Extruder OEMS optimistic despite pandemic slowdown

Despite pandemic-related economic woes, several extruder OEMs reported strong or steady sales in 2020 and are optimistic about the new year.

Entek, a manufacturer of twin-screw extruders, expects about a 25 percent increase in 2020 equipment sales compared to 2019. In addition, the Lebanon, Ore., company anticipates another increase of 30 percent in 2021, said Linda Campbell, Entek VP of sales.

“Actually, 2020 ended up being quite a good year for us,” Campbell said. “We are very close to hitting all of our budgets that we anticipated for the equipment side, and with that, we’re going into 2021 feeling very positive. We’re feeling very good about the year, and we’re operating as if COVID is not an issue. We’re just moving ahead and assuming business is going to be there.”

The growth is mainly coming from two sectors: packaging and home building products, she said.

Packaging is booming now in part because of the pandemic, which prompted people around the world to buy food for home consumption rather than eating out.

“Takeout has become a staple vs. going down and meeting your friends for a quick dinner,” Campbell said. “You are more taking food out and eating at home, either alone or with your family.”

In terms of home building products, such as decking, siding and fencing, the increased demand was surprising, Campbell said. 

“Folks, I guess, are staying home more and doing more home projects, and, of course, building has not been that negatively impacted by COVID. Our customers that are in the building products are actually really struggling to keep inventory moving into the big box stores.”

In addition, Entek’s customers are seeing growth related to new construction.

Recycling equipment has been another area of strong sales.

“People are really starting to wake up to the fact that twin-screw equipment serves the recycling industry very well,” Campbell said. “We started seeing strengthening for us in the middle to the end of 2019, and that has continued to have a strong impact on our business in 2020, and I don’t think it’s going away.”

Entek also has benefited from offering a turnkey approach to buying equipment. Entek can help customers design their production facilities, assume responsibility for installing equipment electrically and mechanically, and then train employees on the equipment, Campbell said.

Before the arrival of the coronavirus, the company was growing. A little over a year ago, it completed a shop expansion to keep up with increased demand. The addition boosted the original space at its Lebanon location by 30,000 square feet.

However, not all of Entek’s customers are thriving. Some market segments were hurt by the pandemic, including the automotive industry, which saw a severe dip in its order log for about 2½ months in 2020. That impacted equipment sales that were in the pipeline, Campbell said.

Many of Entek’s customers in other areas also are concerned about the virus’ impact on the economy.

“I think that even though we have had some successes with some large projects, the industry as a whole is still a little shellshocked and a little concerned and waiting to see what happens,” Campbell said. “I think that in general people are still in a wait-and-see pattern.”

Many of Entek’s customers are still gun-shy regarding new equipment purchases. In general, many processors expect 2020 to end up bringing them only about 80 percent of the business they projected at the beginning of the year.

“Our growth can be camouflaging quite a bit of pain out there, but still, if you’re talking about Entek, we are doing well,” Campbell said.

She expressed optimism that the economy and the plastics industry will thrive once the threat of the coronavirus is extinguished.

“I think everybody’s feeling like the floodgates are going to open as soon as we can get this darn vaccine going,” Campbell said. “There is still a strong economy to get back on track.”

US Extruders

US Extruders, a Westerly, R.I., maker of custom single-screw extruders founded in 2017, also reported strong sales in 2020.

“We’ve had a good year,” President Bill Kramer said. “It looks right now, with our backlog, we should finish 2020 considerably higher than 2019, so it’s a good growth year for us, which was not expected, but we’ve done well.”

While Kramer declined to quantify the increase in sales, he said it was significant enough to require the addition of several employees.

“We’ve added a couple in the office and a couple in the shop,” he said. “I’d rather not use numbers, but it’s a decent increase over the previous year in sales and shipments and bookings.”

Kramer attributes part of the growth to companies needing to produce more personal protective equipment (PPE) and hospital supplies. 

