Plastics machinery shipments post moderate rise; North America and Mexico star performers

More good news for the plastics industry! The shipments value of plastics machinery posted a moderate rise in the first quarter of 2015 compared with the same period last year, according to statistics compiled and reported by SPI: the Plastics Industry Trade Association's Committee on Equipment Statistics (CES; Washington, DC). This follows a recent survey of salaries and trends in the plastics industry conducted by headhunting firm Gros Executive Recruiters (Franklin, TN) and the Society of Plastics Engineers (SPE; Bethel, CT), which found a rise in average base salaries and optimistic hiring predictions.

The uptick in machine shipments "is particularly encouraging in light of the slower-than-expected growth in the U.S. economy to start the year," said Bill Wood, the plastics market economist who analyzes and reports on the plastics machinery market sector for the CES. "The U.S. economy will build momentum in the second half of 2015, and the market conditions that favor business investment in new equipment—low interest rates and rising aggregate demand—will continue to prevail," added Wood in a prepared statement.
 
Shipments of primary plastics equipment, which includes injection molding, extrusion and blow molding equipment, for reporting companies totaled $293.6 million in Q1. This was a seasonal decline of 15.2% from the shipments total of $346.1 million in Q4 of 2014, but it was a gain of 2.9% when compared with the total from same quarter of a year ago. In 2014, the total annual value of primary equipment shipments escalated 7.6%.
 
A breakout of the CES data shows that the shipments value of injection molding machinery advanced 1.4% in Q1 when compared with same quarter from last year. The shipments value of single-screw extruders increased 8.4% in Q1 over last year. The value of shipments of twin-screw extruders (including co-rotating and counter-rotating machines) gained less than 1% in Q1. The Q1 shipments value of blow molding machines jumped 19.4%.
 
The CES also compiles data on the auxiliary equipment segment—robotics, temperature control, materials handling, and so forth—of the plastics machinery industry. New bookings of auxiliary equipment for reporting companies totaled $105.4 million dollars in Q1. This was a gain of 6.9% when compared with the total from Q1 of last year.
 
The growth in the CES data on plastics machinery shipments was only moderately slower than the gains in two major data series compiled by the U.S. government that measure demand for industrial machinery. According to the Bureau of Economic Analysis, total business investment in industrial equipment, of which plastics machinery is a subset, increased by a 6% seasonally adjusted, annualized rate in Q1 when compared with the same quarter from last year.
 
The other major industrial machinery market indicator, compiled by the Census Bureau, showed that the total value of new orders of industrial machinery also increased by 6% in Q1 when compared with the year before.
 
"It is particularly encouraging that the data from the entire plastics industry held up quite well in Q1. The macro-indicators from the first quarter indicate that the rate of growth in the U.S. GDP data may have been negative. The good news is that consumer confidence levels are holding up, and accelerating economic growth is expected for the rest of the year. The three main trends that will drive both economic growth and demand for plastics products persist. They are low interest rates, low energy prices and rising wages and household incomes resulting from stronger employment levels," said Wood.

The CES also conducts a quarterly survey of plastics machinery suppliers that asks about present market conditions and expectations for the future. The responses from the Q1 survey indicate that machinery suppliers are optimistic about the market demand for their products in the coming months. In the coming quarter, 98% of respondents expect conditions either to improve or hold steady. As for the next 12 months, 96% expect the market to be steady-to-better.

There was a solid consensus that North America and Mexico are the global regions where the most promising market conditions for machinery suppliers are expected in the coming year. Expectations for Latin America and Asia call for mostly steady market conditions, though respondents are less optimistic about these two regions than they were last quarter. Expectations for Europe are mixed, and this outlook is mostly unchanged from Q4.
 
As for the major end-markets, the respondents to the Q1 survey expect that automotive and packaging will remain strong in terms of demand for plastics products and equipment. Expectations for all other major end-markets call for firm market conditions to persist in 2015.