Injection Molding, Auxiliaries Drive Plastics Equipment Market in Q2

16. September 2014

Record breaking auxiliary bookings, strong injection molding machine demand, and growth in twin-screw extruder orders pushed the value of shipments of primary plastics equipment to $299.3 million in the second quarter, 10% above the year-ago quarter.


The Society of the Plastics Industry's (SPI) Committee on Equipment Statistics' (CES) most recent report showed continued strength for the North American market, with the $299.3 million in shipments of reporting companies just slightly below the first quarter's $300.3 million result. So far in 2014, the total value of primary equipment shipments is running 10% ahead of 2013.


Injection molding machinery shipments were up 9 percent in the second quarter compared to last year, while shipments of single-screw extruders slipped 2 percent. The value of twin-screw extruder shipments jumped 63 percent, while blow molding machine shipment values slipped 2 percent.


The auxiliary equipment segment, including robotics, temperature control, and materials handling, totaled a record-breaking $108.0 million, representing a surge of 21 percent compared to the second quarter of 2013.


The CES also conducts a quarterly survey of plastics machinery suppliers, and  when asked about future market expectations, 90 percent of the respondents said they expect conditions to stay the same or even improve in the coming quarter, while 88 percent expect them to hold steady or get better during the next 12 months.

Capital Equipment Investment: To Lease or Borrow?

By: James Callari 16. September 2014


As the economy continues to improves, more processors are making capital investments to help them expand their current business and/or penetrate new markets. The question becomes, how should they finance this investment? It's a particularly relevant question around when processors start putting together their capital equipment budget for the upcoming year.


“When business owners and managers consider acquiring equipment, they often think of their payment option as a ‘lease versus buy’ decision,” states William G. Sutton, CAE, president and CEO, Equipment Leasing and Finance Association. “In any economic environment, when preserving owner or shareholder capital is an important goal, financing equipment through a lease or loan will enable your business to preserve its cash.


“Whether you finance equipment through a lease or loan, each has its advantages,” Sutton says. “In evaluating your options, it is important to look at each alternative to determine which will best balance usage, cash flow and your financial objectives.”


To help determine the most appropriate option, Sutton has compiled a list of 10 questions processors should ask themselves before proceeding: 


1. How long will the equipment be required?


“Generally speaking, if the length of time the equipment is expected to be used is short term (which usually means 36 months or less), leasing is likely the preferable option, “ he says. “Equipment expected to be used for longer than three years could be a candidate for either a lease or a loan.”


2.  What is the monthly budget for the equipment?


“As with any ongoing business expense, consider the monthly cost for a piece of equipment and how it fits into your budget," he states. In general, leasing will provide lower monthly payments.”


3. Will the equipment become obsolete while it is still needed for the operation?


Sutton notes, “Protection against obsolescence is one of the many benefits of equipment leasing, since the risk of obsolescence is assumed by the lessor. Certain lease financing programs allow for technology upgrades and/or replacements within the term of the lease contract.”


4.  Is the equipment going to be used for a specific contract or can it be used for other projects?


“Often, the business objective of equipment is for it to be revenue-producing. If a piece of equipment has limited use within a specific contract and won’t be used for other projects, it’s not ideal for it to be idle while you continue to make payments on it,” Sutton explains. “It makes sense to stop the equipment expense when the income from it ceases, which you can do with a lease.”


5. How much cash would be required up front for a lease and for a loan?


“Leasing can often provide 100% financing of the cost of the equipment as well as the costs for transportation, delivery, installation set-up, testing and training, and other deferred costs (e.g., sales tax),” states Sutton. “Loans usually require a down payment and don’t include the other cost benefits. Ask how much of a down payment is needed and assess the availability and desirability of allocating company capital for that down payment.”


6.  Can the company use the depreciation or would the company get a greater benefit from expensing the lease payments?


“The tax treatment of the financing arrangement is an important consideration in choosing between a lease and a loan,” Sutton says. “A loan provides you with the depreciation tax benefit; with a lease, the lessor owns the equipment and realizes the tax benefit, which is usually reflected in a lower monthly rent payment for your business as well as the ability to expense the payment. In many instances, if your business cannot use the tax benefit, it makes more sense to lease than to purchase through a loan because you can trade the depreciation to the lessor in exchange for better cash flow.”


7. How will a working capital facility be impacted?


“Many businesses have an aggregate line of credit through a bank that they can use for inventory purchases, improvements and other capital expenditures,” Sutton elaborates. “Depending on the lending covenants, it is often possible, as well as preferable, to preserve your bank working capital by leasing equipment through an equipment finance provider.”


