Supply chain blamed for slowing North American machinery shipments

Shipments of injection molding and extrusion machinery in North America decreased again in the second quarter of 2021, despite an uptick in orders, because supply chain problems are pushing back delivery schedules.

The preliminary estimate of shipment value from reporting companies totaled $320.9 million — a decrease of 4.2 percent from the first quarter of 2021, which was down 11.1 percent from the previous quarter.

The figures were compiled by the Washington-based Plastics Industry Association's Committee on Equipment Statistics, which found shipment values dropped in two of the three primary machinery categories tracked.

Trade group officials said the value of shipments of single-screw extruders increased significantly, by 33.1 percent, compared to the first quarter 2021, but fell for twin-screw extruders and injection molding machines by 24.9 percent and 4.9 percent, respectively.

"While new orders of plastics equipment have been increasing, ongoing supply chain issues — shortage of parts and components — are causing longer order-to-delivery timelines. This explains the decrease in shipments in the second quarter," Perc Pineda, chief economist for the association, said in a news release.

Compared to a year ago, when the COVID-19 pandemic caused lockdowns and disruption, plastics equipment shipments are up 21 percent overall.

Pineda said shipments of injection molding, single- and twin-screw extruders were higher by 19.5 percent, 37.8 percent and 32.3 percent, respectively.

"This means that the underlying trend in plastics equipment demand remains upward sloping — still in sync with the robust economic recovery," Pineda said.

Even so, the trade group's quarterly survey of plastics machinery suppliers, which asks about present market conditions and expectations, indicates business outlooks flattened or soured slightly in the second quarter of 2021.

Some 92.7 percent of respondents expect market conditions to either improve or hold steady in the coming quarter compared to 93.5 percent in the first quarter.

However, looking ahead to the next 12 months, only 78.7 percent of respondents expect market conditions to be steady-to-better compared to 93 percent of survey respondents in the previous quarter who were expecting growth.

"Until the supply chain issues are resolved, and production lead times return to normal, expect to see fluctuations in quarterly shipments of plastics machinery," Pineda said. "Nevertheless, the outlook for plastics machinery in the second half of the year is positive."

Plastics machinery exports decreased 6.9 percent to $367.6 million in the second quarter of this year compared to the first quarter.

The top export markets for plastics machinery from the U.S. continues to be Mexico and Canada. The combined exports to partners in the U.S.-Mexico-Canada Agreement in the second quarter came to $177.2 million, which represents 48.2 percent of total exports of plastics machinery.

Meanwhile, imports increased by 3.5 percent to $874 million, which resulted in a $506.8 million trade deficit. The U.S. plastics machinery trade deficit increased by 12.6 percent in the second quarter 2021, according to the trade group.

Still, Pineda points to another positive outlook from the World Trade Organization, which expects to see an 8.4 percent increase in global merchandise trade this year.

In 2022, trade growth is expected to slow to 4 percent, which the WTO says would leave trade below its pre-pandemic trend.

The volume of world merchandise trade contracted by 5.3 percent in 2020 with a sharp decline in the first half of the year followed by a rebound that struggles but continues.