Update on the Value of Plastics Equipment

Thursday, March 22, 2012 | Blog

Bill Carteaux, President of the Society of the Plastics Industry Inc., stated that the plastics industry is actually faring better than other manufacturing sectors in the U.S.  Low-priced natural gas and the lower value of the U.S. dollar are helping the U.S. to remain competitive in the global plastics market. Last year, California led the country in number of plastics jobs (with 75,800), followed by Ohio, Texas, Michigan, and Illinois.  Based on concentration of jobs, Indiana ranked first with 15.2 plastics jobs per 1,000 non-farm employees.  Next were Michigan, Ohio, Wisconsin, Kentucky, and South Carolina. Although the industry itself posted a trade surplus of $16.2 billion in 2010- up almost 28% from 2009, plastic products such as molds and machinery posted deficits as they have every year since 2002 (www.PlasticsNews.com).   
From car production to beverage bottling, activity in a variety of downstream industries affects the Plastics and Rubber Machinery Manufacturing industry.   As a result of the various factors that affect downstream demand for machines that make plastic and rubber goods, industry revenue has exhibited high volatility since 2007. Declining domestic demand has led the industry to look abroad to stave off its US losses. Through 2017, the industry’s fortunes will continue to hinge on overseas demand for US-made machinery.  Meanwhile, the domestic market is expected to perk up as consumer confidence is restored (www.IBISWorld.com). 

The resale market for injection molding machines has improved significantly in the last 12 months, due to manufacturers cutting production on new machinery during the recession, creating longer-than-usual lead times.  Injection molding machines in the 250 to 1,000-ton range are currently highly sought after by used equipment dealers and end users, particularly late-model equipment from the 2000s. However, recent experience with used machinery dealers and auction activity suggests that improved market conditions have resulted in a significant increase in demand for some of the older vintage machinery,Blow_Molding_Machinebolstering recovery values for equipment from the 1990’s.  The blow molding equipment marketplace has slightly lagged the injection molding marketplace, and has shown a dramatic increase in demand in the past few months.   We were told by several dealers that specialize in this type of equipment that OEM manufacturers have only built 200 new machines since the year 2000.  As such, a general lack of this type of used equipment in the marketplace has been observed since the automotive excess was absorbed several years ago.   With new machines costing in excess of $1 million dollars in most cases, coupled with long lead times for delivery;  used equipment is now in high demand.  Additionally, existing companies generally tend to not like to see used equipment available for sale at auction as this creates a (false) perceived lower entry point for new players in the industry.  In the event of a facility closure, competitors will often engage in a bidding war to ensure this equipment does not fall into the hands of current and future competition.  As a result, higher recovery values have been sustained and have improved with the economy. (www.PlasticsNews.com)