Flemington, N.J.-based Kautex Machines Inc. had a fantastic start in 2022 with a good outlook and plans to grow the business by double-digit figures again. The subsidiary of Bonn, Germany-based Kautex Maschinenbau GmbH had just moved from North Branch to Flemington and was active in strong markets.
But shortly into 2022, in late February, the pandemic-driven world grew more uncertain. Russian President Vladimir Putin invaded Ukraine, then weaponized grain and gas against other countries.
"The war in Europe drastically increased material costs, and increased capital cost resulted in postponement of projects," said Manuel Heusinger, Kautex's vice president of sales and service Americas. "Now we expect to close the fiscal year at budgeted level; in other words, stable business."
Until early to mid-2022, the pandemic declared in March 2020 had a huge impact on the blow molding community.
"Across the board, machine builders experienced record-setting business levels in 2020 and 2021. It was like never before," said Gary Carr, vice president of sales for Bekum America Corp. "With that backdrop, how do you follow up in 2022?"
The Williamston, Mich.-based subsidiary of Germany Bekum Maschinenfabriken GmbH started the year with a really strong backlog because machinery deliveries had been extended due to high demand and supply chain issues.
"In many respects, 2022 was almost assured to be a decent year just because of carryover. That's how I'd characterize the first half of the year," Carr said.
In the second half of the year, there was a change; quote activity decreased and not just because of the war.
"I think a lot of that is the market adjusting back to pre-pandemic levels on the packaging side," Carr said, excluding large drums, cannisters and technical parts associated with blow molding.
"Our customers' capacity levels are to the point where they would seek new business and opportunities. All that equipment that was installed is now being absorbed in 2022," Carr said.
Fred Piercy, president and general manager of R&B Plastics Machinery LLC in Saline, Mich., shared similar observations. He said a lot of excess capacity post-COVID created a glut in extrusion blow molding demand in 2022. Now more machine builders are likely to be going after that falling demand, he added.
"I see new faces or entrants in the North American machinery space," Piercy said. "Companies that had a toe in the water are trying to increase their North American business. We're seeing increased competition from European machinery manufacturers with less access to the Eastern European market."
In the meantime, U.S. plastics processors are rightsizing their businesses.
"Customers seemed to be getting their capacities realigned," Piercy said. "There was a lot of quoting activity and a lot of projects we were working on, but the capital didn't cut through until H2, or even this quarter."
Right now, R&B customers are focused more on industrial and home care applications than consumer packaging related to the pandemic.
"Customers either ended up with the cannister business or they've come back and asked us to look at retooling or repurposing their machines for other applications or markets. There's been an adjustment," Piercy said.