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Planning on Investing in Equipment? Best Be Decisive

By: James Callari 17. December 2014

Every year Gardner Business Media, the Cincinnati-based parent company of Plastics Technology, does research on what plastics processors plan to buy in the way of capital equipment in the year ahead. Within the next few weeks, we’ll have the full report of this study in the print pages of Plastics Technology, as well as posted on this website.

 

For now, let me share some thoughts with you as I peruse the manuscript, which was written by Steve Kline Jr., Gardner’s director of market intelligence.

 

My first reaction was that NPE ’15 could not have come at a better time. My second reaction, as I dug deeper into the analysis, was that processors need to be decisive in their buying plans if they have their sights set on something in particular this year.

 

Steve is projecting that processors will invest $5.4 billion on primary processing machinery, auxiliary equipment, and molds this year, a $17% uptick over what was laid out in 2014. As a processor, you might be tempted to respond to this with an ambivalent shrug. You might think something like: “So sales of robots are going to increase a lot in 2015. That’s nice, but I’m a molder; I don’t make or sell robots, I buy and use them. How does that impact me?”

 

It impacts you, because as Steve astutely pointed out, an increased demand for machinery will influence how long it will take you to accept delivery and ultimately commission your new product, whether you will be able to get your “first choice” to begin with, and perhaps what you’ll have to pay for it.

 

“Processors should expect longer delivery on equipment orders as the year progresses,” Steve explains. “When demand increases rapidly … suppliers may have a hard time ramping up production fast enough. As orders build up in the pipeline, delivery times typically grow longer and longer. Because a significant amount of processing equipment acquired in the U.S. is imported, shipping times from overseas can exacerbate the problem.”

 

He continues, “Equipment and mold prices are likely to rise during 2015. This is a supply-and-demand issue. When demand rises rapidly and builders cannot increase the supply as fast as demand is rising, the price of machines and molds tends to increase to balance things out.”

 

And last but not least: “The longer processors wait before pulling the trigger on an order next year, the more unlikely it is that they will be able to buy their first choice of equipment.”

 

Steve’s bottom line? If you are serious about making an investment in capital equipment, it might be better for you to act sooner rather than later. Over the 28 years I have covered this industry, I have heard time and again—from both processors and suppliers—about investment plans that have either been delayed or scaled back. But as business conditions among processors continue to improve, any delay could put you at a competitive disadvantage. In other words, there are reasons beyond delivery times and purchase price for you to act quickly.

 

 

Steve points out the U.S. monetary base is an excellent leading indicator of primary plastics processing equipment consumption. Historically, changes in the monetary base lead changes capital equipment consumption by 24 months on average, as the chart above indicates. The monetary base saw its peak rate of growth in the summer of 2014, which means processing equipment consumption should see accelerating growth through 2015 and possibly into 2016.

 

As Steve points out, most processors make investment decisions based on capacity utilization—how busy existing equipment is right now. Generally, the Gardner survey shows that the need to increase capacity has been the number one motivator for plants to buy new capital equipment. This finding has not changed in 25 years.

 

Capacity utilization is at its highest level since late 2007, and has been increasing at an accelerating rate, as the chart above shows. This is likely to continue, and based on the correlation between backlogs in our business index and capacity utilization, capacity utilization could reach 80% in 2015 for the first time since January 2007, and capacity utilization could average more than 80% for the first time since 2006

 

So am I recommending you come to NPE with your checkpoint and a purchase order in hand? Not necessarily. But think about having them in your pocket.

U.S. Plastics Sector Stars in Lackluster Global Economy

By: Tony Deligio 17. December 2014

The sustainability of that performance disparity was one topic tackled in a recent SPI webinar, which highlighted results from the association’s newest Global Trend Report.

 

In addition to a breakdown of the report’s finding by Michael Taylor, SPI’s International Affairs Director, the webinar included insights on the broader manufacturing environment by Cliff Waldman, director of economic studies at the MAPI Foundation, and a reshoring recap from Harry Moser of The Reshoring Initiative.

 

Where’s the Mojo?
The global economy is recouping from the economic shock of the Great Recession, but doing so on an uneven basis and without the vigor of previous recoveries.

“We have a world that lacks mojo,” Waldman explained. “Worldwide there is a dearth of the type of risk taking that is often the difference between sluggish growth and normal growth.”

 

Waldman acknowledged that “the U.S. is the only major economy that truly is looking better,” before asking, “the question is: will global economy bring it down?”

 

Plastics Power On
SPI noted that its data showed overall demand for plastics remains strong, with the U.S. holding significant market share over imports. “The U.S. plastics industry is healthy and getting healthier,” is how SPI President and CEO Bill Carteaux summed up the state of the sector ahead of its largest show.

