Cash for clunker machines

Roughly one month after being launched, the Consumer Assistance to Recycle and Save Act of 2009, more commonly known as Cash for Clunkers, has likely run through the $1 billion it was allotted, forcing Congress to push through emergency funding for a program that has been a surprise hit. The concept is relatively simple: according to the U.S. Department of Transportation, it’s intended to help consumers "pay for a new, more fuel-efficient car or truck from a participating dealer when they trade in a less fuel efficient car or truck.”

The benefits are two-fold: spur consumers to spend money (aiding an industry that has seen two of its U.S. stalwarts declare bankruptcy in recent months), and boost the efficiency of the nationwide fleet, replacing gas-guzzling emission-spewing “clunkers” with newer, more efficient models.

The worst recession since the Great Depression has prompted thrift in many areas, whether it’s households eating in or companies cutting travel budgets. One area where the penny-pinching could cause longer-term damage, however, is in manufacturing. Given that the average age of most primary plastics-processing equipment is in the double digits, the decision to put off the purchase of a new machine, especially as global competition grows, could be costly.

Prior to NPE2009, Steve Braig, president and CEO of the North American operations of injection molding machine supplier Engel (Schwertberg, Austria), stopped by the editorial offices of Canon Communications Plastics Group, speaking with Injection Molding Magazine, Modern Plastics Worldwide, and PlasticsToday.com. After discussing what was new with his company, including Engel’s plans for the show, the assembled editors asked Braig about his goals for NPE2009. Born in Switzerland but having lived in the U.S. for a large portion of his life, Braig said he considered himself in many ways an American, and, as one, he was growing concerned about its future, especially where industry is concerned.

“What really worries me is; A) the lack of new investments, the used machine market, and molders bringing in 10-, 12-year-old technology,” Braig said, “and B), molders not capitalizing on all of the different technologies that we and other companies have. I think by not doing that, we kind of dig a deeper hole. You’re not going to reduce your per-piece or part cost on 12-, 15-year old energy-chewing technology.” Several states, including California, and utilities, offer tax rebates for the installation of energy-efficient machines. 

One interesting aspect of the highly successful cash-for-clunker car program is that the legislation mandates that participating dealers do not turn around and attempt to sell the clunker, allowing it to continue to run inefficiently while also meaning there is a net-zero effect on the nation’s automotive capacity. Specifically, the law says, “The dealer must agree to transfer the trade-in vehicle to a disposal facility that will crush or shred it so that it will never be returned to the road, although parts of the vehicle, other than the engine block and drive train (unless the drive train is sold in separate parts), may be sold.”

Mirroring that model, Engel rolled out a swap-old-for-new program earlier this year that runs through the end of September. In that program, injection molders who replace an old machine with a new Engel will receive a bonus of $5000. As in the government program, Engel's declares that "To be eligible for the bonus, the purchaser must provide proof that the machine has been taken out of service and scrapped." 

Perhaps the U.S. and other countries should consider a similar program for capital equipment. Give shops a reason to outfit their manufacturing floors with the kind of top-of-the-line equipment that will keep them competitive with regions of the world that have an inherent advantage in labor costs. Not only that, but take that old, inefficient equipment and remove it from the supply stream where it’s already causing a glut. — [email protected]

 

 

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