Slow growth continues even as post-recession boom fades

The U.S. injection molding press market is growing steadily, but more slowly than during the immediate post-recession boom, according to industry executives.

Just one word, Ben: Confidence!

U.S. plastic part production has climbed back to the level of 2007, before the Great Recession, according to economist Bill Wood. The same goes for capacity utilization, now at about 80 percent for plastics.

Seven years to claw back up may not sound impressive, but the recession was cavernous, and, Wood points out, plastics processing is much different today: fewer plants, more efficient, high automated machines and fewer workers.

“The industry has gotten so productive they can make more with less,” Wood said. “You don't need as many people as you used to have and you don't need as many machines, and you don't generate much waste and use much energy. And with all those amazing gains, we're just about to back to where we were.”

Wood is Plastics News' economics editor and president of Mountaintop Economics & Research Inc. in Greenfield, Mass.

Molders who survived the Great Recession are profitable, and ready to keep investing in the newest technology, especially automotive molding. That mirrors general manufacturing. The Institute for Supply Management's Purchasing Manager's Index was 59 percent in October. A reading over 50 means manufacturing is expanding.

In fact, ISM said U.S. manufacturing now has expanded for 17 consecutive months.

“Companies are strong. They've experienced three heyday years of healthy activity. Now they feel comfortable enough that when that make a budget and establish a plan, they're actually sticking to it when it comes to new machines,” said Glenn Frohring, president of Absolute Haitian Corp. of Worcester, Mass.

John Ward, vice president of sales and marketing at Arburg Inc., agreed. “The strong market has given people the confidence to replace machines,” he said. “What's happened is that people have been really noncommittal in their replacement programs in the last couple of years, but now we're seeing more companies putting regular plans together.”

Back to 4,000 units?

The Society of the Plastics Industry Inc. projects new orders probably will increase 4 percent in 2014, to about 3,800 units. A 5 percent gain in 2015 could put orders close to the 4,000 level.

“I would love to see next year's numbers approach the 4,000 mark. Any machine salesman would say that,” said Bill Duff, national sales manager of Negri Bossi USA Inc. A bump from NPE 2015 could help, but he's not sure the milestone number can be reached.

In the boom days of the early 2000s, customers would buy injection molding machines, then go look for work. That buy-it-and-they-will-come attitude is gone for good, Duff thinks.

On the other hand, the robust automotive market still wants big machines — yesterday.

“There are phone calls I get weekly that ask for quick delivery on large-tonnage machines. None of the OEMs have a 2,000- or a 3,000-ton machine sitting on the floor ready to ship,” Duff said.

Duff said there's another change in the last decade-plus: automation. Almost every Negri Bossi unit shipped comes with an automation cell.

“People are really looking at reducing their costs,” he said.

Most machinery officials think 4,000 units — if it happens — will be high water mark and that 3,500 units is the “new normal” for the U.S. injection press market.

Mark Sankovitch is one who thinks press sales will start to slow again in 2016, after several years of growth.

“What's happening, the curve is starting to bend. The year-end growth is starting to bend. I find it will be hard to get over 4,000 units,” he said.

Sankovitch is president of Engel Machinery Inc. in York, Pa. Automotive is Engel's largest market. North American auto production is nearing 17 million a year.

“Automotive is still strong in the U.S., but where we'll see a higher percentage growth is Mexico,” he said. “I think we're at the point where we won't see that much growth after 2015. In 2016 we'll start to see some slowing again, especially in large-tonnage machines.”

Last year's brutal winter took a toll on the U.S. economy, as gross domestic product plunged nearly 3 percent in the first quarter. Even so, plastics machinery remained resilient, increasing 11 percent over the first quarter of 2013, SPI reported.

Machinery executives agreed.

“January, from our perspective, was the slowest month. But we picked up strong right after that,” Frohring said.

Auto suppliers add capacity

Automakers and their plastics part suppliers are building new factories to keep up with demand, said David Bernardi, senior sales and marketing manager at Ube machinery Inc. in Ann Arbor, Mich. And companies are replacing older machines in existing plants.

“Because of the efficiencies of modern machines, you not only replace it, but you increase your productivity, because you've got a faster, more-efficient machine,” Bernardi said.

