Injection press makers see 'steady, stable, strong' 2017 market

Stable at a high level. That's the way to describe the U.S. injection press market in 2016 — and likely, the coming New Year as well, according to sales executives at machinery companies.

U.S. shipments topped 4,000 in 2015, reaching around 4,100 presses, equipment officials said. That was a benchmark for what is a fundamental segment of the capital machinery sector for plastics, and an economic indicator for the entire industry.

After rocketing up coming out of the Great Recession of 2008-2009, U.S. press shipments have settled into several years of about 5 percent growth. Growth in 2017 may slow to just a few percentage points, but it could be higher depending on gross domestic product, industry officials think.

Machinery executives think 4,000 is possible again this year.

“2016 is another strong year,” said Friedrich Kanz, president of Arburg Inc., interviewed at K 2016. He expects U.S. shipments around 3,800, or even close to 4,000.

“So it's a steady, stable, strong market,” Kanz said. “There is no reason why it should dramatically change.”

He made his comments at the German company's jam-packed booth at K, a trade show that drew 230,000 visitors from around the world to Düsseldorf, Germany, in late October. U.S. machinery sales people at the show say they saw a lot of North American visitors.

Mark Sankovitch, president of Engel Machinery Inc., said 2016 will “definitely” be another year of growth.

“It's not the growth that we've had the last couple of years, but it's still significant in terms of relation to GDP,” he said.

Paul Caprio took a break at the KraussMaffei Group K show stand and echoed his competitors.

“It's stabilizing at a high level. So for the whole year, it looks like it's going to be the same volume, same units [as 2015],” Caprio said. “We're seeing absolutely no indication that there's a slowdown coming. Most of the business is still being driven by automotive, which has everyone nervous that when that stops, it's going to slow down again.”

Automotive sales should end 2016 with another strong year in the United States, of around 17.5 million. What about 2017? Is a correction coming?

It's an important question. Kanz has said the 4,000 level depends on a strong motor vehicle industry.

“The automotive industry plays a major role. So we need a decent volume out of the automotive industry, and I do not expect a dip in 2017,” he said.

Michael Prachar said automotive suppliers continue to invest in multicomponent technology, and move to reduce weight. That means automotive will continue to be a “significant part” of the market in the coming year, said Prachar, the vice president of marketing of global injection machinery for Milacron Holdings Corp.

And even if car and light truck sales do level off, the move to weight reduction should keep driving plastics applications. That is, unless President Trump rolls back the CAFE standards…

Speaking of Trump, did the vicious presidential election impact plastics manufacturing? No. Machinery leaders said that plastics processing is tied to the real world of consumer spending.

“It's not, ‘if Trump gets in, nobody's gonna buy a car. If Hillary gets in, nobody's gonna buy a house.' I think if you're employed you are buying a car. If you're employed you are buying a house. I think we're so much closer to reality in manufacturing,” Caprio said.

Trump, of course, is a major wild card for free trade. He has promised to renegotiate the North American Free Trade Agreement, or even dump it.

“There is some apprehension in Mexico,” said Bill Duff, general manager of sales and marketing at HPM North America Corp., which sells injection presses and die-casting machines made by its Chinese parent, Guangdong Yizumi Precision Machinery Co. Ltd.

“We deliver quite a few machines down to Mexico. There are some big companies down there doing molding work and die-casting work, and those pieces come back [to the United States],” he said. “And I guess there's some worrying about what's going to happen to NAFTA.”

A few machinery executives said there was a slight pause in capital investment a month or two before the election. Now, with inauguration day approaching Jan. 20, some injection press leaders think Trump's policies could help the domestic economy.

“We see this ‘Trumpism' as a real opportunity for plastics processors in the U.S.,” said Sonny Morneault, vice president of Wittmann Battenfeld Inc.

“We just worked with two U.S. clients on brand new plants being built in Mexico to support the automotive industry. Those parts are coming back to the U.S. for final assembly and if they get taxed, as Mexico taxes all products shipped into Mexico, when they come back to the States it may not be as attractive opening up new plants in Mexico,” he said.

Peter Gardner, vice president of sales and general manager of Niigata at DJK Global Group, thinks some customers will remain cautious as they wait to see what the future with President Trump will hold.

“The pro-business domestic policies should take hold in the shorter term and ‘trump' the longer term possible renegotiations of U.S. trade deals,” he said.

Morneault said other Wittmann Battenfeld markets are growing as well, including packaging and medical, driving new technology.

Another question facing the machinery sector: Would a flattening automotive market hurt large-tonnage machine sales in the United States, after the brisk investment of the past several years?

