U.S. injection press shipments collapsed this year, to the 1,200 to 1,300 range, crashing down 50 percent from the 2008 level of 2,444. Machinery executives are hoping for stabilization and a gradual improvement in 2010.
Glad to see this year in the rearview mirror, said Paul Caprio, president of KraussMaffei Corp. in Florence, Ky.
Industry veterans, many with decades of experience, said they never imagined the U.S. market would sink to such a low level. Many said the future is still cloudy, in telephone interviews conducted in November.
The market is certainly at the lowest levels we've ever seen. If next year's going to be flat, the question is, have we hit bottom? I like to think we have, but we really don't know at this point, said Glenn Anderson, Milacron Inc.'s vice president and general manager of injection molding for North America.
It's still a tough market there's no way of getting around that. The first few months of 2009 were probably the toughest I've seen, said Carmen Lowe, service and sales vice president for North America at Husky Injection Molding Systems Ltd. It bottomed out around April, and we started to see that, slowly, it got a little better.
U.S. shipments made history this year, for a negative reason. I never thought it would get that low. But I'm looking at this past year as something very unique, said Lowe, a 22-year Husky veteran. In my lifetime I've never seen a year like this past year.
The Bolton, Ontario-based Husky is promoting its strength in hot runners, plant design and service, and has focused on packaging and medical.
There's a cautious optimism, but it is cautious, Lowe said.
The bottom really fell out of it, said Stephan Braig, president and CEO of Engel Machinery Inc. of York, Pa. Next year, we're probably looking at 1,400-1,500, somewhere in there as a range, in new units. It's not stellar by any means, considering where we have been, which was rock bottom, he said. But nevertheless it is a gradual improvement.
The glory days are a decade past. In the late 1990s, U.S. shipments approached a record 7,000 presses, according to the Washington-based Society of the Plastics Industry Inc., which collects the machinery data. The last really good year was 2000, when shipments were 6,420. It has been a long-term decline since then.
Of course, 2009 was a crushing economic year brought on by unique historical circumstances. The global financial crisis that hit in the fall of 2008 carried over into the first part of this year, creating a climate of fear that froze spending on injection molding machines and most other industrial equipment.
The panic is over. But it has been replaced by lingering questions: Will owners of plastics factories, after getting burned by the recession and facing still-tight bank lending, be wary about buying machinery? Can the private economy function properly once government stimulus money gets rolled back?
And there are plenty of injection presses sitting idle. Capacity utilization this year has stayed around mid-60 percent at U.S. plastics and rubber factories, according to the Federal Reserve Board. That's well below the 85 percent-plus rate that equipment officials say is needed to trigger widespread spending on new machinery.
We're kind of clunking around at the bottom, said economist Bill Wood, who runs Mountaintop Economics and Research Inc. in Greenfield, Mass. The absolute abysmal bottom hit in the fourth quarter of last year and the first quarter of this year, and since then it's been a very, very gradual and slow improvement.
Wood said the U.S. economy has bottomed out, and leading indicators are moving upward. Capital machinery is a lagging indicator it doesn't rebound right away but Wood is optimistic that U.S. manufacturing will invest to modernize, reduce energy consumption and cut direct labor costs.
Longer term, the U.S. needs to hold a leadership positions in areas like green energy, mass transit and high-mileage and electric cars, and plastic has a key role. We have problems that we have to solve and it's going to require manufactured solutions, he said.
Wood is predicting a gradual up-trend in machinery sales.
Calling the 2009 shipment numbers pretty devastating, Friedrich Kanz said it reflects the general state of the U.S. economy. This means we have to find a solution, or a strategy, to keep more production in the country, said Kanz, president of Arburg Inc. in Newington, Conn. He is predicting a slightly better 2010.
KraussMaffei's Caprio agreed that plastics machinery swims in the overall economic ocean.
The machinery people really felt pain in 2009. When the unit volume is that low, that just shows you how hurt our manufacturing community was, by everything stopping at once. Whether it's automobiles, people losing their jobs, houses, the financial community where people can't get money there's just no need to buy capital machinery, Caprio said.
But Caprio said KraussMaffei's injection press business picked up after NPE2009, held this summer in Chicago. Nearly all orders are for special new projects. And he is bullish for 2010, predicting overall press sales above 2,000 units.
Some analysts say manufacturing could help lead the United States out of the recession, as factories ramp up to rebuild inventories and the weak dollar pushes up exports. But in plastics, the recovery is not hitting on all cylinders. Machinery executives said injection molding customers are reporting a spotty recovery, busy for a week or two and then business falls off.
Kanz said automotive molders got busy to rebuild stocks for carmakers during the government-funded cash for clunkers program. But when I talk to our customers, they are not completely confident: Is it permanent, or will it go three, four months and then it dips again? he said.
People are starting to see some pickup. I've talked to several companies and they're starting to see some increase in business, said Ronald Zara, national accounts manager for Toyo press sales at Maruka USA Inc. of Rockaway, N.J.
Zara thinks 2010 will be better but it's not going to be super.
Peter Gardner, who sells Niigata presses said the future is clearer. We can see it's going to be a very difficult environment for awhile. For new equipment, there's a lot of competitive price pressures out there which will dampen machinery makers' profits, said Gardner, vice president and general manager with DJK Group of Wood Dale, Ill.
He said auctions continue to put late-model used equipment on the market.
I don't think there will be a dramatic recovery. It'll be kind of a slow increase at least for the next year, Gardner said.