8. How flexible does your business want the financing terms to be?


Notes Sutton, “A lease can provide greater flexibility, since it can be structured for a variety of contingencies, whereas with a loan, flexibility is subject to the lender’s rules. If your business has continuing use for the equipment at lease termination, extended rentals, purchase options, trade-ups and return options are available. The lease term allows your business to match all expenses to the term of the equipment’s use, including income tax expense, book expense and cash expense. Most importantly, as mentioned previously, the expense stops when the equipment is no longer required.”


9. Do you anticipate the need for additional equipment under your financing agreement?


“If your business is planning for growth, you can enter into a master lease that will allow you to acquire multiple pieces of equipment under multiple schedules with the same basic terms and conditions,” Sutton explains. “This provides greater convenience and flexibility than a conditional loan contract, which must be renegotiated for additional equipment acquisitions.”


10.   Who can help me evaluate what's best for my business?


“Whether you finance equipment through a lease or loan, each has its advantages. When making the decision between a lease and a loan, it is highly recommended that you consult with your accounting professional, as well as draw on the resources of your equipment financing provider to enable you to secure the best possible terms for your lease and/or loan,” Sutton says.


These are some of the key considerations that should go into the lease versus loan decision-making process. For a lease/loan comparison and online tools, click here

What Does the Future of Manufacturing Hold?

By: Tony Deligio 10. September 2014

Dividing the manufacturing industry by region and sector, an ambitious study attempts to ferret out its future through 2050, with some interesting results. Valentijn de Leeuwm, VP ARC Advisory Group, shared the findings in a webinar entitled: The Future of Manufacturing: Scenarios for Investment in Manufacturing through 2050.


Some key takeaways:


Sustainability: Industry will undergo major restructuring and modernization due to the pressure for sustainability, which will be less and less ideological and more driven by necessity and scarcity.


Reshoring: Technology-enabled re-shoring of small-scale production (mass customization) will require traditional automation to instrument, automate, and connect new categories of devices to enable the industrial Internet of Things (IoT).


Connectivity: Data from a single or multiple plants must often be aggregated, integrated with supply chain and business data, analyzed, and exploited to enable what ARC refers to as “information-driven manufacturing.”


de Leeuwm placed “rubber and plastics” in the global innovation for local markets group, along with automotive, electrical/electronic, and chemicals. On a regional basis, Africa and “Emerging Asia” were classified as “factor-driven” economies, with Latin America and the Middle East labeled as “efficiency-driven” and Europe, North America and Developed Asia as “innovation-driven.”   


In terms of investment growth, the study sees the highest rates in Africa (7%), followed by Latin America (6%), with Emerging Asia and the Middle East both at 5%. Europe is forecast to see 4% growth, while North America and Developed Asia come in at 3%.


The study forecasts that the global innovation for local markets industry group, which includes plastics,  will grow steadily but slowly and then be overtaken in investment by the technology innovators industry group (machinery, semiconductors, pharmaceuticals), after 2025.


In its “most likely scenario”, the study forecasts that industrial production will grow worldwide until at least 2050.


Efficiency-driven economies will experience the highest growth, and innovation-driven economies will also continue to grow and remain important areas for investment, largely because manufacturing has become a high priority as a source of social and economic development. In factor-driven economies, industrial production will slowly grow and accelerate after 2030, but remain small at world scale.


de Leeuwm believes local sourcing will be a big driver of manufacturing in the future, regardless of the region. “We will probably produce more locally,” de Leeuwm said. “We foresee large plants making commodities at a very large scale, then shipping materials, with things made locally.”


He was most interested in the potential impact a more connected manufacturing industry could have on efficiency. “We believe optimization will become more and more large scale,” de Leeuwm said. “Today we optimize a plant or line, in the future we will do several plants together, real time.”

3D Printing of “Porous” Tools Awarded Walmart Research Grant

By: Tony Deligio 9. September 2014

Additive manufacturing has long been used to add conformal cooling channels to injection molds, maximizing heat transfer efficiency, but what if it could be taken further, using just the amount of material needed in just the right place to create a porous tool sub-structure that would lessen the tool’s cost and weight while boosting its efficiency?


That’s exactly the goal of a team of researchers at the Purdue School of Engineering & Technology at Indiana University–Purdue University Indianapolis (IUPUI) who received a  grant from retailer Walmart’s U.S. Manufacturing Innovation Fund and the United States Conference of Mayors.


The two-year $291,202 grant will fund IUPUI’s research project: “Optimal Plastic Injection Molding Tooling Design and Production through Advanced Additive Manufacturing.” The project’s goal is to reduce the cost and increase the performance of U.S.-made tooling through what it calls “multiscale, thermo-mechanical topology optimization methods and metal additive manufacturing.”


