SPI reports strong machinery sales

WASHINGTON — Shipments of plastics machinery increased for the fifth straight year in 2014 — a strong report issued a week before NPE 2015 kicks off in Orlando, Fla.

Twin-screw extruders and blow molding machines jumped by double digits — each by more than 25 percent.

The Society of the Plastics Industry Inc.'s Committee on Equipment Statistics compiles the report. SPI said shipments of primary equipment — injection molding presses, extruders and blow molding machines — increased by 7.6 percent in 2014 from the 2013 level, when measured in dollar value.

Last year ended strong, according to SPI in Washington. Primary machinery shipments totaled $346.1 million in the fourth quarter of 2014, up 9.8 percent from the revised shipments total of $315.1 million in the third quarter. And the fourth quarter was up 8 percent from the prior year's fourth quarter.

“The economic fundamentals that favor continued investment in capital equipment are expected to persist through 2015 as well,” said Bill Wood, the plastics economist who analyses the data for the Committee on Equipment Statistics.

The value of shipments of injection molding machines, the largest plastics equipment segment, grew 5.3 percent in 2014 from the year before. Injection press shipments advanced 7.7 percent in the fourth quarter from the 2013 fourth quarter.

Single-extruders declined by 3 percent in 2014 from 2013, measured in value. The sector increased by 1.1 percent in the fourth quarter of 2014 from the year-earlier fourth quarter.

The value of shipments of twin-screw extruders jumped 26.3 percent for the full year 2014. That sector includes both co-rotating and counter-rotating extruders.

Blow molding machines spiked up 38.1 percent for 2014, SPI said.

New bookings for auxiliary equipment, for companies that report the data, increased 9.2 percent in 2014, over 2013 bookings. Auxiliaries gained 2.2 percent in the fourth quarter from the year-ago fourth quarter.

SPI said the participating auxiliary companies reported new bookings of $103.5 million in the fourth quarter.

Wood said the upward trend in plastics machinery corresponds with the long-term trends in two areas covered by the U.S. government measuring overall industrial machinery. The Bureau of Economic Analysis said business investment in all industrial equipment grew by 13 percent in 2014 from the year before. Investment increased 16 percent in the fourth quarter compared with the fourth quarter of 2013.

The Census Bureau reported the total value of new orders of industrial machinery jumped 30 percent for all of 2014, and gained 20 percent in the fourth quarter from the year-ago fourth quarter.

Wood said the rising value of the dollar hurts exports. The rise in U.S. shale oil and natural gas will reduce material and energy costs, luring plastics work to the United States, although low oil prices mean layoffs in that sector.

“The short-term problems caused by a stronger dollar and a downsized oil patch notwithstanding, the recovery in the U.S. economy will continue through 2015,” Wood said in the SPI report. “The stock market is at all all-time high. Corporate profits are still at record levels. And as I have said before, the three main trends that will drive the economy over the coming months are already well-established. They are: Low interest rates, low energy prices and rising wages and household incomes resulting from stronger employment levels.”

At the Plastics News Executive Forum in February, Wood said plastics processors are “quite optimistic about the economy right now. Business levels are good and they have a very favorable or optimistic outlook going forward.”

Wood said the stronger dollar “will be painful on the manufacturing sector in the short term,” but added that the industry will adjust to the currency changes.

The U.S. economy is in a gradual recovery, said Wood, who runs Mountaintop Economics & Research Inc. in Greenfield, Mass., and also is Plastics News' economics editor.

“The good news about what is currently happening is that it has been very gradual, very slow, which allows it to be sustainable. And we have the inputs that continue to keep the economy going,” Wood said at the Executive Forum.

SPI's Committee on Machinery Statistics survey of machinery suppliers backed up that optimism. SPI said more than 90 percent of respondents expect conditions to stay the same or improve in the coming quarter, as well as over the next 12 months.

They continue to expect that automotive and medical markets will remain strong in demand for plastic products and equipment. Other end markets should see steady to higher demand in 2015, the survey said.

According to the survey, machinery officials strongly agreed that North America is the most promising market in the world for the coming year. They were bullish in Mexico. They think that business should hold steady in Asia, Europe and Latin America.