Compounding extruder sales remained solid in 2015, as automotive business stayed strong and transplant operations kept setting up shop in the United States, home of lower-priced resin thanks to the hydraulic fracturing boom.
“The market's kind of reached its equilibrium,” said John Effmann, director of sales and marketing at Entek Manufacturing Inc. There have no big boom or busts in the last five or six years, he said.
Automotive just pumps out at the same high volumes each year, he said.
“A lot of our business is upgrading and looking at some replacements that are just old machines that are out there and they're tired of putting money into them,” Effmann said. “And the other part of the spectrum, there are large projects going on.”
Effmann said extruder sales for general compounding have been “spotty” this year, but more projects did move ahead later in the year, Effmann said. Looking at 2016, Effmann thinks Entek's business should be “pretty steady as we go,” as the company in Lebanon, Ore., wins work putting together turnkey compounding lines.
One key overriding factor: the United States is now a center of low-cost, stable resin because of the boom in hydraulic fracturing of shale oil and natural gas.
U.S. petrochemical investments are planned, to take advantage of fracking. “It will reduce the price of resin, therefore the price of manufacturing will go down in this area,” said Paul Roberson, president of NFM Welding Engineers Inc. in Massillon, Ohio.
Roberson said compounding equipment makers should see growth in compounding machines, as well as spin-off areas such as lines for color concentrates and fillers.
He sees reshoring continuing to bring work back to the United States, which should continue over a several-year period. “I think you're going to see an uptick. And it's going to be substantial,” Roberson said.
Mexico is getting lots of automotive production, and Roberson said that NFM, through its partnership with Toshiba Machine Co. Ltd., is picking up business there.
Reshoring — or rather, in this case “U.S. shoring” — is happening as foreign companies build compounding operations in the United States and Mexico. One example is Chinese materials company Polymax Elastomer Technology Co. Ltd. opening a North American factory and headquarters in Waukegan, Ill.
Some other significant deals have happened in the last year. RTP Co. bought toll compounder Alloy Polymers, broadening its reach beyond engineering resins to commodity resins. RTP also picked up Polymer Partners, a compounder and concentrate maker.
And A. Schulman Inc. gobbled up Citadel Plastics Holdings Inc. in an $800 million deal — nearly doubling Schulman's U.S. compounding sales.
Charlie Martin, general manager of American Leistritz Extruder Corp., said there were a few lousy years during and just after the Great Recession, but business has been pretty steady since then. Automotive is solid, and is especially strong in the Southeast, home of some big transplants, he said.
“We've had a pretty healthy backlog going into next year,” Martin said. American Leistritz is based in Somerville, N.J.
The building and construction market continues to recover. Paul Caprio said KraussMaffei Berstorff is busy building extrusion lines for compounding, EPDM roofing and the tire industry. Caprio is president of KraussMaffei Corp. in Florence, Ky.
Bob Urtel, president of Century Extrusion, said construction has bought machines, “but we have started to see a little slippage on timing. I think everybody's getting a little cautious. But still the ideas are there and lots of projects.”
Century Extrusion, in Traverse City, Mich., is getting orders for automotive, recycling and other markets. The plastics sector's capacity utilization rate “is still bouncing around that number where people are willing to invest in additional capacity,” Urtel said. “It's not like there's idle capacity sitting out there.”
Urtel said Century has won automotive business in more traditional compounding of masterbatch, additives and elastomers — and adhesives, as that replaces mechanical fasteners in more applications.
Urtel said shale oil and gas should continue to drive foreign investment in compounding in the United States.
“Our pipeline is really full of projects,” he said.