U.S. injection molding presses should crack the landmark 3,000-unit mark in 2012, as strong automotive investments keep powering a three-year rebound from the recession, industry officials said.
“Automotive was booming this year. There's no question,” said Friedrich Kanz, president of Arburg Inc. in Newington, Conn.
North American auto builds could top 15 million in 2012. With the average age of a car at 11 years, production should remain strong again next year, automotive analysts predict. Couple that strong production with new-model introductions and making cars lighter to meet aggressive U.S. fuel economy standards, and the long-term picture looks good for plastics — and investments in new molding technology.
“We're getting a double on it,” said David Bernardi of Ube Machinery Inc., which makes large-tonnage machines. “One of things is because of the pent-up need. The industry doesn't have the production requirements to match what is being sold. More vehicles are being sold than you can make, so because of that, the car industry has to buy equipment, and they are,” he said.
Ube in Ann Arbor, Mich., specializes in large-tonnage machines — a hot area of demand for making automotive parts like bumper fascias, body parts and instrument panels.
Bernardi, Ube senior sales and marketing manager, said the capacity issue extends to makers of large presses, too. That's one reason he thinks 2012 shipments will flirt with, but might not surpass, 3,000. “Not because there isn't the desire, but I don't think there's the capacity,” he said. Ube has machines booked into next summer.
Automotive molders are buying inventory machines, because of the long wait for more-customized presses, Bernardi said.
U.S. shipments sank to a paltry 1,285 in 2009, and since then the numbers have steadily climbed back, to 2,111 in 2010 and 2,400 in 2011, according to reports from the Society of the Plastics Industry Inc. U.S. shipments would need to rise 20 percent in 2012 to hit 3,000.
The sector first fell below 3,000 in 2007.
Regardless if 2012 shipments hit 3,000 or fall just short, machinery executives now are looking ahead to 2013. The big question: Will automotive molders demand even more injection presses in the coming year? Reaction is mixed, but the answer will help decide whether press sales keep going up or decline.
“What will automotive do next year? It cannot continue, most probably, on such a booming level. So it will slow down a little bit,” said Kanz. The Arburg executive is not expecting automotive to dive in 2013, just cool off. “But do we expect 3,000 machines next year? I don't know, but I would expect at least 2,500,” Kanz said.
Packaging and medical continue to be solid, recession-resistant markets for injection molding machines. Several equipment executives said press demand for medical has moderated, perhaps because of election-year uncertainty over the fate of Obamacare, and a U.S. excise tax on medical devices, set to start Jan. 1.
“When the economy's down, you can look to packaging and medical as the two primary markets that will underpin the machinery market. What we see now is a resurgence in automotive, which is putting the froth back in the market,” said Tony Firth, vice president and general manager of Negri Bossi North America in New Castle, Del.
Firth added that some business is returning from China to the United States and Mexico. “We're really pleased. We've increased sales significantly, year on year,” he said.
The Corporate Average Fuel Economy standard calls for 54.5 mpg by model-year 2025. That will spark investment in new molding presses, and new technology such as foaming and multicomponent molding, said Mark Sankovitch, president of Engel Machinery Inc. in York, Pa.
“You can't use machines that were built 10, 15 years ago,” Sankovitch said. “There's still this pent-up demand for this lightweighting. We haven't saturated the market by any means. If anything, there's still room to grow.”
Ube's Bernardi said molding automotive parts with thinner walls is driving features like an electric screw drive, so the press can immediately begin to melt plastic for the next, faster-cycling shot. “You have higher injection pressures. You have more-rapid fill. So we're taking out a high-speed packaging machine and selling it as an automotive machine,” he said.
Paul Caprio, president of Florence, Ky.-based KraussMaffei Corp., points to new models and smaller cars aimed as gas savings. “Every new model — that's new molds and new machinery,” he said. “So I think 2013 is going to be as strong as 2012, in the automotive side.”
Caprio said U.S. shipments are on pace to hit 3,300 units for 2012, based on the first nine months. Interviewed in late November, he said: “I would say it slowed down a little bit the last couple of months, and I would expect it to stay at that pace for the balance. But I think for sure it'll be at 3,000 units.”
Peter Gardner, who sells Niigata machines, agrees. “People are looking at 3,000 should be the minimum,” he said.
“Our sales this year are completely dominated by automotive,” said Gardner, vice president and general manager of DJK Global Group in Wood Dale, Ill.
Niigata's Japanese automaker customers are buying all-electric presses for their North American operations, Gardner said. “I think automotive will be pretty steady next year, the same as it was in 2012,” he said. “My hope and dream is that some of the other industries, such as medical, will pick up again.”