Andrés Tovar, an assistant professor in IUPUI’S Department of Mechanical Engineering, said the goal is to create a “free-form, lightweight, innovative structure of maximum performance….a lightweight structure of maximum mechanical stiffness and maximum heat dissipation.”


IUPUI is working with Hewitt Molding Company (Oakford, Indiana) and 3D Parts Manufacturing (Indianapolis) on the project, with 3D Part Manufacturing using its EOS EOSINT M 280 direct metal laser sintering system to build the porous tools.


A sample product confirmed the potential benefits, according to Tovar. He estimates that “conservatively” the optimized porous tool would allow 30% cost reduction, derived directly from material saving, as well as a 20% performance increase based on greater cooling efficiency and a shorter cycle time.


In addition, Tovar’s team expects to see tool life increase of at least 10% compared to conventional cavity molds, with a lower cost per plastic part (from $0.62/piece to $0.58/piece for a given industrial test case), and increased part quality by eliminating imperfections resulting from non-uniform cooling.


“The cost of 3D printing is proportional to the weight,” Tovar said, “so, what we propose is: we can take those designs of molds and redesign them by changing the solid fill material with porous material. So we can have complex molds with conformal cooling in a porous structure.”


Done correctly, Tovar notes the novel design will have no deleterious impact on the tool’s integrity. “Mechanically it’s going to maintain the structural stability; it doesn’t compromise any structural performance; it’s not going to deform; it’s not going to change over time, due to deformation. Wherever it needs to have the material, it will put the material in there.”


Over the next two years, Tovar said his team, in conjunction with Hewitt and 3D Parts, will create production tools to further test the technology, and fine tune the predictive models and algorithms that determine the tool’s cellular structure. In addition, molding trials will allow the researchers to incorporate processing parameters into the algorithm. Above all, the trials will create data, something currently lacking in the additive manufacturing field.


“There is very little data out there available about the thermal and mechanical properties of layered materials using additive manufacturing,” Tovar explained, “so we want to populate that data base.” Better data = better algorithm.


If the predicted results are proven out, Tovar believes that additive manufacturing could encroach on long-held subtractive manufacturing techniques.


“We believe porous structures are going to be more and more common in many thermo mechanical components,” Tovar said. “If you put the holes in in the right way then the mechanical performance is not going to be decreased and the thermal performance is going to be higher. We believe it will be cheaper for the manufacturer.”


Oregon State partners with Arburg
Given how many of the products it sells are made from plastics, with all of those requiring a tool or die, Walmart is keenly aware how important advances in mold and die production could be as it works to ramp up U.S. sourcing.


In addition to Tovar and IUPUI, Sundar V. Atre and Rajiv Malhotra, researchers at Oregon State University, were awarded a $590,000 grant from the Walmart Foundation. Their research project involves “novel metal additive manufacturing processes for fabricating low cost plastic injection molds.”


Oregon State will partner with MTI Albany (direct laser sintering), North American Höganäs (tailoring metal powders)  and injection molding machine supplier Arburg (testing mold performance).


Atre told Plastics Technology that his team is developing two additive manufacturing approaches to create molds, with tool steel as the base material. In an Oregon State release, Atre estimated their technique could reduce mold-making costs by 40-50% noting:


“Current practices for fabricating these molds are labor-intensive and costly, and much of the mold material is wasted as metal chips. [Additive manufacturing] will give U.S. manufacturing an edge.”

Recipients of Walmart's 2014 Manufacturing Research Grants

VW Explores Thermoplastic RTM

By: Matthew H. Naitove 5. September 2014

I recently posted news that BMW in Germany had installed a large vertical press from Engel to mold composite parts with liquid reactive thermoset resins. Now, it appears that Volkswagen in Germany is also pursuing liquid reactive molding of composites, but in this case with thermoplastics.

KraussMaffei (U.S. office in Florence, Ky.) is developing equipment systems for thermoplastic RTM, involving conversion of liquid caprolactam monomer into nylon 6. Because of the low-viscosity of molten caprolactam, it can impregnate dry fabric reinforcements in a mold, which would be impossible with viscous nylon in its polymerized state. KM has pursued what it has dubbed “T-RTM” using one of its own PUR metering machines paired with a vertical-clamp, tilting mold carrier (introduced at K 2013). This equipment comes from the Composites/Surfaces Business Unit of the Reaction Process Machinery Div. at KM.

The first products made with KM’s T-RTM process are B-pillar reinforcement prototypes made at the FRP TechCenter of the Volkswagen Group Research Center in Wolfsburg, Germany. The project utilized caprolactam supplied by BASF SE (U.S. office in Wyandotte, Mich.). A special RimStar series metering machine was adapted specifically to the extremely low viscosity of caprolactam and was fitted with a special mixhead, high-performance axial pumps, and a fully electric temperature-control system.

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