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Introduction
Given the increasing significance of the plastic machinery industry and the consistent changes which have been a feature of the industry over the past decade, this study seeks to provide a comprehensive analysis of the current state of the industry, identify the key drivers of change in the industry, and also make some predictions about the way in which the industry is likely to evolve over the next five to ten years. In order to achieve this aim, the study begins by providing an overview of the plastic machinery industry, including the products which it manufactures and the markets for these products. This is the subject of the next chapter. This provides a platform for further analysis of the significance of the industry in chapter three. Subsequently, in order to achieve the third aim of the study, the methodology chapter of the research outlines how we anticipate identifying the drivers of change in the industry and the most appropriate means of predicting the future course of the industry. This methodology involves a combination of expert interviews and an online Delphi survey of industry participants.
Understanding the Plastic Machinery Industry
Plastic Machinery Industry is a category that estimates production and market for types of equipment used in the plastic industry. There are numerous plastic machinery to name that contribute to the plastic industry such as plastic injection moulding machine, extruders, blister packer, cutting, and compounder or other plastic machinery. Many industries and consumers may not know the benefits of machinery in industry. Machinery plays a very important role in the plastic industry. Without machinery it is impossible to produce plastic products. Try imagine, when you make instant noodle, you don’t want to waste your time to boil the noodle using a pan and a stove if you can just easily cook it using a thermoform method right? This is where a machine is used. It is faster, consuming less cost and effectively improved quality compared to traditional method. A machine also have a wide range of specification depends on what type of end product would a customer want. This gives customers more options in a sense of cost and time saving. Cost itself is every company main concern to produce a product. A good quality plastic products at a cheapest cost is what they really want. In order to accomplish this, a company must find a way to balance the cost of production with the profits garnered. By using plastic machinery, this can be achieved. For example a simple blow moulding machine can be used to produce a plastic bottle at a faster time and less cost compared to a injection blow moulding method. This helps to increase the profit and a cost saving method can also give an opportunity to create a new product that may have higher quality. During this inquiry, I managed to have an interview session with an executive manager of a SDN BHD plastic company. He said, “Without plastic machinery, it is impossible to survive in the plastic industry”. This quote clearly highlights the importance of plastic machinery in Malaysia.
Recognizing the Significance of the Plastic Machinery Industry
Over the years, plastic products have become a part of everyday life, such as computers, televisions, refrigerators, air conditioners, washing machines, and various consumer electronics products. Modernization, urbanization, and changes in living conditions will continue to increase the demand for plastic goods. The industry is targeting consumers to buy plastic products instead of products made from other materials such as wood, metal, and glass. This is because plastic products are generally less expensive than products made from other materials, and plastic products are also lighter. Any replacement or reduction of a certain material in any application naturally affects the consumption of plastics, and to produce plastic goods/parts, there will be a demand for plastic machinery.
The world is changing at a rapid pace, and it seems that no industry is immune to the effects of these changes. Some industries may benefit from these changes, while others may become outdated or even obsolete and extinct. In some cases, an industry may be forced to adapt to the changing atmosphere in order to survive and avoid collapse. The plastic machinery industry is an example of an industry that has adapted since its first existence in the 1940s. In today’s world, there are other factors that are forcing the industry to adapt to changes.
Scope and Objectives of the Study
The study will include the market data for the year 2009, historical data, with more focus on the 2007-2009 period as 2008 was a year of great turbulence, and also market forecasts for the year 2014. The top competitive countries and the market share for respective companies will also be included. The aim is to give the reader a comprehensive global view of the plastic machinery industry. For the industry stakeholders, the study will help provide a clearer picture and better understanding of the plastics machinery industry on a worldwide basis, thus enabling more informed and timely decisions to be made. For potential investors, the global outlook and forecasts will provide an indication of the plastic machinery industry’s investment attractiveness and potential. This is crucial especially in today’s climate, where investors meticulously analyze and assess investment risk and potential. Overall, the study is comprehensive source to analyze the entire plastic machinery industry, specific to individual countries, and is designed to provide the information that industry stakeholders and potential investors are looking for. Omission of trade literature has not affected the depth of analysis as trade data compared to other sources was negligible.
Current State of the Plastic Machinery Industry
Once the question of coping with the year 2000 has been solved, the next problem in the current state of the industry is determining the direction of development for the next ten years. In the past, manufacturers in Japan, Europe, and the USA aimed for product differentiation to escape from the competition of lower labor cost countries. However, at present, overseas production ratios have risen and globalization among products is leading to production rationalization of said global products. Also, there is the matter of excess production facilities in China and price competition is becoming severe all over the world. Unfortunately, in regards to the business environment surrounding the plastic machinery industry, it is an undeniable fact that a conducive competitive environment for survival and development has not yet been reached. Products meant for emerging markets in particular are losing their competitive edge in price due to competition with locally produced machines. This fact can only be taken as an expression of overproduction in terms of world production of plastic machinery and the excess of supply and demand in the global market. Looking at the full-scale market, the trend of trade companies shifting towards sales of secondhand machinery and trading of substitutes made in other fields such as used machine tools and food machinery has increased the servitization of machine products. Exports of machinery to the USA from Japan have decreased and world trade has shown no increase. In the domestic market, a weak yen is aiding in maintaining competitiveness with imports but the increase in imports themselves is a serious matter. In terms of production, the number of maintenance service personnel dispatched to other fields surpassed that of plastic machinery in 1996, and in the year 2003, integrated production across all industries was exceeded in the number of workers in the plastic machinery industry. This only serves to illustrate the extensive hollowing out of the industry.
