Plastics machinery makers express optimism following election

By Bruce Geiselman and Karen Hanna 

The return of Donald J. Trump to the White House has some plastics machinery makers feeling optimistic in the wake of the Nov. 5 election. Some have said they are hopeful that tax incentives, policies to strenthen the U.S. dollar and an aggressive posture toward global trade — with the imposition of hefty tariffs — will benefit their companies.    

Plustech, the injection molding machinery division of Sodick, has been in business 20 years.

"We are hopeful that the new administration’s policies will bring a greater opportunity for reshoring, or increased manufacturing in the U.S.," Kohei Shinohara, senior VP for Plustech, said. "Since Plustech provides the machines that make that manufacturing possible for our customers here, we are eager to learn what that increased demand will look like, and will be ready to provide the machines plus sales and service support for our current and future customers." 

Meanwhile, Laurie Harbour, a partner at Wipfli LLP and longtime consultant to molding and mold making shops, along with other manufacturers, sees the election’s implications as a “mixed bag.” In addition to tariffs, Trump will soon be renegotiating the United States-Mexico-Canada Agreement, a trade agreement he trumpeted in his first term in office. 

Taken together, the policies could mean much higher costs for companies that need to import parts, equipment and raw materials, but also could advantage domestic manufacturers.  

Harbour said she expects Trump to play “hardball” with manufacturers in both China and Mexico.  

But Mark Jones, director of support services in North America for SML, an extruder manufacturer, said, “I don’t see a big problem. If the dollar strengthens, that might make it cheaper for U.S. customers to buy equipment from Austria, offsetting the impact of any possible tariffs. It’s unlikely tariffs would target Austrian goods. We’re unlikely to see tariffs the size of what might be put on Chinese car imports, for example.”  

Trump’s economic plan includes strengthening the U.S. dollar and adopting “a new pro-America system of universal baseline tariffs on most foreign products that rewards domestic production while taxing foreign companies.”  

Much of Trump’s ire seems directed at products coming from China. “My agenda will tax China to build up America,” according to a Trump statement in which he says American wealth and jobs are being exported to that country.  

According to Perc Pineda, chief economist for the Plastics Industry Association, current tariff rates on equipment are relatively low, sitting at 3.1 percent for most machinery, with exceptions for equipment imported from countries with free trade agreements. There also are exceptions for some types of manufacturing equipment such as calendaring and injection molding machines (IMMs).  

“I would be surprised if proposals for higher tariffs in the future on machineries would include those that are used for domestic manufacturing — considering the overall objective to increase U.S. manufacturing activity,” Pineda said.  

One goal of tariffs could be to reshore jobs to the U.S., as manufacturers look to avoid paying duties.  

However, both Harbour and Michael Wittmann, who is president of Wittmann Global Group, based in Austria, questioned whether the U.S. manufacturing industry has the capacity to take on much more work. 

Harbour noted that the domestic mold making industry has been decimated in recent years, as scores of shops have closed. Molds and dies imported from China currently carry a 25 percent duty — and even at that rate, they’re often cheaper than what’s available domestically. 

While Harbour said she would love to see mold making return to the U.S., she expressed doubts that U.S. shops could fill in the gaps right away if Chinese mold makers are essentially shut out.  

In the meantime, companies that buy molds might be caught in a bind as prices skyrocket. Harbour put forth the scenario of a domestic mold buyer: “If it happens that he tariffs the [China Section] 301 to let’s say 100 percent, now, all of a sudden, it's not effective for me to buy tools in China anymore. Where do I go? Do I have a list of (alternative domestic) tool makers? Do I know who they are? Because we've lost a lot of them. … So, how do you position that capacity, and is a tool maker ready to take on that capacity?” 

Wittmann said it’s impossible at this time to understand how Trump’s economic policies might affect sales in the U.S., which is the largest single market for his company’s IMMs and auxiliary equipment.  

“We assume that there will be no immediate massive changes to our business activities,” he said. “Even if it is the declared aim of the Trump administration to increasingly transfer industrial activities back to the USA, planning for the corresponding implementation and necessary investments require certain lead times, especially if new locations for such production are being considered. For me, however, the question arises as to where the additional workers for the increased production activities in the USA should come from. The unemployment rate in the USA runs at a low level, and additional personnel are not readily available in any quantity. Actions in these directions could reignite the labor shortages of 2021 and 2022, with all the associated negative effects, such as higher inflation.”  

Wittmann already maintains a production facility in Torrington, Conn., which manufactures automation and materials-handling and drying systems that are integrated with complete IMM cells in the American market.  

“It is, of course, possible to expand these activities should local demand require it,” Wittmann said.  

Like Wittmann, Nissei counts the U.S. as its biggest market. At its San Antonio plant, the company assembles IMMs made in Japan. 

But Masa Miyajima, president of Nissei America, had mixed feelings about the election. 

"We are currently expanding the San Antonio factory and planning to assemble machines up to 3,000-ton class in the future; however, we are also very apprehensive about the new policies to be set by the upcoming Trump administration," Miyajima said.  

Adolfo Edgar, VP of blown film systems for Kuhne in the U.S., Canada and Brazil was doubtful his company — a European machine builder for film and sheet extruders — would be able to set up shop in the U.S.  

“We are a family-owned company based in Germany and export around the world,” he said. “It would be almost impossible to set up manufacturing in the United States.”  

But Edgar sees reason for optimism for an improving business environment under the incoming administration.  

“For our customers, I think there is some optimism for the business environment, and it is expected there will be some economic improvement in the United States now that the uncertainty regarding the election is over and there will be more of a willingness to invest,” he said. “I work with our Triple Bubble [multilayer film] product, and we have no competitors in that area.”  

Edgar added that “sometimes threats of new tariffs are just political posturing. I think cooler heads will prevail.”  

Steve DeSpain, VP of Reifenhäuser Inc., Maize, Kan., which is a subsidiary of a German-based company, also expressed optimism.  

“I don’t expect any impact on us because of tariffs, but I think the election of Trump will certainly help us,” DeSpain said. “Many of our customers have postponed capital expenditures because of the elections. Many customers wanted to wait until after the election.”  

Customers are looking for extensions of tax benefits and possibly new incentives that will help them with their investments, he said.  

DeSpain said he hasn’t heard any worries about tariffs on machinery coming from Germany.

Like DeSpain, Sodick's Shinohara is looking forward to see how some of Tump's proposed policies pan out.

"A lower proposed corporate tax, plus a strong U.S. dollar could provide more opportunity for manufacturing and investment in the U.S., especially for industries like automotive or electronics, and while we are cautiously optimistic what that might look like, we’re here for it," he said.

However, implications of Trump's election might play out differently for Yizumi, a Chinese manufacturer of IMMs and die casting machinery.  

“Nothing against any person, but if we only talk about the tariff or import duties, any increase would impact the Chinese manufacturer, and the end user, then finally the consumers,” said Joe Liang, acting GM for Yizumi-HPM, Iberia, Ohio, the headquarters for the North American division of Yizumi.  

Whatever their exact situation, consultant Harbour said manufacturers have to be prepared to adapt. They should work with trade associations to learn as much as they can, and to lobby the incoming administration to meet their needs. 

“It's really all about planning and agility at this point, you know, that flexibility to be able to sort of bob and weave to these circumstances that come about,” she said.