 

Consumption increased 6.5%, while exports of raw materials continued to show gains and the resin trade surplus grew. Overall exports rose 2.7%, minus machinery, but SPI expects a stronger equipment performance in 2015, with a bump from its triennial event, NPE2015.  

 

Taylor noted that of the sectors with the largest net employment gains in 2014, plastics was No. 3, behind only fabricated metal and transportation equipment, creating more than 4000 net jobs.

 

Plastics also ranked high in production growth, trailing only furniture from October 2013 to October 2014. Plastics as a U.S. manufacturing sector has long enjoyed overall growth, according to Taylor, with plastics manufacturing employment up since 1980, while the value of manufactured shipments has grown 2.3% per year since that time.

 

Balancing Trade
Industry exports rose 2.7%, while imports rose 5.8%. Mexico and Canada remain the largest export markets for the U.S. plastics industry, followed by China, Belgium and Brazil. Overall, the industry ended up with a positive trade balance, despite a trade deficit of $1.4 billion in machinery. The largest deficit was still with China, although it was smaller.

 

In terms of market share, domestically, resin held steady at 79.6%, while products (84.4%) and machinery (36.6%) saw their domestic segment increase. The U.S. market share for molds, however, shrunk to 54.7%.

 

Top Emerging Markets
The top growth markets for U.S. plastics exports in terms of percentage gains were Ukraine, Oman, Indonesia, Nigeria and Algeria. Going back to 2000, the top growth markets show some overlap with that group, as well as new players with Ukraine, Algeria, Vietnam, Ghana, and Nigeria.  

 

Asked about the growing trade deficit in finished goods, Taylor stressed the overall trade surplus for the sector. “Our largest trade deficit, with China, actually decreased,” Taylor said, “and we hope continue to go in right direction. Whether we will every get out of a deficit with a trading partner like China, that’s not really possible.”

 

Moser sounded a hopeful tone on China, at least in terms of reshoring. Noting that China’s unit labor costs have gone up 400% since 2000, Moser, who often caps presentations with an image of the little Dutch boy trying to plug the leaky dike, revealed data showing what may already be a fully functioning seawall.

 

As opposed to 2003, when U.S. manufacturing was losing 148,000 jobs per year to offshoring, the balance of jobs reshored and offshored in 2013, was net zero. Next year, the tide is anticipated to shift, with a net gain in manufacturing jobs. “About 60% of the reshoring has been from China,” Moser said, noting that the country is “showing a lot of vulnerability.”

 

Getting the Mojo Back
So what would it take for a tepid U.S. recovery to become a full-fledged global growth cycle: reinvigorated entrepreneurship. “I think we need to encourage entrepreneurship,” Waldman said. “There currently are two kinds of risk-taking that U.S. and the  world are short of: one is capital investment, and two, we’re very weak on business start ups, and that’s really why we’ve had such a slow labor market turn. We need to do the things that encourage business start ups, create more of the entrepreneurial environment of ‘80s and ‘90s.”

A Birthday for the Web; A Survey for Our Readers

By: Tony Deligio 10. December 2014

Slipped my calendar too, but whether or not people marked the occasion, the global digital consortium launched by Tim Berners-Lee in 1989 to help share information continues to turn entire industries on their heads, including the worlds of publishing and manufacturing that Plastics Technology straddles.

 

To better understand the web’s influence, as well as how our readers seek, consume and share information vital to their day-to-day jobs, Plastics Technology’s publisher, Gardner Business Media Inc., is once again undertaking its annual Media Usage Survey. Sent to readers across Gardner’s publication portfolio, the survey, which is entering its fifth year, is the largest study exploring media usage and buyer behavior in discrete parts manufacturing.

 

A Growing Web
The Pew Research Center marked the Web’s 25th birthday with a survey of its own. The most striking finding was the mass adoption of the Internet, rising from 14% of American adults in 1995 to 87% this year, with higher usage of 97% among young adults (age 18-29) and people with college degrees.

 

In last year’s media usage survey, Gardner’s poll of manufacturing professionals reflected different engagement trends when it comes to seeking job-related information. Asked how they preferred to receive trade publication content, 58% chose a print magazine, followed by digital magazines (20%), email newsletters (14%), and websites (8%). Of those respondents, 93% had purchasing influence, whether that was approving, recommending or specifying a purchase, and 60% were 50 years or older.

 

Staying Power
A quarter century is a momentous anniversary for the Web, but it also highlights the relative infancy of the medium. The first magazine is believed to have been published  351 years ago in Germany; 121 years ago in November, what some consider the first trade magazine, Billboard, was launched. June marked the 86th birthday of Modern Machine Shop, sister publication to Plastics Technology, and the periodical that launched Gardner.