Sankovitch, of Engel in York, Pa., doesn't think so, as long as oil prices remain low. A big reason: Automakers are moving small, low-margin car assembly to Mexico.

“The good thing is they are keeping their high-margin vehicles here, with the SUVs and trucks,” Sankovitch said. “That's definitely what's been helping our industry. It's keeping the level of new equipment purchases for large machines at a still pretty robust level.”

Sankovitch said greenfield plants still are going up, which is unusual at this stage of the economic cycle. In fact, processors say they're buying more new machines to boost capacity than to replace older equipment, according to the informal Plastics News survey for this story.

“We're seeing the large-tonnage logistics packaging like bins and pallets. And garbage cans. We're seeing that go up, more than last year.” Caprio said. “So it's actually a very bright spot that it's not just automotive.”

KM's Netstal operation also makes presses for thin-wall packaging. “So we're seeing even if automotive starts to dip, we're seeing the other markets are picking up.”

Bob Columbus, sales manager at JSW Machinery Inc., said automotive accounts for more than half of total sales at the company. “We had real good growth in automotive this year,” he said.

JSW, of Lake Zurich, Ill., wants to diversify.

“We are in packaging. And we are developing an improved packaging machine. We're going to announce that next year,” Columbus said. “But where we really need to focus more attention is really in the health care industry. We're going to spend more time in the medical industry.”

Columbus said business seemed to slow a bit in the second half of 2016. It had nothing to do with the election, he said: “No. people talk about it and grumble about the election every four years.”

John Martich said the first half of the year was pretty active, especially in automotive and packaging. Mid-year, business was up and down, but nobody expected a repeat of 2015's post-NPE boomlet, said the vice president and chief operating officer of Sumitomo (SHI) Demag Plastics Machinery's North American operations.

“There's still a steady automotive market. We see good strong packaging activity, and also general purpose custom molding,” Martich said.

Duff, of HPM in Marion, Ohio, handles small to mid-sized accounts.

“The market's been very steady. We've seen sales sort of run along. We are not seeing a downturn — at least not at HPM,” he said.

He said HPM's line of new large two-platen molding machines, which goes up to 3,500 tons in clamping force, has generated interest in automotive, but also housewares, appliances, home building products and other big products such as bins for agriculture.

Glenn Frohring, president of Absolute Haitian Corp. in Worcester, Mass., which sells Haitian machines made in China, said the company is “still growing in the U.S. and I think our market has been steady compared to last year. I don't think we're going to see a drop, but we're not seeing a huge increase, either.”

Frohring considers it a good sign that he saw more U.S. customers than ever at this year's K show.

“I think what it says is, the health of the U.S. processors are in, they felt it was overall worthwhile to send staff to Germany.” he said.

Plastics News economics editor Bill Wood said growth at U.S. processors actually has slowed down, after enjoying upward momentum the past several years. So equipment numbers have started to level off.

The machinery business is still good, he said, but a “slow leak” through part of 2016 will show up in the equipment numbers. For 2017, “I've got machinery actually about flat with this year, possibly a little bit better,” said Wood, who runs Mountaintop Economics & Research Inc. in Greenfield, Mass.

Capacity utilization for plastics and rubber products makers has been around 77 percent all year, according to the Federal Reserve Board.

Packaging seems to be ever-strong, demanding high-speed molding of thin-wall parts.

Athena Automation Ltd. in Vaughn, Ontario, moved into its new 150,000-square-foot factory building this year. Athena machines mold PET preforms and food packaging. “Business has been slow and steady, account by account,” said Jim Overbeeke, vice president of sales.

The company is assembling its first cube molding system for a flip-top closure, Overbeeke said in late November. “The outlook for next year looks strong,” he said.

Husky Injection Molding Systems Inc., in Bolton, Ontario, is optimistic about continued growth in PET packaging, especially the company's Multi-layer Barrier Technology, which should drive conversion to PET.

A Husky spokesman said officials also are “encouraged by the recent launch of our next generation HyCAP4 system for beverage closure molding, as well as the introduction of our HyperSync integrated system for molding specialty closure applications.”

Len Hampton, U.S. national sales manager for Sodick Plustech Co. Ltd., said the U.S. unit, based in Schaumburg, Ill., focuses on “more sophisticated” molders in medical. Micromolding is a focus

Sodick also is doing more business in molders serving high-end displays and light guides, he said.

Dale Bartholomew, product manager for Maruka USA in Pine Brook, N.J., which sells Toyo presses, said the company is getting some orders for large machines, as it moves more into automotive. Medical is the firm's biggest market.

Niigata's Gardner said medical is a solid growth area for his company, and a market where all-electrics are preferred over hydraulic or servo-hydraulic type machines.