For manufacturers of extruders, the packaging market remains strong. Medical keeps chugging along.
But the real news for 2017 should be construction, thanks to new homes and infrastructure projects — promised by our next president, Donald Trump — that will drive demand for windows, siding, pipe and other plastic products.
Paul Caprio, president of the Florence, Ky.-based KraussMaffei Corp., said there is still some excess production capacity for pipe and profile building product segments. “But we have seen upgrades in equipment that has positively affected orders for our company,” he said.
Caprio is expecting a good year. That optimism is backed up by numbers from the National Association of Home Builders. Although home construction remains well below the level before the Great Recession, the industry is strengthening.
NAHB said single family housing starts should grow 8 percent in 2016 over the year before. The forecast for 2017: a jump of 13 percent.
“Historically low mortgage interest rates and favorable demographics should keep the housing market moving forward at a gradual pace,” said NAHB Chief Economist Robert Dietz. However, he said the housing sector will be constrained by a shortage of labor, buildable land and higher regulatory costs.
Building a new home drives household formation, and that creates demand for much more than vinyl building products. Consumers fill their new houses with appliances, furniture, lawn mowers and other consumer goods.
But the overall construction outlook is more uncertain. Remodeling and multifamily housing both are relatively flat, according to NAHB.
Trump has pledged to invest in rebuilding roads, bridges, airports and other public infrastructure. The Flint, Mich., lead water crisis highlights the need to replace the nation's aging pipes.
Makers of sheet extrusion lines report business remains brisk, thanks to packaging. Processing Technologies International LLC is building a 40,000-square-foot expansion at its headquarters in Aurora, Ill. President Dana Hanson said a sizeable part of the addition will house a dedicated technology development center.
“We'll have two production lines for running trials, and hands-on interaction with customers is part of that,” Hanson said. One of the sheet lines will have a horizontal roll stack; the other one, a vertical stack.
Hanson said PTI had a record backlog a year ago, at the close of 2015. “And this year will be slightly above last year. But what is exciting is, the pipeline for new customers is pretty robust. We're seeing a lot of activity,” he said.
PTI's business remains strong in production lines for making both polypropylene- and polystyrene-based barrier packaging, and clear barrier PET packages, Hanson said.
The sheet extrusion market has drawn Milacron Holdings Corp. into the game. Milacron announced Nov. 28 that it has entered the polyolefin sheet extrusion business. The company delivered its first thick-sheet polyolefin sheet line in the second quarter of 2015, and delivered a second line in the second quarter of this year. Several more lines are on order for delivery in early 2017. Milacron did not identify customers.
Packaging generates about half of total sales at Davis-Standard LLC, according to CEO Jim Murphy. The company beefed up its packaging capabilities when it bought the Gloucester blown film business in 2015. Now Davis-Standard is adding 15,000 square feet at its Pawcatuck, Conn., headquarters to house manufacturing of blown film dies.
“Our [worldwide] orders are up about 11 percent total over a year ago,” Murphy said. “It's been a good year, and we continue to see the North American market be pretty resilient.”
Gina Haines, vice president and chief marketing officer for Graham Engineering Corp., said the overall extrusion market was uneven in 2016. But Haines said that Graham's American Kuhne and Welex brands have rallied to gain new market share in recent months, and their backlog is at a “very healthy” levels entering 2017.
American Kuhne's medical tubing line business was not fazed by political uncertainty over the Affordable Care Act, Haines said. “We also experienced strength in the profile, film and sheet, and wire and cable segments,” she said.
Fred Jalili called 2016 “really a good year for us” at Advanced Extruder Technologies Inc. in Elk Grove Village, Ill. He said the sheet market remains solid, as does automotive. “We also see some movement in the construction market,” he said.
Jalili, who owns the machinery company, wants to hire three or four people next year, for machinery assembly and electrical engineers. It won't be easy.
“There is not a large pool. Everybody's fighting for the same pool of skilled workers, and that's the challenge,” he said.