Molders are expanding, reports Ron Krisanda, chief operating officer of Milacron LLC. “There was a tremendous amount of investment in new capacity in 2014,” he said. Companies invested in new machinery across all the primary industries: automotive, packaging, consumer and medical. “The demand for equipment remains high.”

Automotive is a key market for the Cincinnati-based Milacron. The company is working on innovations that officials said will be attractive to that sector, including the Mold-Masters Fusion G2 and Vision hot-runner-nozzle assemblies. Milacron also will now incorporate MuCell foaming technology, for molding lightweight parts, onto its injection presses, under a partnership with Trexel Inc.

Industrywide, Krisanda said demand for injection presses grew by about 5 percent in 2014 and should increase the same percentage in 2015. But sales value actually jumped 10 percent in 2014 because of the mix of larger-tonnage machines, mainly for automotive, he said.

John Martich III said U.S. business has grown about 12 percent this year at Sumitomo (SHI) Demag Plastics Machinery, spread across packaging, automotive and other markets. “There's still some pent-up activity,” said Martich, vice president and chief operating officer at company's U.S. operations in Strongsville, Ohio.

Paul Caprio, president of KraussMaffei Corp., called the resurgent injection press market “a great comeback.

“Next year's going to be as good as this year. Customers keep ordering. They know they need machinery. Unless something changes drastically, I expect another banner year [in 2015],” Caprio said.

The packaging injection press market has been somewhat flat, Caprio, but he said the improving economy should help.

“With people being employed, I think packaging's going to pick up,” Caprio said.

In other preform press news, Athena Automation Ltd. is building a 150,000-square-foot factory in Vaughan, Ontario. Jim Overbeeke, vice president of sales, said the building should be completed toward the end of 2015. Officials plan to build up to four machines a month in the existing, smaller headquarters next door.

Overbeeke said Athena now has six employees who will travel for service and installation, and two in the shop to handle spare parts.

“Business has been strong,” he said.

Arburg's new U.S. headquarters will open in 2015 in Rocky Hill, Conn., a few miles from its current building in Newington, Conn. Ward is bullish on continuing growth.

“Automotive looks strong for the next five years,” Ward said. “The medical market suffered a lot with the Obamacare effect on certain companies, which did not invest as much, but it still remains strong, relatively speaking. Consumer packaging also is strong.”

HPM North America Corp. also is opening a new facility, a 40,000-square-foot showroom in Marion, Ohio. HPM President William Flickinger said the company will run a new 1,100-ton two-platen press at an open house Dec. 9-11. HPM sells presses assembled in China by its parent company, Guangdong Yizumi Precision Machinery Co. Ltd.

HPM was known for years as a large-press maker.

“A lot of doors will open for us with this new two-platen machine,” Flickinger said. It will be available from 900 to 3,500 tons.

“We're getting a lot of inquiries and requests for quotes. It's just a really strong market right now,” said Bob Columbus, regional sales manager at JSW Plastics Machinery Inc. in Lake Zurich, Ill. “Automotive is extremely strong for us, and we're selling a lot of larger-tonnage machines, which we're happy about.”

“Business is fantastic,” said Peter Gardner, who sells Niigata machines. DJK Global Group of Wood Dale, Ill, distributes the presses. Gardner said Niigata is selling large-tonnage machines to Japanese automotive transplants, in the United States and Mexico. “A lot of the Japanese auto manufacturers are building in Mexico, and with that comes all the tier suppliers.”

Automotive “still seems strong, and everybody is busy,” said Tom Geddes, national sales manager at MHI Injection Molding Machinery Inc. in Bensenville, Ill.

Marko Korneef, president of Boy Machines Inc., said the small-press supplier is stocking more machines than ever in Exton, Pa., to meet faster delivery times. Boy also is working overtime and training people.

“I'm looking at a 30 percent growth,” he said. “Business is really good.”

Sodick Plustech Co. Ltd. is gaining business from molders of high temperature engineering grades, said Len Hampton, national sales manager of the U.S. unit in Schaumburg, Ill. Sodick plans to launch several new presses at NPE next year, including a vertical rotary press and a global-platform horizontal machine.