The North American plastics industry is on a roll, and that is reflected in our Machinery Outlook special report. The Great Recession is long past and, while plastics processors are understandably still a bit cautious, they are moving ahead with investments.
A couple of things stand out from the package of stories by senior reporter Bill Bregar, who covers the machinery beat. Several makers of injection molding machines said that more companies now have a planned schedule for replacing older machines each year, taking them out of service and buying brand new equipment. Officials of several other machinery sectors also mentioned this trend.
“The strong market has given people the confidence to replace machines. 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,” said John Ward, Arburg Inc.'s vice president of sales and marketing.
That's what a couple of solid, profitable years in a row can do for the plastics industry.
That is something new, machinery executives report. Big new factories get the splashy headlines — many of them in Plastics News. But plastics processors, including some smaller players, quietly buying machines on a schedule to upgrade their fleets, that's a lower-key story. And just as important.
Regular replacement of older machines — before they just totally wear out — is a sign the industry is healthy. In the recession, we heard stories of companies stripping screws and parts off of idle machines instead of buying new. Now many sectors of the plastics industry are enjoying a solid recovery. Plante & Moran PLLC found that the plastics industry is as profitable as it was in the late 1990s, in a survey presented in October at the Benchmarking Conference held by the Manufacturers Association for Plastics Processors (MAPP).
Reinvesting those profits back into new machinery also shows that North American processors are taking the reshoring trend seriously. They're becoming more efficient to win work back from China.
American manufacturing is standing tall. There's some evidence that consumers are making the connection between buying U.S. made products and their own economic well-being. Even Wal-Mart has launched a Made in the USA campaign.
Bregar interviewed more than 30 machinery executives for the report. It's no surprise that the powerhouse U.S. automotive sector is lifting all boats — especially the one carrying injection molding presses. Clearly, at some point, new car production will plateau or decline. Automotive is cyclical, after all.
But a lot of jalopies are still on the road. IHS Automotive reports the average are of all cars and light trucks in the United States is 11.4 years. This number doesn't seem to go down, even as new car sales stay robust. But at some point, that will turn around as the economy continues its slow advance and hiring picks up. Indeed, IHS says the rate of growth in the age of the nation's fleet has slowed, because of the solid increase in new vehicle sales.
Maybe motorists can follow the lead of plastics processors, and upgrade to a new set of wheels in 2015.