Start Your Engines

Actually, things started to get better last year, though the bar was set so low after 2009 that it wasn’t all that difficult to jump over it. We all want to forget 2009. But I need to toss out a few numbers first, and then I will be done with it. In 2009 only 1285 new injection molding machines were sold in North America, according to statistics supplied by the Society of the Plastics Industry; last year some 1909 new presses were shipped into our market, an extremely healthy gain of 49%. This year the soothsayers—including our own Economics Editor Bill Wood—are expecting double-digit growth.

Of course, those of us who remember the halcyon days of the late ’90s, when annual shipments of injection presses were consistently in the 6000 to 7000 range, probably aren’t ready to throw confetti just yet. But a little perspective is needed: It’s a different business now; there are fewer processors around, to begin with, and the equipment that is being built today can probably do the work of two presses built 10 years ago. Bottom line: 7000 is clearly not an effective benchmark against which to measure future sales.

In any event, our own research confirms what I have heard anecdotally for the last few months: Processors are ready to invest in new machinery and equipment in 2011.

Every fall, under the umbrella of our parent company, Gardner Publications Inc., we do a survey of our subscribers in an effort to gauge their capital-spending plans for the year ahead.

We call this study the Plastics Processing Capital Spending Survey & Forecast.  This year we sent out 5000 questionnaires to our subscribers and got back 562 responses. (In this age of junk mail—both paper and electronic—a response rate above 11% is pretty exciting.) Close to a third of the responses came from plants with 100 to 499 employees, generally considered to be the “meat” of our market. About half the respondents were molders, but about 25% came from extrusion/compounding operations and another 25% from plants where blow molding and thermoforming are performed. Pretty well balanced.

I am excited about what our subscribers told us, too. Some 36% of them said they planned to increase spending on capital equipment this year. As a point of comparison (okay, I have to bring it up again), only 23% of our subscribers said they planned on buying new machines in 2009. In fact, the 36% recorded for this year was the highest since 2005, when it was nearly 42%. What’s more, the number of processors who said they were decreasing capital-goods spending in 2011 was 10.7%, by far the lowest in five years.

Nearly 50% of subscribers who plan to buy this year said their main reason for investing in new equipment was to reduce costs. I’m encouraged by this; it suggests to me that more processors recognize that availing themselves of the latest technology is a way to be more competitive globally.

Thanks to those of you who participated in this year’s study. If you didn’t, there is always next year. Drop me an email at jcallari@ptonline.com and I’ll be sure to put you on the list.In the meantime, make those purring engines roar.