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Toshiba Opens Service Center in Mexico

By: Matthew H. Naitove 17. September 2014

Another indicator of the growing importance of Mexico to North American plastics manufacturing is the recent opening of the first Mexican service center by Toshiba Machine Co. America, based in Elk Grove Village, Ill. Located in the Nippon Express Guanajuato Logistics Center in Puerto Interior, Silao, Guanajuato, the new facility offers local service and support to injection molding and die casting customers throughout the country. Mexico has benefited from the “reshoring” trend as a competitive counterbalance to manufacturing in the Far East. “This is a thriving market for us,” says Toshiba Machine America general manager Tom McKevitt. Manager of the new service center is Robert Kinzel. Contact: +52 472-748-5400.

Helping PET Blow Molders Save Energy & Material

By: Matthew H. Naitove 17. September 2014

Two projects are under way at Plastic Technologies, Inc. (PTI), Holland, Ohio, a leader in PET package development. One is intended to help PET bottle makers reduce their energy costs by designing custom plans for processors. This involves a careful analysis of all bottle manufacturing stages at the customer. This includes preform and bottle production, supply and quality of compressed air, machine conditions and capabilities, blowing cycle review, oven setup, process development, and package performance validation. “Companies go out of their way to drive weight out of bottles, but they often overlook the significant amount of energy waste that occurs when running the equipment,” says Donald Miller, v.p. of technical services. “Depending on how inefficient energy usage is, this can be a gold mine of ‘found money’ for the company.”

 

A particular focus of PTI’s energy review is compressed-air usage. Miller says, “The key to creating a successful energy reduction program is to consider air delivery and air demand requirements at the same time. In the past, companies have tended to focus on these as separate areas and not in concert with one another. Using a systems approach is the key to optimizing operational improvements.”

 

Another new initiative by PTI is becoming the exclusive U.S. representative for several PET processing technologies developed by Toyo Seikan Co., Ltd. of Tokyo. One of the areas that the two companies will be working together on is new foamed PET bottle technology which produces lightweight containers with good barrier attributes and unusual visual and tactile properties. The companies will unveil more details about the new technology—and its potential impact on beverage packaging in the U.S.—in the coming months. They also will reveal other PET technologies to be marketed here.

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.”




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