Even in a recession, people do have to eat and drink. But that doesn't mean U.S. plastics processors have had to buy new blow molding machines in 2009.
“People are still being very cautious on buying equipment,” said Al Hodge, vice president of sales at R&B Plastics Machinery LLC in Saline, Mich.
Executives at blow molding press makers said a few developments are driving investment.
Wal-Mart's packaging sustainability scorecard has fueled innovations, such as square milk jugs that are more efficient to transport and display at the retail giant's Sam's Club stores. To cut costs, some beverage makers invested in self-manufacturing, where bottle blow molding, filling, labeling and palletizing all happen in the same location. And private-label grocery items have grown as hard-pressed consumers traded down from more-expensive premium brands.
Another packaging bright spot is related to a public health issue: Hand sanitizer sales exploded in response to fears of the H1N1 flu virus spreading.
Machinery makers will take any nugget of good news they can get these days.
The crushing financial crisis that hit in late 2008 is over, thanks to massive economic stimulus packages from governments around the world. Most blow molding machinery executives are cautiously optimistic for 2010, at least for packaging equipment.
But accumulator-head machines remain a tough sell.
“There's no longer a feeling of panic or fear. People can certainly see light at the end of the tunnel,” said Jeff Newman, vice president of sales and marketing at Wilmington Machinery Inc. of Wilmington, N.C.
Because of a general caution and problems getting financing, he said, officials at some Wilmington Machinery clients are still slow to pull the trigger on spending for new blow molders. Wilmington Machinery should see a strong new year for international sales, but U.S. sales remain a question mark for 2010, he said.
Gary Carr, national sales director for Be-kum America Corp., also mentioned financing “Bekum's outlook for North America right now is one of cautious optimism,” he said. “We're seeing a resurgence in project quote activity and maybe one of the bigger challenges right now will be securing capital for investment.
“The lending market is extremely tight right now, and that could slow down progress.”
Bekum America this year has conducted a record number of lab trials at its headquarters in Williamston, Mich.
“[R&D included] a full range of market spectrums, including food and beverage, medical and specialty parts. Really diverse and a lot of different materials,” Carr said.
In recent interviews, several blow molding machinery executives said business has picked up in the last few months.
“It's a little more on the upside, coming out of the bottom,” said Dave Yenor, vice president of global business development at Graham Engineering Corp. in York, Pa. “People are still very conservative in their spending right now, but there's a bit more optimism about the future than a year ago.”
Yenor said some capital spending projects that were delayed all year are now back in play, leading to a “slow recovery” in 2010.
Jamie Pace, vice president and general manager of Atlanta-based Nissei ASB Co., said Nissei's business has picked up in the third and fourth quarters of 2009.
“We've seen a significant turnaround in terms of people booking orders. People are feeling good about the potential turnaround,” he said.
Pace said those sales are mainly coming from small to mid-sized blow molders and could be a reflection of strength in store brands at grocers. “The larger-customer base is still being very conservative,” he said.
Nissei ASB sells one-step PET blow molding machines for products like peanut butter and cleaning products, including hand sanitizers. In early 2010, the com- pany will launch a high-output machine that doubles the mold cavitation of its existing offerings.
Werner Amsler thinks the recession will linger: “I don't feel that there's going be a huge recovery soon, not for another year or so — although, from a business point of view, looking at our activity, the requests for quotes have been quite steady.
“Will [those requests] translate into sales in 2010? I don't know,” said the president of W. Amsler Equipment Inc. in Richmond Hill, Ontario.
W. Amsler Equipment makes all-electric reheat stretch blow molding machines, plus a full line of turnkey equipment including trimmers, inspection units and filling liner. That gives the company an advantage in the promising self-manufacturing arena.
Italy's Sipa SpA recently introduced a system that can do it all: mold PET bottles, fill and label at a rate of more than 2,000 bottles per hour. “That's the sort of machine we've sold to major water guys, milk guys and edible oils,” said Jon Elward, vice president of sales and marketing at Sipa North America Inc. in Atlanta.
Elward said small niche machines, to make packaging such as wide-mouth containers, have sold well. But sales are down for the type of high-volume blow molders aimed at mainstream beverage lines.
“There was a lot of capacity out there, but companies want to improve the energy efficiency, the production efficiency of the machine itself, and reduce maintenance costs,” Elward said.
Robert Jackson, president of Jackson Machinery Inc., thinks self-manufacturing at turnkey plants make sense. The alternative, he said, is shipping empty bottles or PET preforms around the country.
Jackson added that new machinery investments will result from moves by Wal-Mart, which he said “is just incessant in terms of taking [retail prices] down to nowhere.”
As 2009 winds down, Port Washington, Wis.-based Jackson Machinery is getting orders, although Robert Jackson said he still hears “latent fears” about the recession.
Recent drives toward sustainable packaging and marketing aesthetics will foster investments in new designs, molds and machinery technology, said Dave Skala, vice president and general manager of Uniloy Milacron of Tecumseh, Mich.
An example is Uniloy's conceptual one-gallon milk jug that can be stacked and shrink-wrapped on a pallet — eliminating the need for dairy crates.
Other innovations, like the square milk jugs being sold in Sam's Club stores, are shaking up the staid milk packaging market.
“You've finally kind of broken the mold of the standard dairy container,” Skala said.
For Sidel Inc., 2008 actually was its toughest year. “2009 has been a small recovery, with some optimism for further improvement in 2010,” said Keith Boss, vice president and general manager for Sidel North America.
Sidel invested more than $1 million this year to create a new training center at its headquarters in Norcross, Ga. The facility includes a complete line for blowing, filling and labeling.
Sidel has helped customers engineer and redesign existing facilities and consolidate plants.
“The majority of the existing equipment base has focused on lightweight packaging,” Boss said.
For Krones Inc., 2009 was about the same as 2008, which David Raabe considers good news.
“I think we're very fortunate. I don't think that is the norm out there,” said Krones' director of blow molding technology.
At NPE2009 in June, Krones debuted a NitroHotFill process that can eliminate the traditional paneled design for hot filled bottles such as sports drinks, by running heat-set bottles at higher speeds.
Raabe said grocery chains are moving into self manufacturing. That saves cost and reduces their carbon footprints. Tight financing is still an issue, “but I see it starting to free up a little bit,' he said.
“This year's been fairly slow” because of the recession, said Roger Eddy, sales and service representative for Akei USA in New Castle, Pa. Financing remains a problem, he said.
Accumulator-head blow molding machines are “still extremely slow,” said Frank Kennedy, sales director for that sector at Davis-Standard LLC of Pawcatuck, Conn.: “In industry blow molding, there's been almost nothing sold for the entire year.
“Most activity has been in upgrading machines,” he said. “In a lot of cases, if they have machines available, they are cannibalizing parts off them for other machines.”
The news is brighter for Kautex Machines Inc. in North Branch, N.J. Kautex also sells single-layer accumulator-head machines, and that part of the business is “pretty depressed,” said Bill Farrant, business development manager.
But Kautex is selling multilayer machines for fuel tanks, a market that is growing thanks to new Environmental Protection Agency emissions regulations covering tanks for lawn mowers and trimmers, personal watercraft and other products.
Kautex recently sold a $5 million, six-layer blow molding machine to Agri-Industrial Plastics Co. in Fairfield, Iowa.
Farrant said the tighter EPA regulations wil take effect in 2011, and the large machines have a lead time of at least six months. “So people realize they've got to invest at the latest by the end of the first quarter of 2010, or they're not going to be ready for 2011,” he said.
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