Shipment term

The value of machine deliveries increases in the second quarter

Extruder and press shipments showed resilience in the second quarter based on data released by the Plastics Industry Association.

However, the report does not indicate whether the value of shipments increased due to market growth or simply because more companies took part in the survey, which could skew comparisons, according to Bill Wood, Plastics News economics editor and founder of Mountaintop Economics & Research Inc.

“Based on this data that we have, the second quarter numbers are pretty strong and that’s good news,” Wood said in a phone interview. “Corroborating that is the fact that the overall plastics industry numbers in terms of transformer production were also quite high so far this year. Surprisingly strong for me.”

For example, Wood said the capacity utilization rate in the plastics industry, according to the Federal Reserve, exceeds 88%.

“That bubbly. It’s spectacular,” Wood said. “You start to see a significant expansion in machine sales when the number goes above 84 or 85 percent.”

Additionally, year-over-year plastics production was up about 6% based on August data, Wood said.

“It’s really good,” he added. “We’ve had average annual growth of just under 2% historically. The plastics industry typically grows at about the same long-term rate as the overall economy, but this year the numbers from the federal reserve for the plastics industry surprise me. It was supposed to be gloomy, but so far in 2022 the plastics industry is above average.”

The medical market is growing 6-7% a year, retail sales are strong and consumer products are selling quite well, Wood said.

“The real thing that worries the plastics industry is consumer activity. How much money are people spending? Those numbers have never gone negative and have held up pretty well, mainly because people had [federal stimulus] silver.”

Another factor affecting machinery sales is interest rates to borrow for capital investments, Wood added.

“Everyone knew interest rates would go up and that may have been an impetus to buy ahead of the increases if you’re relying on funding,” he said. “The Fed started raising rates in the third quarter, but they told everyone in the second quarter. That could have boosted sales.”