“We certainly have noticed that quite a few machines went into the nonwoven industry,” he said.

Nonwoven materials are used to make masks, gowns and other medical supplies.

“Just think of all the disposable materials that are consumed in a hospital — a majority of it is nonwoven,” he said.

The company sold some machines into the medical tubing industry, but Kramer said it is harder to tell if that is an area with a significant uptick.

US Extruders, since it is only a little over three years old, had been a growing business prior to the pandemic, and that growth is continuing.

Kramer said it’s difficult to make any predictions for 2021. It is unknown how long demand for equipment for nonwoven materials will last, he said.

“You would think at some point that the industry would have sufficient capacity, so you wouldn’t expect that to continue, but we don’t know how long it will or won’t,” he said. “It’s hard to predict 2021. We, on the other hand, expect that our growth will continue at some rate.”

Davis-Standard

Davis-Standard President and CEO Jim Murphy said extrusion equipment sales slowed during a three-month period in spring 2020 but began rebounding during the late summer and continued into the fall and winter.

“When the economy really kind of put the brakes on in the spring — March and April — we definitely saw a slowdown in activity that really lasted through May,” Murphy said. “I would say that 90-day period was pretty slow. People were hesitant to make decisions. We even saw some of our parts activity slow down a bit.”

Most of Davis-Standard’s customers continued operating during that period but saw a drop in demand, he said. That also meant a drop in demand for parts and new equipment, but the business climate improved in June and continued to strengthen throughout the year.

“In the fourth quarter, we’ve seen definitely a stronger continuation of that trend and significant improvement,” Murphy said.

As a result, Davis-Standard expects to finish 2020 with close to flat sales compared to 2019, he said.

The strongest markets have been rigid packaging and medical tubing and equipment. However, power distribution has been another strong segment; Davis-Standard sells extruders for manufacturing wire and cable. Other infrastructure areas — including pipe — also have been strong, he said.

Sales to the automotive market slowed down in the spring and early summer, but that area is coming back, Murphy said.

Murphy is optimistic about 2021, especially with the recent news about effective coronavirus vaccines, which may become widely available in the first half of 2021.

“We think ’21 overall is going to be a positive year, meaning some growth,” Murphy said. “We think it may be a little stronger in the second half than it is in the first half.”

Graham Engineering

Graham Engineering, which sells extruders and blow molding systems, had strong sales in 2020 and expects the trend to continue, although it did not release specific numbers.

“We anticipate a strong sales year in 2021, which follows a very strong 2020 for our equipment and services,” said Michael Duff, VP of sales and service. “Graham Engineering has made strategic moves over the past seven years to develop a well-rounded and diverse portfolio of products serving a variety of end markets. This has paid dividends for us and our customer base in 2020, and we expect the same going into 2021.”

Graham Engineering serves essential markets that support the COVID response, as well as others that have strengthened because of the pandemic, Duff said.

“While some of our end-use applications have suffered in the short-term — such as wire and cable, and automotive — I expect a rebound effect for them as the pandemic situation improves,” Duff said. “Specifically, we have seen strong sales in the household chemical space, including disinfectant product packaging and antibacterial wipe packaging.”

Graham had anticipated a drop in its medical tubing machinery sales because of a reduction in elective surgeries during 2020. However, the company saw growth as demand grew for ventilator tubing during the early stages of the pandemic, Duff said.

Other growth markets included takeout food packaging and plastic lumber.

“Another area where we have seen growth and predict further activity is in the area of lifecycle management, where our customers are taking advantage of changing production needs and choosing to upgrade equipment opportunistically,” Duff said.

“Based on our leading indicators of quote activity, we anticipate a strong 2021 in general and specifically in the areas that declined in 2020,” he said. “The business cases for extrusion purchases in these areas may have been delayed, but the need is still there.”

Graham is receiving more requests for quotes, which could be a leading indicator of future growth, Duff said.