Reshoring is giving appliance molders a bounce, thanks to General Electric Co.'s decision to move appliance manufacturing back to the United States and invest $800 million in GE Appliance Park in Louisville, Ky. GE had outsourced much of the work to suppliers in Asia. Several injection press makers report they have sold machines to Appliance Park, or to U.S. molders that are picking up work from GE.
“I see other projects that are coming back, that we are getting business from,” said Tom McKevitt, vice president and general manager at Toshiba Machine Co. America in Elk Grove Village, Ill.
McKevitt said Toshiba is selling machines to make parts for both Japanese transplants and domestic automakers. He reports big demand for midrange presses, in clamping forces from 720-1,450 tons. “We can sell pretty much everything we bring in that size range,” he said. “It doesn't sit in inventory.”
Change of command
In business news, two major injection press manufacturers got new private equity owners in 2012. Onex Corp. bought Munich-based KraussMaffei Group from Madison Capital Partners. CCMP Capital Advisors LLC acquired Milacron LLC from Avenue Capital Group.
Cincinnati-based Milacron is facing moderation in business in Europe and India, said Dave Lawrence, president of worldwide plastics machinery. “We're having a pretty good year” in North America, he said.
Lawrence thinks the U.S. injection press market will top 3,000 this year.
“Automotive's been very strong. We've seen certainly automotive's leading the parade to some extent. I think that we've begun to see some strength in housewares. We've seen some moderation in the medical molding area, but we've had even some flickers in housing and home products,” Lawrence said.
2012 was an NPE year, and SPI moved NPE2012 from Chicago, its longtime home, to Orlando, Fla. The show attracted about 55,000 people.
NPEs can help juice sales, by promoting new technology. Some machinery exhibitors had worried that the change would hurt attendance from the important Midwest region.
Ube's Bernardi thinks NPE gave the industry a boost. “I went into it very afraid, as I think most people did. When we came out of it, it was one of the best NPEs I've ever been to. It was spectacular. We had excellent lead quality and we sold a bunch of machines at the show,” including to non-automotive buyers, he said.
Glenn Frohring also was “pleasantly surprised” by the first NPE in Florida. “We sold machines during the show, and sold them after the show,” said the president of Absolute Haitian Corp. of Worcester, Mass.
He thinks U.S. shipments should exceed 3,000 in 2012. Bookings should reach about 3,500, which means 2013 should be another good year, Frohring said.
“Automotive is playing a huge role, and it's big for us. In a nutshell, we've been experiencing steady growth over the last three years, due to automotive,” he said.
Absolute Haitian has an advantage because its Chinese parent can produce large numbers of big presses, of 1,000 tons and more.
Tom Geddes said his company, which sells Mitsubishi presses, also is busy. “I'm in the middle of five different automotive projects right now that are all big-machine stuff — it's all 3,900 tons,” said Geddes, national sales manager at MHI Injection Molding Machinery Inc. in Bensenville, Ill.
Netstal Machinery Inc. this year moved from Massachusetts into KraussMaffei in Kentucky. Netstal is owned by KraussMaffei Group. Netstal General Manager Mike Sansoucy said the company has won medical business, in machines for contact lenses and diabetes projects, for example. The press builder also targets packaging.
“We tend not to see big cyclical waves, in the Netstal business,” he said. “We started the year with a decent backlog, and so far, we haven't really slowed down.”
Husky Injection Molding Systems Ltd. targets thin-wall packaging, closures, medical and consumer electronics. “We have a healthy backlog of orders, which is up by 25 percent vs. the same time last year,” said Michael Urquhart, vice president of global sales for packaging systems.
Husky, based in Bolton, Ontario, build scomplete systems targeted to specific applications. The firm's core markets “are stable and growing,” Urquhart said.
Marko Korneef is one machinery executive who thinks the industry will fall short of 3,000 units in shipments for 2012. “They're not going to hit it,” he said.
But Korneef, vice president of sales and service at Boy Machines Inc., said for the Exton, Pa.-based Boy, “medical has maintained strong, and this year it seems that technical parts are strong.”
He is optimistic about the upcoming year. “The amount of projects that we're working on, if they come to fruition, it's going to be a good year,” he said.
Nissei America Inc. in Anaheim, Calif., is getting automotive business. “Some customers are still growing, and they still continue to buy the equipment to make parts for automotive manufacturers,” said Ted Maruyama, regional West Coast manager.
Automotive has purchased so many presses the past few years that Maruyama thinks it will be “difficult to grow more” in that sector.
John Martich, chief operating officer of Sumitomo (SHI) Demag's U.S. operations, is more bullish.
“We've seen significant activity on the automotive side of our business. The others have been steady, medical and packaging, but automotive really has been the significant player,” said Martich, who is based in Strongsville, Ohio.
“And I think there's more to come. There's still pent-up opportunity. No doubt about it. There's greater upside yet.”