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Global machinery firms cautious on 2018

PLASTICS NEWS

Some of the world's largest plastic equipment companies are predicting that 2018 will be a year of more cautious growth, but growth nonetheless.

Speaking at news conferences at the Fakuma trade fair in Germany in mid-October, executives with some of Europe's largest plastics machinery makers predicted revenues would rise this year, even with uncertainty from trade policy - a revised NAFTA, a tariff conflict between China and the United States and Brexit - taking its toll.

Munich, Germany-based KraussMaffei Group GmbH, for example, said its global sales through September were $1.12 billion, up 1.6 percent over the same period last year.

"We expect growth to continue, but to be less pronounced than previous years," said CEO Frank Stieler, adding that the company is still seeing steady growth in China, while other markets are "more sluggish."

KraussMaffei is owned by China National Chemical Corp. (ChemChina), which is in the midst of listing the German machinery maker on the Shanghai Stock Exchange. Stieler said "the approval process in China is much more intense" but said the company hopes to gain approval from Chinese regulators by the end of the year.

Meanwhile, injection press maker Engel Holding GmbH said it expects worldwide sales in its current fiscal year, which ends March 31, to be up 6 percent, to $1.85 billion. That's less than the 11 percent gain in sales in the previous fiscal year.

So far this year, executives said, the company has seen business cool somewhat in North America, as buyers from large international conglomerates waited on negotiations for a new North American Free Trade Agreement.

But with the terms agreed to for the successor to NAFTA - now called the United States-Mexico-Canada Agreement - Steger said Engel is "quite happy" and that many of the company's initial insecurities have been reduced.

Nonetheless, he also said business is off because some customers are still assessing the impact of Britain's exit from the European Union.

"People are a bit reluctant with investments at the moment," said Christoph Steger, Engel's chief sales officer, citing a "certain reservation" the company is seeing in parts of Europe because of confusion surrounding the Brexit strategy.

But, Steger told reporters that growth in central and Eastern Europe is balancing out the slowdown in the U.K., and Germany continues to grow, with sales in that country up 50 percent in the last five years.

He said Europe accounted for 53 percent of the Austrian company's global sales, followed by the Americas at 24 percent and Asia at 22 percent.

Revenue growth in Asia has been the biggest for the Engel Group and is continuing to grow, Steger said, with stricter quality requirements in the medical and packaging industries leading to increased demand. China is the strongest driver of growth in the region, he said.

Engel is also paying close attention to the trade conflict and increasing tariffs between China and the United States. In May, the company announced plans to restart assembly of big injection molding machines at its Engel Machinery Inc. facility in York, Pa., in the first quarter of 2019.

They are watching the impact of tariffs on machine castings they would import from China, Steger said. He said it would be difficult to import enough castings from Europe.

"Everything is still on track. The question is how the tariffs are going to harm the speed of ramping up the production because when it comes to the casting part, you simply, more or less, just get it out of China," Steger explained. "It makes no sense to import these castings to machine them in the U.S. if I have a 25 percent tariff on the castings."

German injection machinery maker Arburg GmbH + Co. KG said at a Fakuma press event that it was seeing better results this year, although the company declined to release a lot of specifics.

"In 2017, we reached 698 million euros ($807 million)," said Jürgen Boll, Arburg's managing director of finance, controlling and IT. "In the first half of 2018, and still now at the end of the third quarter, we are still well ahead of the previous year, and we expect good levels of revenue for the rest of the year."

Arburg officials did not provide a specific target, but Boll said they are "very optimistic" that sales could potentially reach a 10 percent turnover for the year as whole.

But despite predictions of a successful 2018 for Arburg, the machinery maker's confidence still rests in the hands of pending economic uncertainty.

"In this context, the question is often raised as to whether economic upheavals -- for example, in relation to 'punitive tariffs' -- are emerging that could have an impact and, if so, what measures we are taking to avert this potential problem," Arburg Sales Director Gerhard Böhm said. "As of today, I can say that uncertainties are beginning to emerge in certain markets."

 

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