Automotive, the source of many of those auctioned-off presses, is beaten down. CSM Worldwide, an automotive industry forecaster and adviser based in Northville, Mich., predicts U.S. sales this year of just 10.1 million cars and light trucks. At the same time, however, molding plants have sprung up around three new U.S. assembly plants: Hyundai Motor Co. in Georgia, Kia Motors Corp. in Alabama and Volkswagen AG in Tennessee.
David Bernardi said business picked up in midyear for Ube Machinery Inc. We're selling and shipping machines to automotive again. They're not dead, they're still alive, said Bernardi, senior sales and marketing manager at the Ann Arbor, Mich., firm. He said the recession culled out weak automotive molders, and the survivors are thriving and moving on.
Injection press executives said molders that pick up transfer work sometimes need a certain-sized press delivered, and quickly, machinery officials said.
Dima Inc., the U.S. subsidiary of South Korean press maker Dongshin Hydraulics Co. Ltd., has picked up U.S. business from a South Korea molder that set up to serve the Hyundai transplant factory, according to Michael Shin, sales coordinator for Dima in Santa Fe Springs, Calif. We made some good sales there, he said, adding the firm expects orders for about 20 presses from the unidentified customer in early 2010.
But overall, U.S. business is tough, Shin said. People will still be a little hesitant to buy.
To combat sales lost to auctions, Negri Bossi USA Inc. is offering factory-certified used machines, which are upgraded and covered by a warranty, said Bill Duff, national sales manager. Technicians perform the work at the firm's headquarters in New Castle, Del.
Duff said orders for new presses are looking good in the fourth quarter. Right now we're seeing an uptick in requests for quotes for specialty machines, multimaterial and larger-tonnage machines, he said.
The economy has somewhat stabilized rather close to the bottom, said Nobu Kobayashi, marketing team coordinator of Nissei America Inc. in Anaheim, Calif. He said Nissei has picked up business for machines for special projects and transfer molding work.
JSW Plastics Machinery Inc. grabbed a major sale this year 50 all-electric presses to housewares molder Iris USA Inc. Otherwise, business is recovering step by step, said Bob Columbus, sales manager at JSW's technical center in Lake Zurich, Ill.
There are a lot of customers that normally would've bought this year that say they're in fine shape, they've survived the storm and they're going to be in a position to resume their normal machine buying next year, Columbus said.
Toshiba Machine Co. America of Elk Grove Village, Ill., also made one of the biggest deals of 2009, selling at least 20 all-electric presses to Oregon molder Vision Plastics Inc., which placed the order at NPE2009.
We're still getting sales right now from the NPE show. We've planted the seeds and we're still bringing in the harvest now, said Tom McKevitt, national sales and marketing manager.
McKevitt said Toshiba is selling machines in medical and packaging. Believe it or not, we're seeing some spark in the automotive end, he said.
Jim Mitchell, executive vice president of Sumitomo Demag, said he thinks overall U.S. press sales could increase 10 percent in 2010. The company in Norcross, Ga., is ending the year with strong sales in medical and packaging machines, he said.
People can put off buying a car but they need health care and they need something in a package, Mitchell said.
Packaging also is a focus for Netstal Machinery Inc. in Devens, Mass. Lighter, faster, better is really the driver behind packaging, said Rick Shaffer, president and general manager.
Shaffer said Netstal enjoyed a pretty stable year thanks to a good backlog and consistent orders throughout 2009. We didn't feel the pain of a drop-off anywhere near other companies.
President Robert Koch, said Exton, Pa.-based Boy Machines Inc. is getting orders for presses and turnkey systems for specific jobs. We're not getting requests for just a plain vanilla machine., Nearly all our quote requests are for automated cells, or specialty applications. New applications in medical and automotive have been really driving our business.
A systems approach also is winning business for Wittmann Battenfeld Inc. of Torrington, Conn. David Purcell, injection molding machinery manager, said the firm is selling Battenfeld presses with Wittmann robots and auxiliary equipment integrated into the frame and controller.
He called the U.S. market daunting, but said overall shipments should continue a subtle upward trend in 2010.
Everyone pulled back, did what they needed to do to keep their doors open, and now they're seeing a bit more of a recovery, said Tom Geddes, national sales manager of MHI Injection Molding Machinery Inc., which sells Mitsubishi presses in Bensenville, Ill.
Geddes is upbeat about next year. We will see some decent activity including replacement machines, he said.
Tony Thompson, sales manager at SMU USA in Shirley, Mass., which sells Stork presses, said he used to think 2,000 press shipments was a low number. Now we're at 1,300. It's ridiculous, he said.
Nevertheless, he said: We see some light at the end of the tunnel. We're a little more optimistic for next year.
Randall Wan, executive vice president of Fortune International Inc. in Somerset, N.J., said new press sales are being depressed by used equipment and low pricing of machines in stock.
Wilmington, N.C.-based Wilmington Machinery Inc. is selling a new structural foam molding system to make pallets from recycled plastic. People are looking at a way to add value to that collection stream. And converting it and molding it into a product seems to be the logical thing to do, said Jeff Newman, vice president of sales and marketing.
Glenn Frohring has a theory about low capacity utilization. There's a lot of equipment that has been idled and there's no intention of that equipment ever being hooked up and run, said the president of Absolute Haitian Corp. in Worcester, Mass.
Many of the presses were purchased in the 1990s boom period, so they're 10 years old, he said. They've been scavenged for parts. No maintenance was done. And Frohring said desirable used machines are getting harder to find. That spells opportunity for replacement presses.
Braig echoed other executives when he said almost all of Engel's 2009 sales came from special projects. But molders are telling Braig that they also are looking to upgrade their fleet next year. That's something that I haven't heard in 12 or 18 months, he said.
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