News, Insights and Best Practices for Manufacturing in Mexico

Big gains in third quarter for plastics machinery industry

04 Feb 2014

Category: Manufacturing in Mexico, Electronics Manufacturing

Business is booming for the plastics machinery manufacturing industry, according to statistics compiled by the Committee on Equipment Statistics (CES) of the Society of the Plastics Industry, as reported by  Business totaled $3.26 billion in the third quarter of 2013. This represented a gain of 20 percent in comparison to the second quarter - and a gain of 20 percent year over year as well. It was the strongest quarterly total for the year, and the total value for plastics equipment shipments went up 12 percent year over year.

Shipments of injection molding machinery increased by 20 percent in the third quarter year over year. Single-screw extruder shipments went up by 9 percent, and shipments of twin-screws increased by 12 percent year over year. Shipments of thermoforming equipment experienced a sharp uptick of 50 percent compared with 2012.

Auxiliary equipment
New bookings of auxiliary equipment totaled $99.9 million in Q3​ - an increase of 12 percent from the second quarter, according to the report. The CES estimates that this is a solid gain from the previous year, although it is impossible to have a precise number because the reporting companies changed significantly.

The CES numbers compare well with gains measured by the federal government regarding activity levels in the industrial machinery sector. According to the Bureau of Economic Analysis (BEA), investment in industrial equipment advanced 5 percent in the third quarter compared with Q3 2012. Another indicator, which is compiled by the Census Bureau, indicated that the total value of U.S. shipments of industrial machinery increased by 13 percent in Q3 year over year, according to the article.

"These data indicate that the recovery in the plastics machinery sector remains intact, and it may even be gaining momentum," according to Bill Wood, a plastics market economist who analyzes and reports for the CES. "The national level data suggest that the economy has yet to hit the sweet spot of the capital expenditure phase of the current recovery. This could start to happen as early as 2014, and when it does it should result in even stronger gains for the plastics machinery sector."

The CES also conducted a survey of suppliers asking about market conditions and future expectations. The third quarter 2013 responses indicate a positive attitude.

The CES also conducts a quarterly survey of plastics machinery suppliers inquiring about present market conditions and expectations for the future. Of the respondents, 87 percent expect conditions to stay the same or improve in the next quarter, and 92 percent expect things will remain unchanged or get better in the next year.

The CES expects that strongest gains will be North America and Mexico.

Shipments in plastics machinery are growing, according to the CES report, which means there is greater industrial activity and businesses are expanding. One of the best ways to expand is by nearshoring. Expanding to Mexico can be cheaper than starting an operation somewhere else. Chinese labor costs have "skyrocketed" according to John Costanzo, president of Purolator, writing in Manufacturing Today.  Additionally, Costanzo cited time zone discrepancies and difficulties monitoring quality control as difficulties in China.

By working with factories in countries on the border with the U.S., a manufacturing company can reduce costs in shipping their goods to nearby end-markets. The North American Free Trade Agreement has removed tariffs on "virtually all domestic products", according to Costanzo. Although there can be complexities navigating compliance and security regulations, with an offshoring partner, the process can be made easy and affordable. In many cases, Costanzo explains that shipments can arrive at the border pre-cleared for entry.

The Offshore Group: You manufacture ... We do the rest

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