CEO: ‘Engel has sky-rocketed out of the crisis'

Austrian machinery maker Engel Austria GmbH painted an optimistic picture for the current fiscal year at its June 21 news conference organized by the company ahead of its e-symposium 2021 event.

Engel reported 1.1 billion euros ($1.3 billion) in sales revenues for the 2020-21 fiscal year, down 15 percent compared with the previous year, but with an expected growth of 20 percent for the current fiscal year, the company is well satisfied, said Chief Sales Officer Christoph Steger.

"We have an order backlog not seen since 2018," he added. "We still employ 6,400 people at our locations and the demand for plastics remains strong and robust."

With the outbreak of the COVID-19 pandemic last year, combined with an automotive industry that had already been subdued for the past two years, the outlook seemed bleak. In November, however, something changed, Steger said. Demand from the automotive industry picked up, due to the introduction of new drive technologies and solutions, making sustainable mobility the key for transformation in this industry.

Regardless of which alternative drive technology will prevail in the long term, the proportion of plastics in automobiles will continue to rise. Lightweighting remains a key prerequisite for sustainable mobility and requires innovative injection molding solutions.

"Carmakers needed time to adapt," CEO Stefan Engleder pointed out. "Now everyone is launching new models, and all the OEMs are boosting their product lines."

Sales in the packaging, electronics technical molding and medical divisions were also on the rise, with 5G as a driver for the electronics business line. For packaging, sustainability is driving business, Steger said.

Sustainability, he emphasized, is far more than a hype. "It is part of our identity," he said.

The regional distribution of sales at the end of the 2020-21 fiscal year clearly reflected the impact of the crisis. Europe contributed 45 percent of group sales, well below the previous year's share of 54 percent. The Americas accounted for 30 percent, compared with 25 percent the year before, and Asia for 23 percent, up from 20 percent the year before.

"The Americas and Asia — and China in particular — were the first to see the economy pick up again, and strongly," Steger said. "But meanwhile, Europe is also clearly back on track."

The current volatility of the markets and materials shortages are just two of the factors that are creating uncertainty in the market.

According to Steger, plastics are and will remain the material of the future, as reflected in the strong and, above all, fast-growing demand. Nonetheless, the company must be prepared to be able to respond flexibly to developments.

"We have geared up for crises," Engleder added. "Our global production network, and the stronger focus on decentralized expertise in sales, service and processing engineering, help us to act in a versatile way."

And while lockdowns in individual countries — and travel restrictions with quarantine rules — continue to make daily business difficult, the biggest challenge at the moment is delivery bottlenecks in raw materials and components. Although Engel is able to ensure global delivery capability thanks to its international network of plants and the dual-sourcing strategy established several years ago, the cost gap is continuing to widen.

"Transportation costs are soaring. We've seen a 30 percent increase in casting costs and double-digit rises in the drive systems costs. The supply situation will see us face a couple of challenges in the next few months," Engleder said. "The markets are overheated, and rising inflation is aggravating this effect. This will also have an impact on prices in machine manufacturing."

As a supplier, Engel's sustainability focus is directed at functioning as a strong partner for its customers, offering a portfolio of products to create sustainable solutions and playing a role in the materials circle.

"We want to be a part of the circular economy," said Engleder, but added, "sustainability only works with digitalization.

"Digitalization helps us to leverage the full potential of the injection molding machine and to make production more efficient and sustainable by doing so. If we genuinely make use of digitalization, the CO2 reduction targets set by politicians will suddenly no longer seem impossible."

Engel's circular economy solutions are targeted at promoting Design for Recycling, for example, through in-mold labeling; the development of machine assistant systems and solutions, such as its suite of IQ products; and the analysis of recycled materials.

"We've also developed a two-in-one solution in which we install an extruder upstream from the injection molding machine, into which we continuously feed shredded plastic flakes or milled plastics from the grinders. The material is degassed, extruded and the output can be directly fed into the plasticizing unit of the injection molding machine. Because no regranulation step is needed, it is a highly energy-efficient process," Engleder said.

Engel has also established a Digital Solutions sales team in which all sales activities for digital products and solutions from the inject 4.0 program have been combined, giving customers a central contact for all topics relating to the digitalization of injection molding production.

As both managing directors continued to stress, digitalization is the enabler of sustainability, but it must also bring value for the customer.

"It must provide a return on investment. However, to gain benefit from the digital solutions available, converters need to make use of them, which may require a mindset change," Engleder said.

To start, manufacturers need to establish transparency in their production processes to identify where the biggest potential is. "If a converter uses a lot of recycled material, IQ weight control is low-hanging fruit," he said.

Both Steger and Engleder agreed that the task may seem daunting.

"But you have to start somewhere," they said, adding they are confident that Engel's products, technologies and solutions are an excellent starting point.

"Together, we will master the challenges that lie ahead well," Engleder said.