Market Outlook - November 2008
Modest Growth Ahead for Injection Molded Consumer Products
Despite current economic worries, Mastio & Company’s most recent Injection Molding Markets Study forecasts moderate growth for injection molded consumer products in the next two years.
Despite current economic worries, Mastio & Company’s most recent Injection Molding Markets Study forecasts moderate growth for injection molded consumer products in the next two years. The consumer products section of Mastio’s Injection Molding Markets Study is divided into four major chapters: Toys, Office Products, Outdoor Products, and Magnetic/Optical Media & Media Packaging. Collectively, these products consumed 985.4 million lb of resin in 2007 and are expected to reach nearly 1.4 billion lb 2010, representing an average annual growth rate (AAGR) of 4.9%.
| Injection Molding Consumer Segment | Market Size, MM lb | 2007-2010 AAGR |
| Outdoor Products | 483.2 | 3.9 |
| Magnetic/Optical Media & Packaging | 290.8 | 8.1 |
| Toys | 131.0 | 3.6 |
| Office Products | 80.4 | 0.8 |
| GRAND TOTAL | 985.4 | 4.9 |
Increased costs of labor, energy, and resins in North America have made it very difficult to compete with imports. Toy makers estimate that about 80% to 85% of toys sold in the U.S. come from China. Production of injection molded office products like pens, markers, and small business-machine parts also has moved overseas to Taiwan, China, and Mexico. Poor economic conditions during 2007 and 2008 have restrained demand for magnetic/optical media products and related packaging, much of which already comes from Pacific Rim countries. The outdoor recreation and leisure market has suffered lower demand due to a slow economy. Some participants in the study say demand for outdoor products correlates directly with new housing starts, which has been anemic over the past year.
Demographic trends are a major factor affecting consumer products. Injection molded toys, for example, are expected to have an AAGR of 3.6% throughout 2010. Although today’s families have fewer children than a generation ago, the larger population of women having babies has compensated for the difference. Particularly important is the growing population of children aged seven years and younger. Although they do not consume the more expensive toys, like video games, this age group accounts for over 60% of total toy sales.
The economic slowdown, high inventories, and saturation of the U. S. office-products and business-machine market have led to a manufacturing recession in this segment. Resin consumption for office products will see only 0.8% AAGR through 2010, though this may partly be due to the fact that business machines are getting smaller and lighter, requiring less plastic materials. However, the evolving trend of home-based offices has increased the need for more efficient office products.
Recreation, gardening, leisure, and sporting goods producers continue to develop new outdoor products to satisfy increasing demand. For example, there is still continued growth for riding lawn mowers and tractors due to sheet metal being replaced by plastic for the side panels. Favorable demographic trends, such as an increase in the spending power of Baby Boomers, will also contribute to the 3.9% AAGR for these products. Unfortunately, the increased popularity of computer games has decreased the amount of time children spend playing outdoors, thereby affecting demand for outdoor recreation products.
The magnetic/optical media & media packaging market is experiencing overcapacity, high imports, and a soft economy, which are contributing to consolidations and closures among injection molding companies serving this sector. Although the market is growing nicely at 8.1% AAGR, too many companies want a piece of the action. All aspects of this business have become so aggressive and competitive that profit margins have almost disappeared.
CD-ROM demand is declining due to the ability to download music on the Internet. The development of Blu-ray Discs is said to have caused increased demand for the DVD segment of this market. Still, DVD manufacturers are now facing overcapacity.
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
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