Market Outlook - January 2009

Mastio & Company’s most recent Injection Molding Markets Study forecasts slow growth in the next two years for injection molded appliances, furniture, housewares, and consumer electronics/telecommunications. Collectively, these market segments consumed 1.87 billion lb of injection molding resin in 2007. They are expected to reach 2.04 billion lb by 2010, representing an average annual growth rate (AAGR) of 2.9%. (Mastio’s forecast for other molded consumer products appeared in November. See Learn More box.)

Not only is growth slow, but profit margins are slim in this uncertain economy. Cost hikes for raw materials, energy, transportation/shipping, and labor are all squeezing profits. Imports, government policies, and consolidation in the retail sector have also kept profits low over the past few years. In particular, manufacturers have had a tough time passing on the rising costs of raw materials, and most have had to absorb as much of the cost as they can.

The health of these consumer molding markets is determined primarily by consumer confidence and the housing market. Although housing is in a slump, the 11.4 million homes that were built in the 1970s now require improvements, repairs, and updating. Remodeling should encourage the need for new housewares, furniture, appliances, etc.

 

SPEED TO MARKET

Resin consumption for injection molded housewares is expected to see only 2.7% AAGR through 2010. Plastic housewares are typically smaller, inexpensive, high-volume, low-margin products and thus are facing heavy pressure from imports. However, foreign housewares suppliers are at a disadvantage when it comes to identifying emerging trends in North American consumer demand. Domestic consumers expect an array of colors, styles, and textures, as well as improvements in durability and functionality. Foreign suppliers are much slower to the market with new products, giving domestic producers an advantage.

 

Injection Molding  Segment	2007 Market  Size, MM lb	2010 Market Size, MM lb	2007-2010 AAGR. %
Housewares	952.4	1033.3	2.7
Appliances	598.2	645.2	2.5
Furniture	267.4	303.1	4.2
Consumer Electronics & Telecommunications	49.1	53.5	2.9
GRAND TOTAL	1867.1	2035.1	2.9

 

 

 

 

 

 

 

 

FURNITURE ON TOP

The furniture market is expected to experience the highest growth with an AAGR of 4.2%. This growth is attributable to a trend toward home remodeling and the increasing popularity of home offices. Lower labor costs and price cutting have made it difficult for furniture producers in the U.S. and Canada to compete with the Far East. However, furniture manufacturers claim that imports don’t affect large injection molded furniture items because of high shipping costs. One processor admitted to “China-proofing” its furniture products by making them bulky and hard to stack, implementing frequent color changes, and adding material-saving technology such as gas-assisted molding.

 

APPLIANCES & ELECTRONICS

Growth opportunities in appliances follow new residential housing construction, which stagnated in 2007 and 2008. Thus, the appliance market anticipates only a 2.5% AAGR through 2010.

A sluggish AAGR of 2.9% is also expected for consumer electronics and telecommunications. New technologies and product innovations are the name of the game when it comes to keeping demand afloat. Examples include advances in cell phones, thin, large-screen plasma or LCD televisions, and computer monitors that can receive digital, high-definition (HDTV) formats.

 

About the Author

Bart Thedinger is managing partner of Mastio & Company in St. Joseph, Mo., a consulting firm specializing in industrial-consumer opinion research and market trends in the plastics industry. For more information, call (816) 364-6200 or visit www.mastiogale.com