Screw and barrel makers are getting busy, and some are even hiring — a sign that plastics factories are restarting machines that got shut off in 2009.
“It's so much better than last year,” said David Mantyla, vice president and sales engineer at General Plastex Inc.
Pent-up demand seems to be breaking loose, according to executives at makers of screws, barrels and components such as non-return valves. The big question now: Will it continue through this year?
“We are seeing the end-user business is getting busier. Many of our customers that are custom molders, as well as proprietary molders, are getting busier, and it's in a lot of different industries,” said Dave Larson, president of Westland Corp.
Screw and barrel sales are a leading economic indicator of future capital spending, according to plastics industry observers.
“I always consider it a link in the chain of the industry,” said plastics analyst Bill Wood. “It will be behind the trend in actual output of plastic parts, but it will be ahead of the trend of orders for new machines.”
Screws and barrels are basic components that melt and move plastic. Spending on screws and barrels right now could lead to investment, down the road, in new injection molding presses, extruders and blow molders.
In 2009, plastics companies slashed capital spending to stay alive during the Great Recession. It was a bleak time for machinery makers.
Makers of screws and barrels shared the pain. Some plastics processors even eliminated maintenance budgets. A few thousand dollars for a new screw was out of the question. Instead, if a screw wore out, they simply moved the mold to another machine. Or they cannibalized parts.
“People just put worn-out screws to the side there. It was really bad,” Larson said. “From the end of 2008 through most of 2009, people had extra machines that were sitting idle. So why repair that screw and barrel? Just move it to another machine. But now they're getting busier, and they have to get that other equipment up and running.”
The Society of the Plastics Industry Inc. reports that screws and barrels showed steady, modest improvement throughout 2009. The fourth quarter was the strongest for both, as Washington-based SPI said single screws reached 1,377 for the final period, up 6.5 percent from the third quarter. Fourth-quarter barrel shipments reached 1,252, a 14 percent gain from the third quarter. The numbers last year were well off the pace of past years, but the pickup at the end of 2009 shows the component sector is moving in the right direction — and reflects what screw and barrel companies said for this story.
Consolidation was a big story for 2009. The two biggest players joined forces in September as Xaloy Inc. of New Castle, Pa., bought Spirex Corp. in nearby Youngstown, Ohio. Smaller players welcomed the news as a way to reduce overcapacity in screws and barrels in the slumping market.
Shortly after announcing the sale, Xaloy said it was closing an Xaloy screw-making plant in New Hampshire and Spirex's bimetallic barrel plant in Wisconsin.
Production volume at North American processors dropped between 20 and 40 percent in 2009, from a good year, say 2008, said Ron Auletta, Xaloy's president and CEO. Automotive was worse, medical and packing fared better.
But so far in 2010, that has shifted from a decline of 10-25 percent, so the plastics industry has still not recovered to 2008 levels, but it's improving, he said.
“I'm optimistic for 2010,” Auletta said.
In March of 2009, Westland reduced working hours and laid off a few people. But the company in Wichita, Kan., saw business turn up last November, and that has carried through so far in 2010, Larson said. Westland rehired the people and has gone back to a full workweek for its 46 employees.
“If it continues, we'll be looking at hiring a few more people in the next few months,” he said.
Mantyla said that Barberton, Ohio-based General Plastex started getting busy in December. “We're seeing people putting machines back into service, and they're now trying to play catch-up on some of the machines that have been neglected,” he said.
Plastic part production is still at a low level, but it has been increasing gradually each month, Wood said. Modest growth is an improvement.
“One year ago at this time, it was absolute panic. It was panic mode and everybody just shut down. A lot of the manufacturing sector went into absolute zero,” said Wood, who runs Mountaintop Economics & Research Inc. in Greenfield, Mass. “Now the overall trend is mostly up.”
Jerry Warren agrees with that view. “People were afraid to do things. Everything was like Chicken Little. People were afraid the sky was falling,” said Warren, vice president of aftermarket business at Davis-Standard LLC in Pawcatuck, Conn.
Warren said customers are more upbeat now. “It's really picking up nicely. You can just see the consistency,” he said. “People are planning projects for the future.”
Overall plastics manufacturing is gaining steam. Kris Bledowski, an economist with the Manufacturers Alliance/MAPI of Arlington, Va., predicts U.S. plastic product manufacturing should grow by 3 percent in 2010 and 6 percent in 2011. It sank by 14 percent in 2009, he said in a speech at the Plastics News Executive Forum last month.
North American automotive production also should rebound, after a dismal 2009, he said.
Several executives said automotive molders are investing in new screws and barrels. “They're starting to pick up on their parts production,” said Jeffrey Kuhman, president of Glycon Corp.
“Now they go back and see these machines they've taken out of production and say, 'Oh my gosh, we need a new screw and barrel for that machine.' “
Automotive has led an across-the-board pickup in work, Kuhman said. “Glycon is very busy right now and still getting busier,” he said in late March. The Tecumseh, Mich., company will bring back a second shift, call back two machinists who were laid off, and hire five more people.
But Kuhman wonders if the boomlet in screw and barrel production will last.
“We're seeing inflated demand because of the pent-up demand. We think some of what we're seeing is permanent, but we don't think it's going to continue at these levels,” he said.
Kuhman and Larson said the federal Cash for Clunkers program drew down inventories of cars and automotive parts. A decent year for car sales is important for a general plastics recovery, they said.
“Automotive is strong at this point, and I don't know if that'll stay,” Larson said.
Kuhman thinks the economy still has some “trouble spots,” like the deficit, layoffs of city employees and weakness in home prices. “There's still some weakness in the economy,” he said.
Capacity utilization — a measure of the number of machines running at U.S. plastics and rubber plants — has ticked up about 1 percentage point a month since mid-2009, but it remains weak, at 71.3 percent in February, according to the Federal Reserve. That's far below the 85 percent rate needed to spark broad-based spending on new machinery. But every percentage point gain means some processors need to get presses running again.
Screws and barrels may be a window to future industrial spending, but non-return valves can predict injection molding screw sales, said Stan Glover, sales director at Zeiger Industries Inc. of Canton, Ohio. A good non-return valve, also known as a screw tip, is a key to making a consistent shot.
“The first thing to recover, always, is non-return valves,” Glover said. “As machinery is brought back on line, the first components to be replaced will be the non-return valves, followed by screws and then barrels.”
Glover said Zeiger's screw business has remained constant for the last 12 months. “It hasn't picked up like the non-return valves have,” he said.
Wexco Corp. makes bimetallic barrels in Lynchburg, Va. “The whole quarter has been ramping up, but for the past six weeks it's been really strong,” Don Smith, product manager, said in late March.
Wexco is working a lot of overtime. Smith said the company has brought back six or seven people who were laid off.
“Confidence was down so far last year, and now we're on the upswing,” Smith said. “We're noticing it through the distributors and screw manufacturers and [machinery original equipment makers], across the board.”
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