A pickup in plastics machinery business is the talk of K 2010, as equipment executives said business has rebounded sharply after the steep downturn in 2009 — mainly from strong sales in Asia and Latin America.
Several European machinery officials said they expect 2010 sales to return to the level of 2008, a quick pickup from the brutal recession in 2009. And right now, bulging order books mean business should be solid through the first part of 2011, they said.
“There was a very big impact from the economic crisis in 2009,” said Bernhard Merki, president of Euromap, the trade association for European plastics and rubber machinery companies. Production of primary machinery like injection presses, blow molding machines and extruders fell by 30.2 percent in 2009, from 2008 levels. Auxiliary equipment dropped 27.7 percent.
But that has changed, Merki said at a K show news conference held Oct. 29 by Euromap and VDMA, the German Plastics and Rubber Machinery Association.
Merki said growth returned to the machinery industry at the end of 2009, and has continued. Euromap thinks overall production will rise by 10-15 percent for all of 2010.
“Now we are not that far away from where we were before the crisis occurred,” he said. “We really are in a positive, ongoing situation.”
Merki said the automotive sector has come back sharply. “The customers are looking to invest in high-tech equipment,” said Merki, who also is president and CEO of Netstal-Maschinen AG, an injection press maker in Näfels, Germany.
Just before the start of K 2010, VDMA upgraded its 2010 sales-growth forecast for German-made plastics and rubber machinery to 15 percent, instead of its previous expectation of 11 percent growth. “The upturn that began in the fourth quarter of 2009 has continued,” said Thorsten Kuhmann, VDMA's managing director.
From January through August, orders rose by 77 percent from the same period of 2009, according to VDMA. “That is really extraordinary,” Kuhmann said.
German orders are up 55 percent from 2009. Exports have skyrocketed by 87 percent — mainly from China, India and a number of Latin American countries.
Executives of injection press makers Engel Austria GmbH and Arburg GmbH & Co. KG warned at K show news conferences that delivery times are extending as factories and supply chains attempt to keep pace with the recovering demand.
“For many of our customers this is a surprise. They still live in a world where if you needed a machine you got it immediately. Some are a bit shocked when they find we cannot deliver,” said Engel CEO Peter Neumann.
Helmut Heinson, managing director of sales, said lengthening delivery times will become an issue for the machinery sector. But he said it is an issue the company in Lossburg, Germany, is well-positioned to manage.
“Delivery times are increasing and [supply] prices are increasing,” he said. “However, we have a high level of internal production and we have real partners in some key areas. We profit from these long-term supply contracts.”
Michael Hehl, Arburg managing partner, said sales for 2010 should be more than 340 million euros ($471.7 million), up 50 percent from 2009 levels, and nearly reaching the 2008 level of 344 million euros.
“We are currently working at full capacity and are responding very flexibly to the increased demand,” Hehl said.
Heinson said demand is strong for turnkey systems. Today, every fourth inquiry to Arburg includes an automated injection molding system with a six-axis robot, he said.
Arburg is having its best year ever in Asia — and that includes not just China, but also Taiwan, Indonesia and Malaysia. “More than 50 percent of our customers in China are local ones; it's not only the global ones we started out with years ago,” Heinson said.
Arburg also this year will get the best results in its history in Brazil and Mexico, Heinson said.
Schwertberg, Austria-based Engel's fiscal year closes at the end of March. Neumann said sales will jump by 60 percent in the current fiscal year and will nearly match Engel's record level from the last fiscal year.
Neumann said Engel remained profitable during the recession.
This rebound, he said, has been marked by a lot of replacement machines, a trend he thinks will cool off to a more normal capital investment climate.
Echoing several other injection press officials at K, Neumann said Engel now is selling to domestic Chinese molders, not just multinationals.
“These Chinese customers are becoming more and more interested in technical molding,” he said. Engel is doubling the capacity of its plant in Shanghai.
In early October, Engel opened a new technical center in Querétaro, Mexico.
Sales are rebounding around the world, but the strongest percentage of growth is being seen in emerging markets, Neumann said.
KraussMaffei AG of Munich had sales of about 754 million euros ($1.05 billion) for fiscal 2010, which ended Sept. 30. That's slightly ahead of fiscal 2009 sales of 742 million euros, but well short of the record 1.05 billion euros in 2007-08. Still, CEO Dietmar Straub said, “We consider this as a success because the year 2009 was marked by a severe reticence to invest.”
KraussMaffei's future looks good, thanks to strong orders. Straub said orders for 2010 reached 869 million euros — 35 percent higher than the order level of 2009.
However, he thinks the red-hot pace of the last few months probably will cool to a more traditional level of growth.
Wittmann Battenfeld GmbH officials said group sales, for injection presses and auxiliary equipment, should be around 200 million euros this year.
Orders leaped 180 percent from 2009, after orders suddenly stopped at the end of 2008, according to Georg Tinschert, president and CEO of the company in Kottingbrunn, Austria,
“This year was a total change,” with strong orders all year, he said.
Like other European machinery players, Wittmann Battenfeld kept up investing during the recession.
“We did not reduce anything in our development strategy,” Tinschert said.
He said automotive has recovered the strongest. The toy industry also is investing in machinery.
Since January, Wittmann Battenfeld has hired 50 people in Kottingbrunn, Tinschert said.
President and founder Werner Wittmann said 2009 sales declined to 150 million euros, down from 250 million euros in 2008. This year should hit around 200 million euros and by next year, sales should again reach the pre-recession level of 2008, he said.
Davis-Standard LLC officials are seeing the improving economy first-hand. “We've just come off the best quarter in the company's history,” President Charles Buckley said in an interview at Davis-Standard's K show booth.
The Pawcatuck, Conn.-based machinery maker generated well over $100 million in sales in the fourth quarter of its fiscal year, ended Sept. 30, Buckley said.
Backlog is 21/2 times the level of a year ago, mainly from strong business in Asia and South America. “A year ago we had people on short work weeks — now we're hiring,” Buckley said.
The U.S. injection molding machine market sank to depressed levels in 2009. But the future looks brighter, said Bill Carteaux, president and CEO of the Society of the Plastics Industry Inc.
U.S. orders for injection presses is pacing some 900 machines ahead of year-ago orders, on a rolling, 12-month basis, Carteaux said at the show.
He projects injection press orders to total 2,100 to 2,200 for all of 2010 — up sharply from 2009.
Plastics News editor Robert Grace and Chris Smith, editor of European Plastics News, also contributed to this story.