Injection press sales to U.S. molders are riding a sharp turnaround this year, after crashing to the depths of despair in 2009, when only 1,285 presses were shipped.
The Society of the Plastics Industry Inc. is projecting 2010 shipments will reach 1,909 — up 49 percent. That's well below the 2008 level of 2,444 units, but clearly, the recovery has begun. And the strength of the rebound is much stronger than many industrys leaders expected.
Economist Bill Wood said plastic processors cut back on investment so much in 2009 that the bounce-back had to happen.
“There's quite a lot of momentum. There are a lot of things that are pushing manufacturing, and especially machinery — and plastics machinery is riding that wave,” said Wood, who runs Mountaintop Economics and Research Inc. in Greenfield, Mass.
Wood is predicting double-digit growth for 2011, with the meteoric rise slowing to more traditional levels. Most machinery leaders agree.
A much-improved automotive sector now is investing again, according to machinery executives. That has brought sales of large-tonnage presses back from the dead during the brutal recession.
“If you had a 2,000-ton machine in a warehouse today, you could sell it immediately. The large-tonnage business is very, very active,” said Glenn Frohring, president of Absolute Haitian Corp.
“We're certainly seeing a nice increase, and a big part of the driver is automotive,” said Glenn Anderson, Milacron LLC's vice president and general manager of injection molding for North America.
“I was surprised to see automotive become such a big part of the growth for 2010,” Anderson said.
Automotive is responsible for a lot of the 600-plus additional presses sold this year, according to machinery officials.
“Automotive has such an impact across all manufacturing. When they're buying, everyone benefits down the chain,” said Paul Caprio, president of KraussMaffei Corp.
He also is bullish about sales to packaging and medical. “Our outlook for 2011 is without question very optimistic.”
Replacement machines, and even some additional production capacity, are other “new” features of the U.S. market. During the brutal recession, molders hung onto old machines, stripping off components to use on presses that were operating. But now molders finally are scrapping that aging metal and bringing in some new iron. That hasn't happened in several years.
Overall, many machinery executives said it was like turning on a faucet — a sudden pickup that came fairly early in 2010 and has continued all year.
“It was, for most people, surprising how much it turned around,” said Friedrich Kanz, president of Arburg Inc. in Newington, Conn. “I mean, the fourth quarter of 2009 was already getting better. But nobody was confident that it would carry on, and continue to improve. So at the end of 2009, I think the entire industry was cautious, and January and February were still kind of slow. But then thereafter it improved significantly and we took, all of a sudden, [many] more orders and that continued to improve until today.”
The suddenly healthy U.S. press market mirrors a global recovery. At K 2010, major machinery makers heralded bulging order books, with the strongest business in Asia and Latin America.
“More or less the global picture is, it has picked up everywhere. And nobody could predict that,” Kanz said.
Kanz said he thinks the increase probably comes from planned investments that got put on hold during the recession.
Peter Gardner has three words to explain the return of replacement sales. “That's pent-up demand. They kind of lived with their old machine and squeezed the last bit of production out of it, and had to buy something new,” said Gardner, who sells Niigata machines as vice president and general manager of DJK Global Group in Wood Dale, Ill.
After customers sat on the sidelines, the dam broke at the end of the first quarter. “And to us it seemed very abrupt,” Gardner said. “March, April and May were all very, very good and it was unexpected.”
Niigata is selling machines to suppliers to Japanese automotive transplants, he said.
Kanz said Arburg's mix of U.S. sales includes presses for new projects. But processors also are adding general production. “Very often we all of a sudden get a call that the customer has gotten more orders, more demand, and needs more production capacity, and so has to order additional machines,” he said.
But lead times are increasing, as the supply chain for machinery rebuilds after a recession-driven year of cutbacks to inventory and employees.
Anderson of Batavia, Ohio-based Milacron said meeting demand for shorter lead times is the plastics machinery industry's major challenge going into 2011.
“Customers are waiting to have firm purchase orders and then they're placing orders for capital equipment, which is compressing lead times,” Anderson said. “Our supply chain is struggling to keep up, and that's across the board.”
During the K show, European machinery leaders warned of shortages of some basic press components if the hot level of demand continues well into next year.
In the meantime, manufacturers that have presses available can win business from brand-new customers. “We've won some deals just based on people not being able to deliver a machine,” Gardner said.
David Purcell said supply-chain issues will work themselves out. “Moving into next year there has to be some stabilization. The supply/demand equation can't remain so unpredictable,” said the injection molding manager for Wittmann Battenfeld Inc. in Torrington, Conn.
Wittmann Battenfeld's sales bounced back in the first two months of the year, Purcell said. “Everybody anticipated some comeback, but I don't think everyone anticipated that the growth would be so overwhelming,” he said.
During the recession, auctions dumped lots of late-model injection molding machines on the market, especially in automotive, as companies cut back or folded. That further depressed sales of new presses. Those days appear to be over.
“All those good machines have been taken. The used market has dried up,” Purcell said. “This year it's almost impossible to find a good large-tonnage machine.”
