Plastics News reporters who covered primary machinery at the show asked each exhibitor they visited about the tax reform (as well the impact of Trump's tariffs in steel and aluminum tariffs, but more on that later). The reporters were Heavy Metal (me), who covered injection molding machinery, LaForest, who handled injection and extrusion, and Catherine Kavanaugh, who covered blow molding equipment.
Quite a few of the primary machinery sales executive we talked to said, yes, the tax law is good for the industry and should boost sales, but customers had not specifically mentioned it, and it was too soon to say. We in plastics journalism circles call this Yada, yada: in other words, the same thing we heard back in January. It wasn't any clearer in May, five months later.
Some machinery people at NPE said flatly, no, the tax reform is not driving sales, at least so far.
"We've had conversations with different customers just to test what it could mean. Frankly, people buy when they need capacity," said Tom Goeke, CEO of Milacron Holdings Corp., at the company's NPE booth. He said business has been solid, but there hasn't been a groundswell reaction to the tax reform.
Tom McKevitt, vice president and general manager of Toshiba Machine Co. America, said essentially the same thing. Business was good, but he could not point to sales driven by the tax reform.
Some executives said tax reform has indeed already helped. Customers of Bekum America Corp. were talking more about investing in future growth than at past NPEs, thanks in part to reduced accelerated depreciation and reduced corporate tax rates, said Gary Carr, vice president of sales.
Carr said something we expect to hear more of — that Bekum was talking to customers who were starting to schedule phased-in programs to replace some older equipment. The big tax write-off seems like an obvious draw to retire old stuff that is outdated or just worn out, and do it over the next five years.
He noted the change. "In the last 10 years, those decisions may have been more tied to a particular piece of business. When it was in hand, then they would move forward with the purchase, and then there was always tremendous delivery pressures," Carr said in Orlando. "That's reversed out somewhat. Our customers are planning more. They're projecting their future business needs. We're talking about 2019 strategies and having meetings on some bigger programs that are even beyond that."
Jamie Pace, president and CEO of Nissei ASB, thinks tax reform will help.
"There's absolutely talk of it," Pace said. "Has it really come in? I'd say, quite honestly, people have been waiting for NPE. There's been a lot of talk, a lot of activity, but hurry up and wait."
Martin Graziadei, managing partner of Italian blow molding press maker ST Blow Moulding, said ST liked the U.S. reshoring trend.
"Before, they shifted to low-cost countries. We see now a trend that they're bringing back production and this gives us an opportunity to sell more machines locally," he said.
So there are a lot of positive things, in the eyes of Graziadei.
"It's not only about tax advantages but to bring back knowledge into the country. That's what I hear from the decision-makers," he said.
Over at the Sodick injection molding press booth, Len Hampton was handing out a flier from a machinery financing firm trumpeting the benefits of the 100 percent expensing.
Hampton, U.S. national sales manager for Sodick presses, said large molders have figured out the tax-reform math.
"Definitely, not only have we seen it, but it's really for your bigger companies," he said. "This is going after the bigger companies to purchase more capital equipment." Executives at smaller plastics processors are probably still digesting the tax-law changes.
The conclusion of our unscientific survey: Tax reform can only help — now and at some point, probably soon. That's great.
Nobody is going to spend tens or hundreds of thousands of dollars on new equipment just because of a tax break. The biggest incentive is the overall strong economy that is driving demand and new business — plus the environment pushing for U.S. manufacturing (give Trump credit for that, although his tariffs and a looming trade war may mean Trump giveth and Trump taketh away).
OK, now Heavy Metal doesn't want to be a buzz-kill… But the import tariffs of 25 percent for steel and 10 percent for aluminum are going to bite any U.S. company that uses those basic materials. Especially molds.
The tariffs should be the topic of conversation next week at the Amerimold conference in Novi, Mich.
Watch for higher mold prices.