U.S. Plastics Equipment Sector Weathers Another Rough Winter

Compared to the fourth quarter of 2014, plastics equipment shipments were down 15.2%, registering $293.6 million in the first quarter of 2015 versus the $346.1 million posted over the final three months of 2014, according to data compiled and reported by SPI’s Committee on Equipment Statistics (CES). Compared to the first quarter of 2014, the results reflected a slight gain of 2.9%. For all of 2014, the total annual value of primary equipment shipments rose 7.6%. As it did last winter, inclement weather had a tangible impact on the U.S. economy.

 

The shipment value of injection molding machinery (up 1.4%) and twin-screw extruders (up less than 1%), were essentially flat year over year, while single-screw extruders (+8.4%) and blow molding machines (+19.4%) posted strong gains in the first quarter of 2015 as compared to 2014. Auxiliary equipment, including robotics, temperature controls, materials handling, and more, was also stronger over the first three months of 2015, jumping 6.9% to $105.4 million.

 

Broader scope industrial surveys by the U.S. government reflected similar growth rates, with total business investment in industrial equipment up 6% year-over-year in the first quarter, according to the Bureau of Economic Analysis. The total value of new orders of industrial machinery was also up 6% for the same time period, according to the Census Bureau.

 

Optimistic Outlook
In addition to reviewing machinery orders, the CES also conducts a quarterly survey of plastics machinery suppliers, asking about present market conditions and future expectations. In the coming quarter, 98% of the respondents expect conditions to either improve or hold steady. Over the next year, 96% expect the market to be steady-to-better.

 

The survey revealed 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. The outlook for the rest of Latin America and Asia was for mostly steady conditions, although respondents’ optimism about these two regions was lower than in the previous quarter. Expectations for Europe are mixed—an outlook mostly unchanged from the fourth quarter of 2014.

 

Q1 survey respondents expect automotive and packaging to remain strong in terms of plastics products and equipment demand, while expectations for all other major end-markets call for firm market conditions to persist in 2015.

 

Global Outlook
Industrial production in China remained positive at the start of the year, growing by 7.9%, 6.8%, and 6.8% in January, February and March, respectively, according to Trading Economics and the National Bureau of Statistics of China. Manufacturing production in China has dropped in six of the last 12 months with its manufacturing purchasing manager’s index dipping below 50, indicating contraction, in February and March.

 

In February, the German Plastics and Rubber Machinery association (VDMA) reported that new orders for equipment in 2014 were up 3% for the full year, while turnover was essentially flat, rising 1%. For 2015, VDMA forecast sales growth of 4% in 2015, which if accomplished, would push sales in excess of euro 7 billion.