Wittmann Battenfeld is responding by building up the company's large-press stable, At K, it showed a MacroPower press with 1,000 metric tons of clamping force. The company plans to add a 1,300-tonne press next year and a 1,600-tonner in late 2011 or early 2012, he said.
The renewed investment by automotive molders this year did not surprise David Bernardi, since Ube Machinery Inc.'s automotive sales picked up in the fall of 2009. Replacement machines account for about three of every four presses Ube is selling right now.
“Our biggest competitor prior to [the middle of] last year was the used-equipment market. I was out there competing against my old machine that was 2 years old. But now you can't find a good used machine,” said Bernardi, senior sales and marketing manager for Ube in Ann Arbor, Mich.
The automotive shakeout culled the weak players, Bernardi said: “The recession, it was like a great purging. It's like we had a forest fire and it burned everything down to the ground, and all this new growth came up.”
Mark Sankovitch of Engel Machinery Inc. in York, Pa., was not surprised by the solid recovery. “The molders that survived the recession, they needed to spend some money on their infrastructure,” Sankovitch said. “You can only go so long with your car being old, but there's a point where you've got to replace it.”
Improved profitability for processors also spurs reinvestment, he said. Molders are looking at replacing old machines with improved technology, such as multicomponent presses, all-electrics and turning-cube molding.
U.S. molders are scrutinizing energy consumption, so all-electric presses continue to grow, Sankovitch said.
All-electrics account for about half of the U.S. market for injection presses, measured by unit volume. The technology made some news at K 2010, when Bolton, Ontario-based Husky Injection Molding Systems Ltd. rolled out its first-ever all-electric presses: the H-MED AE, aimed at clean room medical molding; and the H-PET AE for PET preforms.
Mike Urquhart, Husky's vice president of sales for North America, said the company was already well-versed in medical through its hot-runner business. “Now we can do a complete solution,” he said.
Husky's emphasis on packaging, which is recession-resistant, and on molds, hot-runners and plant upgrades, meant its sales took less of a dip than other machinery companies, according to Urquhart. But some customers still delayed spending on presses.
“2009 was an artificially low level. Even people that had money were holding off because they didn't know what was going to happen. Now companies are moving forward with investments that were put on hold,” said Urquhart.
Frohring of Absolute Haitian in Worcester, Mass., said this year just had to be better than 2009. “We knew it was going to rebound, but I think the market rebounded more than expected,” he said.
Three things are driving the sales, he said: high maintenance costs of older equipment, tax incentives such as the accelerated depreciation, and the cost of energy.
“Everybody has had a good year in machinery,” Frohring said. “The fortunate thing that we have is, our capacity's higher, so when we get busy, our lead time doesn't go out as quick.” Absolute Haitian sells machines made by Haitian International Holdings Ltd., China's largest maker of injection presses.
Liam Burns, general manager of Negri Bossi USA Inc., thinks U.S. injection press sales will increase 10-20 percent in 2011. “From the beginning of the year to the present, there's been a continuous monthly increase in machine sales, industrywide,” he said.
Burns credits profitable molders for replacing old presses that are too expensive to fix. “We've not seen that for awhile,” he said. Negri Bossi USA is in New Castle, Del.
This year was “extremely strong” for Netstal Machinery Inc., said Rick Shaffer, president and general manager of the Devens, Mass., company. Packaging companies have invested in presses for applications such as conversion to smaller caps for PET water bottles.
“We didn't suffer nearly as much [as the overall market]. We didn't get hit that bad when it dropped off, so I hope we get a little bit of a bump,” Shaffer said. “And we think that bump for us will come in medical.”
Nissei America Inc. President Jin Yoda also likes the medical market. “Medical is very consistently strong, and it's going to be drastically increasing for the future,” he said.
Global issues concern Yoda, including the yen/dollar exchange rate, which affects the prices of Nissei's Japanese-made presses. He would like to see continued U.S. pressure on China to allow the yuan to float against the dollar, which would make it harder for Chinese companies to sell their machines in the U.S.
Nissei America is in Anaheim, Calif.
Sales have jumped by about 50 percent this year at Boy Machines Inc., according to Marko Korneef, vice president of sales and service for the small-press supplier in Exton, Pa.
“We're looking at numbers that are higher than 2008 but not as good as 2007,” he said.
Korneef said some molders that used to buy larger machines are moving to small presses and small-cavitation molds, to give them flexibility to mold just-in-time parts.
Toyo experienced gradual improvement in 2010.
“We've had a good run. It wasn't the all-time highest but we had a good run and a good rebound,” said Ronald Zara, national accounts manager for Toyo presses at Maruka USA Inc. in Rockaway, N.J.
Right now, quoting activity for Mitsubishi presses is for new projects, said Tom Geddes, national sales manager of Bensenville, Ill.-based MHI Injection Molding Machinery Inc. With few decent used machines on the market, Geddes thinks sales will keep moving up in the new year.
“We're going to continue to see it improving. That's the impression I get from just the quote activity and the results we're seeing. I don't think you'll see another 40 percent [increase this] month, but we think there will be growth,” Geddes said.