 

Help us shape the next century of media usage in manufacturing; take the survey today and let us know about your about consumption habits so we can better serve you in the years to come. 

Global PEI Shortage To Last Until Second Half Of 2015

By: Lilli Manolis Sherman 8. December 2014

Since the global supply of Ultem PEI (polyetherimide) resin from SABIC has tightened in the last few months, molders and OEMs have had to manage risks such as long lead times and supply disruptions. RTP Company, for one, is aiming to address the issue by offering a number of thermoplastic compounds that serve as viable alternatives.  In fact, the company is hosting a webinar this Thursday, Dec. 11 at 10 a.m. CST to discuss these options and will make available a recorded version after the live session.

 

A SABIC spokesman, says the company anticipates the extended lead times to last until the second half of 2015, as a result of a significant increase in global demand for Ultem over the last years coupled with an upcoming scheduled maintenance at one of its Ultem resin facilities. “We are very sensitive to the impact this situation is having on our customers. We are honoring all previously submitted orders and are working with great urgency to increase capacity. The scheduled maintenance, while affecting supply in the short term, will allow for increased capacity in the future. We are confident that the actions we’re taking at SABIC will enable us to meet the needs of our customers longer term, and continue to deliver the unique value they have come to expect from our Ultem resin.”

 

This spokesman noted that across the engineering resins industry, the demand for higher heat materials is growing. Key drivers include trends such as thinner and more complex consumer electronics, uniquely branded automotive headlamps, and lightweighting within the aerospace industry. He notes that some customers have realized unforeseen double-digit growth, and that engineering resin suppliers are working hard to meet the short- and long-term volume needs of their customers.

 

RTP, meanwhile, is offering alternative compounds that include amorphous materials based on polysulfone or semicrystalline materials that have been modified, alloyed, and/or reinforced to achieve very similar physical properties to PEI, according to Matt Torosian, RTP’s product manager of high-temperature materials. “RTP has created a range of compounds with similar characteristics to PEI that are not depended on a single supplier of base resin. By doing so, our customers have benefited from a larger selection of material options, greater design flexibility, and far fewer interruptions in material supply.”

 

PEI is known for its excellent dimensional stability, chemical resistance, strength, stiffness, inherent flame retardancy and creep resistance. As such, selecting a replacement requires a thorough understanding of the application requirements. According to Torosian, once these requirements have been identified, RTP engineers can recommend compounds that fit the requirements, along with added benefits such as color. To support transition to a new material, the company provides on-site technical service and CAE support including mold-flow analysis, FEA and fiber orientation analysis. For more details, take a look at RTP’s website page entitled PEI Alternatives.

 

Want to find or compare materials data for different resins, grades, or suppliers? Check out Plastic Technology’s Plaspec Global materials data base.

 

Fine-Particle-Sized Cellulosics Key To Patented Bio-Plastic Compounds

By: Lilli Manolis Sherman 5. December 2014

Within the last two years, Eco Bio Plastics Midland, Inc., (EBPM), Midland, Mich., has been leading the way in the use of a novel new method in which cellulosic material and post-industrial waste paper can be used to create bio-plastic products.

 

The patented technology originated at the Tokyo-based Eco Research Institute (ERI), one of Asia’s biggest bio-plastics manufacturers. A subsequent joint venture with the Michigan Molecular Institute, a global leader in advancing polymer research, has allowed for the “earth-friendly” composite resin, called MAPKA, to be made available to North American’s processors, with EBPM and ERI  holding the exclusive technology.

 

MAPKA bio-plastic or bio-plastic content compounds can be based on such virgin or recycled materials as PP, LDPE, HDPE, ABS, EVA as well as PLA and PHA. They are created by dry-grinding various types of cellulose down to the mean particle size of 20 microns, and incorporating the filler into the plastics. According to the company, the cellulosic fillers can comprise up to 65% of the total weight of the product, enhancing the plastics physical and mechanical properties while remaining virtually undetectable to the naked eye.

 

While incorporation of cellulosic material into plastics in not new, EBPM’s patented pulverization technology reportedly allows for the production of significantly more enhanced compounds of this type. “When you compound plastic with organic material, you need that material to be a very fine powder. We are the only manufacturer in the world with the ability to do that on a large, commercially viable scale,” explains EBPM’s v.p. Fukuji Saotome.

 

EBPM serves a broad variety of industries looking to reduce their reliance on unsustainable materials. The company can customize the compounds to fit specific property requirements and applications, ranging from housewares and consumer goods to building products and automotive components. Moreover, EBPM enables “closed-loop recycling systems” for companies with their own scrap paper materials.  

Want to find or compare materials data for different resins, grades, or suppliers? Check out Plastic Technology’s Plaspec Global materials database.

 

 

 




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