SML

SML, an Austrian maker of film and sheet equipment, reported that 2020 sales were comparable to 2019.

“Worldwide sales were pretty much on a par with previous years, somewhat up,” said Mark Jones, director of support services for extrusion line supplier SML North America Service Inc. “There was very little change for us.”

One reason was because much of SML’s equipment is used to produce wrap and packaging for what most states deem “essential services,” including warehouse distribution, food distribution, PPE and food packaging, Jones said.

“Demand for the products and for the machinery that we produce was actually higher than normal,” Jones said. “I think there has been a shift toward home deliveries. People don’t go out to restaurants anymore. Restaurants tend to take big catering-pack-type units, which use less packaging per pound of product than consumer stuff does.”

In addition, a lot of consumers started ordering products online to avoid in-store crowds. Items packaged for online shopping frequently require additional packaging.

“So, we’ve seen business demands go up for the machinery that runs those sorts of products,” Jones said.

Some of Jones’ customers in the U.S. have factories running at capacity and have expressed interest in purchasing equipment to meet the demand.

“But it takes a while for that interest to translate into sales via trials and then contract negotiations and so on,” he said. “We have a lot of inquiries into new packaging equipment — sheet lines, stretch film lines and so on.”

Whether that increased interest leads to more sales remains to be seen, Jones said.

One recent complication is that some factories are having to temporarily shut down production lines because, as COVID-19 infection rates rise, more workers are becoming sick.

“When people are out sick, there’ve been a couple of instances where the machinery goes down not because there’s no demand for it, but because they can’t find the people to operate it,” Jones said.

The feeling in the industry is that the vaccine may help working conditions return to normal by the middle of 2021, he said.

Another factor is whether changes in consumers’ buying habits will continue once the pandemic is over.

“There is also some conjecture that part of the change in demand might be permanent,” Jones said.

People who have become accustomed to shopping online may continue doing so because they like the convenience, Jones said. However, he suspects that after the pandemic ends, people will resume eating in restaurants instead of eating all their meals at home.

The change in the U.S. administration in the new year may lessen the probability of higher tariffs on imported machinery, like SML’s extruders manufactured in Austria, he said. However, Jones said it is hard to say whether the new administration might impose some environmental taxes or restrictions that could affect the plastics industry.

Leistritz

Leistritz Extrusion, based in Somerville, N.J., expects a decline in sales in 2020 as some projects were delayed, said Charlie Martin, president and GM.

“We’ll be down about 15 percent from last year, which was a record year,” Martin said in December. “A lot of projects got pushed back, delayed.”

He said the coronavirus’ effect on the economy was to blame.

Martin said he wasn’t certain what would happen in 2021: “I hate to say it, but I’ve stopped predicting.”

However, he sees opportunities to sell equipment for some new markets outside of the mainstream. “There is definitely a trend toward sustainability, bioplastics and recycling,” he said.

A new administration in the White House could impact Leistritz’s business with changes to tariff policies. As a result of the U.S. government recently putting tariffs on many Chinese products, the Chinese have responded with their own taxes on U.S. goods.

“It’s both ways,” Martin said. “We have a customer in China that’s getting hit with an 18 percent tax for any equipment coming in from the USA.”

An easing of tariffs between the two nations could help Leistritz in that market.

Bruce Geiselman, senior staff reporter

[email protected]

Contact:

Davis-Standard LLC, Pawcatuck, Conn., 860-599-1010, www.davis-standard.com

Entek Extruders, Lebanon, Ore., 541-259-1068, www.entek.com. 

Graham Engineering Corp., York, Pa., 717-848-3755, www.grahamengineering.com/ 

Leistritz Extrusion, Somerville, N.J., 908-685-2333, www.leistritz.com/en

SML North America Service Inc., Gloucester, Mass., 978-281-0560, www.sml.at  

US Extruders, Westerly, R.I., 401-584-4710, www.us-extruders.com