Shipments of injection molding and extrusion machinery increased 19.3 percent in North America in the fourth quarter of 2020 compared to 2019, according to the Plastics Industry Association.
The increase, which marks the third consecutive quarter of growth, is based on statistics compiled and reported by the Washington-based trade group's committee on equipment statistics.
The preliminary estimate of shipment value from reporting companies totaled $376.8 million, which was up 22.9 percent from the third quarter, according to a trade group news release.
The industry also saw a 15.8 percent increase between the previous quarters, the release says.
The value of shipments of single-screw extruders led the double-digit growth, climbing 31.6 percent, while twin-screw extruder shipments were up 4.5 percent in the last quarter of 2020. Those increases are compared to the previous quarter, Perc Pineda, chief economist for the trade group, told Plastics News.
Shipments of injection molding equipment rose 23.1 percent from the previous quarter and were 21.2 percent higher than the fourth quarter of 2019, the trade group says.
Three back-to-back quarters of double-digit increases in plastics machinery shipments underscores the importance of plastics machinery in the manufacturing supply chain, according to Pineda.
"We were hoping to see an increase in shipments of machinery in the fourth quarter as the economy stayed in the recovery cycle and that's exactly what we got," he said in a news release about the quarterly changes.
Bill Wood, economist for Plastics News, sees two factors at play.
"No. 1, the machinery sector was in a recession in 2019 so the fourth quarter wasn't very good," Wood said in a phone interview. "No. 2, we're coming out of a situation where there's some pent-up demand due to the coronavirus. To be up almost 20 percent year over year isn't bad, but I hesitate to say, 'wow, we're back up and running.' I'm not sure happy days are here again, but we'll take 19 percent."
The fourth quarter is usually the biggest in terms of machine sales, Wood said.
"Machinery is tax deductible," he explained. "Also, most processors operate on a yearly budget. They want to spend their budget allocation before they lose it."
For these reasons, the first quarter is usually the lowest in terms of machine sales, Wood added.
"There's tremendous seasonality in machinery data," he said.
The association's equipment statistics committee also does a quarterly survey of plastics machinery suppliers about present market conditions and expectations. In the coming quarter, 96 percent of respondents expect conditions to either improve or hold steady compared to a year ago. That's up from 76 percent in the third quarter.
As for the next 12 months, however, 86 percent of respondents expect market conditions to be steady-to-better. That's down from 89.8 percent in the third-quarter survey.
Wood said the statistics raise questions.
"Almost 100 percent of respondents think the next quarter will be good, but not the next year, when we've got vaccines going," Wood said. "Why is that? Maybe they're overly worried about not having NPE. That juices the numbers every show year and now we don't have it in 2021."
The plastics association canceled NPE2021, which was set for May, because of the pandemic.
Pineda also said the value of shipments of plastics and rubber products in December was 1.1 percent lower than in December 2019. The drop was much less than the 11 percent decrease in April year-over-year numbers due to the pandemic, he added.
"Against the backdrop of a recovering domestic and global economy, the growth momentum in plastics end-markets that began in the second half of 2020 is expected to continue through 2021, which should sustain a steady demand for plastics materials and resin, products, machinery, and mold for plastics," Pineda said.
Wood offered this take on December's 1 percent decline in the value of shipped plastic and rubber products: "The industry hasn't recovered. Certain packaging and medical segments have, but automotive and others aren't back yet."
Machine builders won't see a "legitimate uptick" in orders until there's overall demand growth in products made from plastic.
"If processors don't make more things, they don't need more machines. They just need to replace what wears out," Wood said.
The association also reports that plastics machinery exports increased 20.8 percent in the fourth quarter to $360.9 million compared to the previous quarter. Imports rose, too, by 16 percent to $875.5 million, resulting in a $514.6 million trade deficit that was 12.9 percent larger than the previous quarter.
Canada and Mexico remained the top export markets for U.S. equipment suppliers. The combined quarterly exports to the U.S.-Mexico-Canada trade partners totaled $173.4 million, which represents 48 percent of total U.S. plastics machinery exports.