These are good times for machinery companies that serve flexible packaging — big-dollar items like blown and cast film equipment, and sheet lines, that have long lead times and are still seeing pent-up demand from the Great Recession.
A modest rebound in housing starts, and continued strong industrial construction, also bodes well for companies supplying extruders to make vinyl windows, siding and pipe.
“We're seeing growth. We're not seeing any pulling back in flexible packaging in the high-barrier front,” said Gary Hughes, president and CEO of Brampton Engineering Inc.
The company can make lines to make film with up to 11 layers, but Hughes said business is brisk in three- and five-layer film, even for some applications like bundling water bottles, where a company can lower overall cost by using lower-cost materials inside.
Hughes said the attitude seems to be: “We've waited long enough. Let's get going [with new equipment].”
Brampton Engineering is in Brampton, Ontario.
Windmoeller & Hoelscher Corp. had a milestone in 2014.
“This year we will take more orders in film extrusion than printing equipment for the first time since I've been at W&H for 26 years,” said Andrew Wheeler, who was promoted from vice president to president of the company when Hans Deamer retired this year.
“If you look at the strength of the flexible packaging industry, you're talking about an industry that's growing strongly every single year,” Wheeler said.
Worldwide, the German parent company will ship about 120 blown film lines in 2014, he said.
And W&H officials know 2015 will be a good year.
“We've already got a significant number of orders to be shipped next,” he said.
Film also benefits from the growth of pouches, as flexible packaging displaces rigid, blow molded or injection molded items, and cans in a wide range of grocery items like tuna fish, soup and ketchup.
Food companies like pouches, Wheeler said.
“They can see the benefit because it's a smaller package that is lighter and infinitely less expensive to transport,” he said.
Hughes, at Brampton Engineering, said pouches demand film that is perfectly flat and film rolls with more consistent tensions, so the film can move smoothly through downstream lamination with other materials.
“It can have impact positive or negative on the downstream processes. So the whole value chain gets more efficient,” he said.
The Flexible Packaging Association expected the industry to grow by 3.8 percent in 2014, a percentage point higher than the 2013 rate of 2.8 percent.
One major segment — plastic retail bags — continues to face major threats. California banned single-use plastic bags statewide in September. The bags will be prohibited in certain stores in the state as of July 1, 2015.
Hughes pointed out that “single-use” is not really an accurate term, since people reuse the shopping bags. He said bag makers are coming out with new products to fill the gap, such as small scented liners for bathroom trash containers.
Packaging accounts for more than half of total business at Davis-Standard LLC, which makes extrusion systems and accumulator-head blow molding machines.
“Those are good steady markets,” said Jim Murphy, vice president of global sales and marketing in Pawcatuck, Conn.
“Business this year is good,” Murphy said. “We saw that the year kind of started off a little slow, but overall a strong second half, and it's going to be improved year after year.”
Hosokawa Alpine American Inc. President David Nunes said the blown film machinery market remains strong.
“It's more of the same, a continuation of last year. The same dynamics that were in play in 2012 and 2013 are happening now,” he said. “I'm fairly optimistic, that the market has lots of opportunities for new equipment, and lots of upgrades and retrofits.”
Nunes said one customer bought an Alpine American line that replaced the capacity of three blown film lines that were 40 years old. “There's this massive installed capacity that is needing to be brought up to 2014 productivity and efficiency standards,” he said.
Alpine American is in Natick, Mass.
Dana Hanson, president of sheet line maker Processing Technologies International LLC, said customers are both replacing old machines and adding new capacity.
“If you look back there's been some mega consolidations. And those companies represent a significant percentage of the marketplace as a whole in packaging,” he said. “But they also, within their plants, contain machinery that was originally installed in the ‘80s and ‘90s, so a lot of that equipment is antiquated. The machinery today just eclipses the machines that were installed in the ‘90s.”
PTi held an open house during the Society of Plastics Engineers Thermoforming Conference in September, showing its Super G Multi-Nip, a seven-roll sheet line. Hanson said PTi is running customer trials on thin-gauge polypropylene film for form, fill and seal applications at its facility in Aurora, Ill.
Fred Jalili said business was a little slow in the first quarter of 2014 for Advanced Extruder Technologies Inc. in Elk Grove Village, Ill.
“But the second quarter, and remainder of the year, were very strong,” he said. “We're still continuing to see the growth in the sheet market for us, as well as compounding. Right now we are doing more in heavy-gauge sheet for automotive. We're doing a lot more in heavier gauge, and wider sheet than we've ever done before.”
Jalili said AET is building lines that can extrude sheet a half-inch wide and 110 inches wide. One automotive market: truck bed liners.
KraussMaffei Corp. President Paul Caprio said the steady growth in jobs in the U.S. economy will help maintain the housing recovery. The Commerce Department reported construction of single-family homes increased in October to a seasonally adjusted pace of 696,000 — the most since November of 2013. Total starts, including single-family and multi-family units, should pass 1 million units for the year.
“The twin-screw extruder market is more on the PVC side, so it's directly related to residential products like siding and window profiles, and that side of the market absolutely is waking up,” Caprio said from company headquarters in Florence, Ky. That helps fuel investment in equipment.
“It's growing steadily. Some people are buying more equipment, and they're definitely buying replacement screws and barrels,” Caprio said.