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Injection molding in 2005

2004 saw the global market for injection molding machines slough off sluggishness, particularly in the U.S. market, which suffered through three consecutive years of decline, but 2005 has been relatively mixed, even for white-hot China.

On a worldwide basis, rising raw material prices-both for the resin being processed and the steel used to build the machines-and higher energy costs have depressed sales, but on a localized level, the reasons for more tepid machine purchases vary.

Although estimates of the total market size are hard to come by, during K 2004, Demag Plastics Group (Schwaig, Germany) speculated that for the full year, between 60,000 and 70,000 injection molding machines would be sold around the world, with China accounting for slightly more than half of that total, or around 35,000.

Dollar vs. euro

For comparison''s sake, total shipments of injection molding machines in the U.S., according to the Society of the Plastics Industry''s (SPI; Washington DC) Committee on Equipment Statistics, were 3798 in 2004, which represented an increase of 15% over 2003. In terms of dollar value, 2004 machinery shipments were priced at $778.3 million, up 13% over 2003.

In Europe, the global market share leader is Germany, with 26.8% of total output. Germany produced injection molding machines valued at e881 million in 2004, an 8.9% increase over 2003, with e717 million worth of those machines exported, according to the German Plastics and Rubber Machinery Assn. (VDMA).

Growing by leaps and bounds

Information on the Chinese market is far from definitive, but explosive growth is undeniable, with some speculating that the total market value for injection molding machines in the country is just under $1 billion, with annual growth of 10%.

Just in terms of imports, from 2002 to 2003 the number of injection molding machines entering China grew from 13,491 to 18,396 for a one-year growth rate of 36%, according to the Chinese Chamber of Commerce''s Light Industrial Machinery Branch. (Editor''s note: Data out of China regarding machinery sales are notoriously inaccurate, although rapid growth is undeniable.)

For a growing market leader like Hong Kong''s Chen Hsong, that growth has sent revenue from approximately $160 million in 2001 to $240 million for fiscal 2005, with roughly 85% of Chen''s machines bound for mainland China. This is a drop in the bucket compared to the e857.5 million the world''s largest injection molding machinery group, Mannesmann Plastics Machinery (which includes Demag, Netstal, Krauss-Maffei, and Billion), posted in 2003, but bound to grow further and faster with current annual production of 15,000 machines set to increase to 21,000 presses.

Finishing strong?

In relative terms, however, China is cooling down, thanks mostly to government efforts to restrict the flow of cash.

Starting in May 2004, the Chinese government announced austerity measures aimed at reducing the amount of loan activity. Machinery makers like Chen Hsong have felt a pinch from this in 2005, as well as from higher oil and steel prices, but the company has tried to circumvent such measures with its own Buyer''s Credit programs. According to the company''s annual report, Chen Hsong has been cooperating with Chinese banks on the program "in order to alleviate customer''s credit crunch due to austerity measures."

Even with banks tightening their purse strings, the potential for machinery sales remains; the China Plastics Processing Industry Assn. estimates that there are in China more than 10,000 injection molding companies which employ 300,000 people and generate annual revenue of $1.2 billion.

In the U.S., SPI forecast back in 2004 that the number of injection molding machines shipped would increase 15% in 2005, but through the first six months of the year, the number of machines shipped was 1804 (Q1, 888 machines; Q2, 916)-a pace well below 2004''s total of 3798. The second-quarter report states that excess inventory among domestic automakers, increased oil prices, and reduced investment in industrial equipment-which was down 5%-have created a negative outlook for machinery in 2005.

In Europe, after a slowdown in new orders in the second half of 2004 and the beginning of 2005, the VDMA felt output in the current year would fall below 2004 levels.

Still, the association felt that increased calls for optimized material and energy usage, as well as the fact that many German machinery manufacturers have vertically integrated automation, bodes well for the market going forward.

Those brighter prospects are showing in the second half of 2005, especially in Eastern Europe, where one-third of European plastics and rubber machinery manufacturers expect gains, according to a survey conducted by Euromap (European Plastics and Rubber Equipment Manufacturers). The survey queries plastics machinery manufacturers from Austria, France, Germany, Italy, Switzerland, and the UK.

That outlook comes in spite of the first half of 2005, however, when 47% of companies reported lower production due to a lack of new orders, compared to only 30% over the second half of 2004. Looking ahead, 54%, 46%, and 65%, foresee no change in the U.S., China, and Western Europe markets respectively. There is some optimism on the horizon, however, with 41% of survey takers anticipating growth in 2006, while only 10% expect a decline.

What remains certain is the understanding that the booming growth of the mid- to late-1990s will likely never return to the developed economies of North America and Europe. As with every other plastics industry segment, growth will be slow and steady in the developed world, and unprecedented in China, India, and other parts of Asi.

Tony Deligio [email protected]

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