Barnes Group Inc. is expanding research and development efforts for its Molding Solutions Group, which includes Synventive and Thermoplay hot runners, Männer and Foboha molds, and Gammaflux and Priamus control technologies, according to Barnes President and CEO Patrick Dempsey.
Barnes will invest $5 million this year and continue to spend in future years, Dempsey said in the company's fourth-quarter conference call on Feb. 21.
He also said the investments will help Barnes innovate to meet challenges facing the plastics industry, telling financial analysts that the company is working on systems to process and monitor biodegradable plastics.
Dempsey said the initial focus is on four areas: materials, hardware, software and sensors. That includes items such as data analytics for its Molding Solutions business, including the use of advanced algorithms and artificial intelligence.
"The intent being that, as we continue to differentiate [from competitors], our goal is to create a full spectrum of innovation that will go above and beyond meeting our customers' expectations," he said.
Barnes, based in Bristol, Conn., announced 2019 sales of $1.49 billion, down less than 1 percent from 2018. Operating profit was $236.4 million, up 2 percent from the 2018 level of $231.7 million.
Net income fell by 4.7 percent for 2019, to $158.3 million, from $166.2 million the year before.
Full-year sales declined 5.7 percent for Barnes' industrial segment, which includes Molding Solutions, to $938.5 million, down from $994.7 million last year. Dempsey told analysts that Molding Solutions declined 8 percent as areas of softness hit the automotive hot runners and packaging markets.
The Männer injection molds business is showing strength in medical and new automotive model launches in North America, Dempsey said. He said Barnes has "seen some nice green shoots" for North American new vehicle models, which drive investment in molds and hot runners. That should continue as automakers move to electric and hybrid cars, since each one will require changes to existing models, he said.
The company's aerospace segment includes manufacturing of high-precision metal components. Sales for that area increased 10 percent for the year, to $552.6 million, from the 2018 level. Aerospace generated record sales and operating profit.
Dempsey said aerospace has turned in 14 straight quarters of year-to-year growth.
"End market trends throughout the year endured into the fourth quarter as a weak global industrial manufacturing environment and lingering trade uncertainties unfavorably impacted revenues in our industrial business, while sustained growth in aerospace provided a partial offset," he said.
In the conference call, Dempsey said Barnes leaders are in close contact with automakers and their suppliers around the world, and a global footprint means the company can respond to projects anywhere they happen.
Dempsey said the initial U.S.-China trade deal, announced Jan. 15, helped.
"It sent a clear signal of alleviating some of the business uncertainty, and that progress has been made," he said.
But now the coronavirus outbreak is a new threat.
"Our primary concern remains with the safety and welfare of our associates around the world," Dempsey said. Barnes has temporarily suspended employee travel in and out of China, he said.
He said that plants remain closed in China but are "slowly coming back online. At this point, we are monitoring the situation closely."
Dempsey said Asia accounts for about 10 percent of Barnes' total revenue, mainly from molds and automotive hot runners, and nitrogen gas springs. He told financial analysts that, as of now, Barnes executives are expecting a potential hit from the coronavirus of $10 million to $15 million from the company's China business.