much as 50 percent as measured at some machinery booths. Quality vs. quantity has become a show organizer's cliché, but it seemed to be reality for this NPE.
The people that are here, are here for a reason, said Liam Burns, general manager of Negri Bossi USA Inc. We have the decision-makers here. We have the technical people here. Ninety percent of the people we're talking to are a technical, management-level person, and really, that's fantastic. In previous shows you could waste several hours talking to somebody who really wasn't the decision-maker.
NPE2009 came after an especially brutal period when U.S. machinery sales plummeted in the fourth quarter. Several machinery makers say that weakness has continued in the first part of 2009.
Early this year, U.S. processors seemed scared to death to spend any money, but NPE2009 seemed to mark a change in thinking, said Peter Gardner, who heads sales of Niigata presses at DJK-Global Group in Wood Dale, Ill.
They were kind of waiting for the other shoe to drop. And I guess, maybe with the General Motors bankruptcy and all that, maybe that's the other shoe, Gardner said. It seems like all the bad news, hopefully, is done. So they seem to be less fearful of what's coming next, and everybody seems to think we've bottomed out.
The plastics industry is going through a painful period. During NPE2009, the Society of the Plastics Industry Inc. reported the industry had lost more than 100,000 jobs in the past eight months, cutting total U.S. plastics employment to slightly less than 1 million.
Mike Ortolano, chief technical officer of Absolute Haitian Corp. in Worcester, Mass., said companies that have taken steps to remain standing sent people to NPE2009. He talked to a lot of them in Chicago.
Most of the customers actually feel like they've turned the corner and they're starting to see more business breaking loose, Ortolano said. Some of the machine utilizations in our industry are starting to crawl back up. Nobody's anticipating a big spurt, but nobody's anticipating anything getting worse than it is.
Unfortunately, capital spending for new machinery tends to lag an economic recovery. That means a general rebound in sales of injection presses might not happen until 2010, said people from several companies at the June 22-26 trade show in Chicago.
U.S. shipments of injection molding machines fell to 2,444 presses in 2008, a 15 percent decline from 2007, according to Washington-based SPI.
That could mean machinery makers many of them having already cut costs through layoffs and shorter workweeks will have to keep trudging through this year before business improves.
Obviously we don't know; we're not economists. But I don't think we're expecting any dramatic change from where we are today over the course of, let's say, to the end of 2010, said John Galt, president and CEO of Husky Injection Molding Systems Ltd. in Bolton, Ontario.
Over at Engel Machinery Inc.'s booth, Peter Neumann agreed. He said global injection press sales will decline by more than 50 percent this year.
It's really a very, very challenging time, said Neumann, CEO of Austrian parent company Engel Holding GmbH. He said every injection press maker has reduced production, because we don't believe that it will come back this year.
When will it come back? I believe that in 2010 is the earliest, the second half of 2010, Neumann said. And then the machinery business will not reach the volumes of 2007 and 2008, he said.
Although a few end markets remain solid, most injection press executives expressed sober reality at NPE2009. Even so, business has to bottom out before it can grow again.
I think it's moving up, said Paul Caprio, president of KraussMaffei Corp. in Florence, Ky. A few weeks before NPE, the company noticed an uptick in orders. There's real substance that the market is turning, at least for packaging and medical. Automotive and housing is still trying to catch up, he said.
The U.S. injection press business has struggled under the weight of auctions dumping late-model machines on the market, weakness in automotive and construction, and the whammy of the financial crisis that hit economies around the world.
Capacity utilization has bounced around at about 65 percent this year well below the 85 percent level that traditionally prompts broad buying of plastics machinery.
Grease is the word
He's not an economist, but Gardner has his own way to track sales of Niigata presses. Call it the Grease Index.
Grease is my leading indicator. When grease sales start to go up, then I know people are re-commissioning these machines and starting them up again, he said.
Grease is down. But Gardner remains hopeful that business will pick up by the end of this year. Although the number of visitors to Niigata's booth was about half the level of NPE 2006, he said attendees were more qualified a comment echoed by several other U.S., European and Japanese machinery makers.
We see more decision-makers, more focused individuals here than in the past, said Jim Mitchell, executive vice president of Sumitomo Demag in Norcross, Ga.
Mitchell said the North American market remains tough. But he said the company created last year when Japanese press maker Sumitomo Heavy Industries Ltd. bought Germany-based Demag Plastics Group is well-positioned globally to win business in regions that pick back up first.
Mitchell said some U.S. customers are winning transfer work from other molders that have gone out of business. Others are replacing aging equipment. But molders remain cautious about spending money, he said.
During NPE2009, Husky officials stressed an ability to design specific high-speed machines for packaging and medical jobs and help customers upgrade existing presses. Galt said the low utilization rate means customers are going to get the most out of their fleet before they order new presses.
You lower your operating costs, your labor costs, your energy, and things like that, Galt said.
Burns, at Negri Bossi, said processors are reporting a slow increase in orders, as their customers start to rebuild inventory. Negri Bossi USA, in New Castle, Del., is seeing interest in special machines for two-shot and three-shot molding, technical molding work that is harder to move off-shore, he said.
Officials at Negri Bossi USA had hoped for a broad pickup in press sales in the second half of this year. Now it looks like 2010. I think the rest of this year is going to maintain this very flat, low level. It won't get any worse. We've hit the bottom, Burns said.
At Arburg Inc.'s booth, Friedrich Kanz agreed. There is a little bit more positive spirit coming into the game now. The people are not coming so negative. They're saying OK it's a difficult time, but I think it's getting better now, said Kanz, president of the company in Newington, Conn.
Because the molding industry has too much capacity, attendees were more interested in machines designed for specific jobs, not general-purpose machines, exhibitors said. Wittmann Battenfeld Inc.'s No. 1 attraction was a micromolding press, which can mold bio-absorbable medical parts, according to David Purcell, injection molding machinery manager at the company in Torrington, Conn.
Purcell said booth visitors came holding parts, looking for a solution.
Elk Grove Village, Ill.-based Toshiba Machine Co. America sold machines at NPE2009 including a major deal for at least 20 all-electric presses to Vision Plastics Inc. of Wilsonville, Ore. Tom McKevitt, Toshiba's national sales and senior marketing manager, said that during NPE, several people stopped by the booth daily wanting to buy.
The conversations that I had have all been positive. The true results of this show will come in another two to three months. But I feel with what came through this booth, it's going to be a positive two to three months, McKevitt said.
Two Japanese injection press makers JSW Plastics Machinery Inc. and Nissei America Inc. had pulled out of NPE2009, but returned after SPI cut the cost to exhibit, dubbed the NPE stimulus package.
We are very glad we came back, said Nobu Kobayashi, marketing team coordinator for Nissei America in Anaheim, Calif. He said Nissei sold machines in Chicago, a pleasant surprise given the U.S. economic woes.
JSW of Corona, Calif., also reported a good show. It's exceeded our expectations, said sales manager Bob Columbus.
Copyright 2009 Crain Communications Inc. All Rights Reserved.