Injection Molding Machinery
Date April 2017
By the numbers
- Buoyed by another strong year in the automotive industry, manufacturers reported U.S. shipments of new injection molding machines topped 4,000 units again in 2016
- Market demand is strong for used late model 400- to 600-ton injection molding machinery serving the automotive industry
- Smaller tonnage machines are seeing steady demand from the medical and bottling industries
Moderated growth: In a sign of moderating growth in capital equipment spending, North American plastics machinery shipments fell in the third quarter of 2016 from the third quarter in 2015, only the second time a year-over-year quarterly decline was recorded since the economic recovery began in 2010. However, the Plastics Industry Association reported that shipments of primary machinery were up 4.7 percent when compared with the first three quarters of 2016 as compared to the same period in 2015. Growth was partially driven by reshoring to the U.S. and plant expansions.
Automotive, packaging, medical, and appliance sectors were also among the drivers cited for the sales of new injection molding machinery in 2016. In particular, increasing demand for automobiles in emerging economies fueled the growth of the injection molding machine market. Low energy consumption, low maintenance cost, short production cycle time, and high accuracy of all-electric injection molding machines contributed to the growth of the injection molding machine market.
Industry benchmark: Overall, U.S. shipments topped 4,000 in 2016, reaching around 4,100 presses, a benchmark for a fundamental segment of the capital machinery sector for plastics and an economic indicator for the entire industry. After the Great Recession, U.S. press shipments have settled over the last several years into an approximate 5 percent growth. Growth by the end of 2017 may slow to a few percentage points, but industry officials indicate it could be higher depending on gross domestic product. Industry executives expect sales of 4,000 units could be maintainable in 2017 but note that, even if growth moderates to the 3,500 unit range, the market should remain healthy. Values on new and used equipment are expected to remain steady through 2017.
Technology improvements driving upgrades: With production demand as strong as ever during the past three years, the need to upgrade and refurbish older machines has become increasingly important as companies try to maximize capacity. In the U.S., the average age of an injection press is approximately 15 years. These older assets, when not refurbished or upgraded, decrease in value at an accelerated rate as they become comparatively less marketable. Newer all-electric molding machines are increasingly desirable because of their lower operating costs. The movement towards greater automation has also spurred sales for associated robotics.
Lower resin costs freeing capital for investment: Machinery values have also been impacted, albeit to a lesser extent, by falling resin prices. Declines in oil, coal, and natural gas prices have contributed to improving margins for injection molders by reducing both the cost of raw materials and transportation of finished goods. This has freed up capital, enabling increased investment in production machinery.
Brand impacts value: Brand recognition remains an important factor in determining the value of injection molding machines. Top manufacturers include Husky, Engel, Milacron, KrauseMaffei, Nissei, Toshiba, and Sumitomo (SHI) Demag, each of which is known for its high-end quality and strong brand recognition. Brand recognition does improve expected liquidation recoveries as buyers trend towards machines with which they are familiar.
Industry landscape: Injection molding machinery presents a highly competitive landscape for all the players operating within the market and is dominated by international players as the market space is highly capital-intensive in nature. The vendors in this market are also experiencing demand from the medical and orthodontics industry, which is expected to drive the demand for injection molding at least until 2020.
Forecast optimistic: Secured lenders should continue to monitor the trajectory of the automotive industry while also watching the impact of resin prices on the profitability of plastic product manufacturers. Industry experts say automotive suppliers will continue to invest in multicomponent technology and move to reduce weight. That means the automotive market will continue to be a “significant part” of the market in the coming year, says the vice president of marketing of global injection machinery for Milacron Holdings Corp.
While current conditions and projections for these underlying elements look positive for 2017, growing uncertainty in international markets, particularly China, could prove to have an increased trickledown effect on the demand for plastics-related products and their associated production machinery.