Custom injection molders raised machine-hour rates sharply in the first half of 2008, despite a substantial drop in their capacity utilization and a gloomy outlook for business conditions.

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Custom injection molders raised machine-hour rates sharply in the first half of 2008, despite a substantial drop in their capacity utilization and a gloomy outlook for business conditions. Responses to our latest survey by 66 custom injection molders suggest that increasing costs of energy, transportation, and other costs of doing business meant they could not avoid hiking the price of their services, even in the teeth of a business slowdown.

However, there were some positive signs: The decline in business slowed at mid-year, and new orders for injection molds (reported by 49 mold shops) rose 4.3%, reversing steady declines in the previous 18 months.

 

RATES UP, ACTIVITY DOWN

Average hourly rates rose 2.5% in the second half, the largest change reported in 10 years of surveys. The 33% of respondents raising rates was the largest share ever. Only 7% lowered their rates, and 61% did not change their rates.

Meanwhile, capacity utilization dropped 3 points to 55%, the lowest since mid-2005. About 38% of respondents reported lower capacity utilization for the first half, which is fewer than the 50% that saw declines in the second half of 2007. And 35% of molders saw higher utilization during the period, about twice as many as in late 2007. Average utilization was highest in the South Central region and lowest in the Southeast.

Molders were pessimistic about the near future. Half the respondents saw business conditions getting worse—the most in any survey since 1986. Only 30% expected improving conditions—the lowest proportion ever. The Northeast was most optimistic (44%) and the North Central and South Central regions were least optimistic (25%). 

 

CUSTOM INJECTION MOLDERS' MACHINE-HOUR RATES 
WITH OPERATOR, PROFIT MARGIN INCLUDEDa (66 PLANTS)
Dollars Per Hour (High/Average/Low) 2nd Quarter 2008
Tonnage Range
<50
50-99
100-299
300-499
500-749
750-999
1000-1499
1500-1999
2000-2999
3000+
Indexb
Northeat
(ME, NH, VT, MA, CT, RI, NY, NJ, PA)
$65.46
$55.00
$57.50
$67.50
$97.50
$100.00
$134.21
 
 
 
 
$43.76
$42.94
$44.99
$58.34
$83.97
$99.60
$132.10
 
 
 
94
$29.18
$31.51
$33.84
$52.52
$70.02
$99.20
$130.00
 
 
 
 
Southeast
(DE, DC, FL, GA, MD, NC, SC, VA, WV)
$42.50
$62.50
$82.50
$77.28
$104.88
$121.44
 
 
 
 
 
$36.53
$48.69
$56.11
$58.36
$78.21
$100.72
  
 
 
100
$32.09
$35.33
$37.60
$44.16
$61.82
$80.00
  
 
 
 
North Central
(IL, IN, MI, OH, WI, IA, KS, MN, MO, NE, ND, SD)
$68.45
$80.00
$152.35
$105.00
$180.02
$245.48
$116.28
$138.00
$167.31
$224.76
 
$33.89
$36.62
$46.40
$51.47
$67.93
$83.34
$92.52
$102.01
$120.77
$169.03
84
$13.00
$14.00
$17.51
$23.34
$29.18
$52.52
$70.02
$65.46
$70.02
$99.20
 
South Central
(AL, KY, MS, TN, AR, LA, OK, TX)
$54.72
$61.56
$75.24
$66.24
$92.74
$109.10
$120.01
 
$180.00
 
 
$37.53
$37.03
$44.15
$48.19
$69.53
$78.22
$115.01
 
$180.00
 
83
$26.50
$17.39
$23.18
$28.98
$35.94
$40.57
$110.00
 
$180.00
 
 
West
(CA, OR, WA, AK, HI, AZ, CO, ID, MT, NV, NM, UT, WY)
$51.63
$110.40
$110.40
$76.13
$89.67
$82.08
$114.56
$130.92
 
 
 
$35.45
$48.00
$47.65
$59.08
$70.15
$82.08
$101.46
$117.83
 
 
93
$13.09
$28.00
$24.55
$44.60
$55.20
$82.08
$88.37
$104.74
 
 
 
National Averagec
$37.28
$41.43
$47.01
$54.88
$73.56
$88.47
$107.87
$106.99
$133.37
$169.03
 
Average Change in Hourly Rates In First Half 2008: +2.5%
a An adjustment factor is used where data do not already include profit and labor. b Relative to highest-cost region (which equals 100); value shown is a weighted average for all size ranges. c Weighted geographically according to Plastics Technology's Manufacturing Census.