Orlando, Fla. — Machinery company Arburg GmbH + Co. KG (W3743) has put an emphasis on local since its founding by Arthur Hehl and his family in Lossburg, Germany, 101 years ago.
About 72 percent of the company's supplies come from Germany. Thanks to local business partnerships, the injection molding machine builder had no production stoppages — even in the most turbulent times of the pandemic.
Arburg officials point to a regional thrifty philosophy — only consume the resources needed — as being a driver of efforts toward sustainability, climate protection and the circular economy.
But a paradigm shift is afoot.
Officials of Arburg — as in Ar for Arthur and burg for Lossburg — are responding to changing global and market situations with plans for more "local-to-local activities in the hegemonic regions of Asia and America."
2024 is about internationalizing the value chain for this generation of Arburg managers, including this week's launch of the Allrounder 720 E Golden Electric at NPE2024 in Orlando, Fla., and plans to install an assembly plant in North America.
"It is the first time in Arburg's history to have a world premiere outside of Germany," Guido Frohnhaus, Arburg's chief operating officer and chief technology officer, said at a news conference Monday.
"In doing so, we are highlighting to our customers and the market that the USA and the entire Americas are of great importance for Arburg. We are in a leading position in the USA — with over 14,000 installed machines. It is ours to maintain and support our local-to-local customer focus and manufacturing strategies."
The machine launch follows a mid-March announcement that Arburg will build injection molding machines outside of Germany for the first time, starting in China. A search is on for a site in North America, too.
"We're signaling to the market that we're changing from made in Germany to made by Arburg," Martin Baumann, president of the Arburg Inc. subsidiary in Rocky Hill, Conn., said, calling it a natural progression.
"We're rethinking how do we adapt to a changing market environment and that's the right thing to do for any company that wants to remain relevant. At Arburg, we call it local to local. I think we'll see more of that. We're looking for sites in North America to be closer to our customers. It's a very large market segment for us. Outside of Europe, North America is the second largest region."
Like all other companies in the industry, Arburg has experienced a significant global decline in orders since last year, which is reflected in sales figures.
"However, in 2023 we achieved a consolidated turnover of approximately 780 million euros, which corresponds to approximately $835 million. This is a decrease of 11 percent year over year," Frohnhaus said.
Still, he cautioned that the global situation in terms of orders remains weak and the plastics industry is in a challenging economic situation.
"And, unfortunately, there is no sign of a significant improvement in the short term," Frohnhaus said.
With customers opting instead to upgrade their machine fleet and retrofit current equipment, Arburg's after-sales business shows a more positive picture.
Arburg customers in the U.S. and the Americas are running machines at reasonable capacity utilization for the most part, Baumann said.
"However, a clear message remains that most are cautious to invest in new machines, and rather use what is available to maximize utilization of existing assets," he said.
In the U.S. and Americas, markets are mixed with the mobility sector doing well in some segments but is still depressed overall.
"Investment in new machines is slow due to the uncertainty regarding model switchover from gasoline to electric," Baumann said.
"Where Arburg sees good activity is in sensors and smaller mobility electronic components. Gasoline as well as electric cars have both increased electronics. We see that reflected in orders for vertical machines that are used for insert molding of cables and sensors."
The market for electronics, driven by the data center infrastructure required for artificial intelligence, is doing well, requiring connectors as well as components related to cables and chip manufacturing, Baumann also said.
The medical sector also is doing well overall but the Americas are still suffering from an overinvestment in machine capacity during the COVID-19 pandemic years. For new projects, molders are reallocating machines that ran during the pandemic instead of investing in new machines.
Baumann described the packaging market in the Americas and U.S. as steady.
"Certainly there is an increased interest in sustainable solutions — either more recycling content or biomaterials are topics that come up with every packaging customer," Baumann said. "Design for recycling is more of a consideration as compared to previous years. Labels, lightweighting, tethered caps are a few examples."
The construction market is still depressed, mostly driven by historically high mortgage rates, Baumann said.
"We do see some activity in solar accessory components, EV car charging installations and construction surrounding data center infrastructure as mentioned," he added.
The sector for games, sport and leisure is lagging, too.
"This segment, too, is following the overall trend of suppressed capital investment," Baumann said, adding Arburg has seen some activity related to 3D printed components for shoe soles.
From a global perspective, Frohnhaus said the mobility sector, which is essentially the automotive industry, has achieved a turnaround and is seeing a small recovery; the electronics/electrical sector has lost some strength, but is still stable; the medical sector is performing slightly positively; the packaging industry has grown stronger; and the construction industry has experienced a considerable slow down.