Overview of the Plastic Machinery Market
The size of the plastic machinery industry has doubled in the last five years and is now worth around $20 billion. There are a number of reasons for this, primarily the packaging and electrical/electronic sectors, which account for around 30% of the market. This is closely followed by the transport industry at 25%. The medical and construction industries also promise great potential. Much of the growth has come from Asia. Based on research done in 2005, the analysis provided in Fig 2 suggests that Europe consumes over 30% of new machinery, and China now over 20%. However, if we also take into account used machinery, the Asian split is much more balanced. Milacron’s Monteith also adds that when China’s domestic market for higher-end machinery improves, the industry in Japan, which has seen particularly slow growth, highlighted by the fall of JSW, one of Japan’s key manufacturers of plastic machinery, must be seeing increased competition from other Asian machinery exporting countries, and this is likely to hinder further Japanese growth. In relative terms, the strongest growth has come from Eastern Europe, with Russia heading the market in this region. The shift of global machinery production to China has raised many concerns for the industry as production costs continue to rise. Machinery firms are faced with the decision whether to relocate their manufacturing bases in order to reduce cost, yet still have access to growing markets. This theory has already been put into action by a small number of firms looking to exploit the benefits of relocating to Asia. A drastic example is Husky, who in the past year offloaded a considerable portion of their Canadian-based hot runner system manufacturing to China, which, although not machinery, is a fundamental component of the injection molding process. However, a number of technological and financial barriers still exist for China to become self-sufficient in higher-end machinery and also to be able to develop suitable products for end users in export markets. This will continue to put pressure on foreign machinery firms who have manufacturing or sales operations in China.
Key Players in the Plastic Machinery Industry
Top key players in the plastic machinery industry are a widely known industry term. For example, recycling machines are designed to reclaim the raw material from a waste product. Injection moulding of fast food containers with IML is done at very high production volumes and most system suppliers of injection moulding machines have systems specifically developed for this application. Because of this demand, much of the development work in injection moulding machinery is to make the machine more and more efficient, in order to increase output and lower production cost. Another major sector for injection moulding machine suppliers and the plastic part manufacturers is the automotive sector. Here, it is an ongoing battle to be the approved supplier to the car producer, because there are many opportunities for production of components throughout the car and supply agreements can be very lucrative. In the extrusion sector, the development work tends to focus on the process and the die rather than the machine itself. This is because the cost of the die and the potential for making high added value products through development of the die or process, far outweighs the cost of the machine. The extrusion machinery industry is a lot more fragmented than the injection moulding sector, with a larger number of smaller companies. This has also led to much consolidation in recent years. Twin-screw extruders are of growing interest to the plastics industry, with new applications in many sectors. This is one sector where the non-plastic machinery manufacturers are now beginning to take an interest, with possible future competition from the food processing machinery industry.
Market Trends and Challenges
The positive side to this is that there is a constant effort to innovate, upgrade machinery, and offer new technological solutions. This, in itself, is a key driver for growth of the industry. On the other hand, with global economic uncertainty, a pricing war has developed in the market, creating intense competition between developed companies and the smaller ones. This has often led to cost-cutting in the research and development sector and has had an impact on the quality of machinery being produced. An example of this can be seen in Europe, where there has been a decline in the production of injection moulding machines, which are the most original sector for European machine manufacturers. This is due to the increase of Asian suppliers entering the market. However, it is not all doom and gloom for European machinery manufacturers, as there are still many niche markets in the plastics industry in Europe that still require high-quality machine solutions. Simulation of different materials processes, high-end multi-material machines, and customized machines are still in relatively high demand in Europe.
When looking at the current state of the industry, it is very clear that plastic machinery is a highly competitive one. The continuous technological developments that are taking place in this particular sector, combined with a rise in the number of small players, has ensured that the market dynamics are strong. This has been both a positive and a negative for the industry.
Development Trends in the Plastic Machinery Industry
The world climate on environmental issues is also driving the development of plastic machinery. There is societal and political pressure to make plastic manufacturing greener and more environmentally friendly. It is well known that plastic materials have to be lightweight and low cost to compete with alternative materials. However, in the past, the cost of making a product environmentally friendly has been too high. This in turn has been a barrier for some plastic products. Some products may not have been able to reach the market due to the added price as well as some manufacturers not willing to change to a greener product due to costs. Therefore, the technology must be cost-effective and viable. In recent years, there has been much research into these low-cost eco-materials and technologies. The utilization of recyclable materials, use of supercritical CO2 as a foaming agent, and the modification of materials by compounding and reactive processing are some examples cited. As well as the development of new materials and technologies, it is important to train engineers and researchers in these fields and educate the incoming engineers of the benefits and possibilities of using eco-materials.
Technological advancements are an important driver in the innovation of plastic machinery. The advances in these machines are due to the needs and wants of the consumers and manufacturers, therefore the machines have to keep ahead of the trends. One key trend is the move in the market to multi-material solutions. There is an increasing demand for products made from more than one material. This could be driven by cost, or the need to combine the properties of different materials to create a product with specific attributes. An example of this in today’s society would be the use of metal insert injection on plastic molded parts. This is a process where a metal component is placed in the mold and plastic is molded around the component. Multi-material solutions can also cover over molding and insert molding. This type of processing requires special machines, tools, and technologies. Therefore, present and potential methods for multi-material injection molding were reviewed, taking into account the alloys of eco-materials, and ways in which the recyclable materials can be best employed.
Technological Advancements in Plastic Machinery
A hybrid machine is a combination of the two. The main driving force behind making an electric machine was to eliminate waste and provide a more efficient product. In this sense, it is similar to the goal behind the development of the next generation injection molding technology: the variotherm process. Currently, the main process for plastic part manufacture is variotherm injection molding. This is a technique in which the plastic is heated as much as it can be before it degrades, and then rapidly cooled to form a part. The reason for the rapid cooling is to reduce the cycle time as much as possible. However, the rapid cooling leads to a high level of internal stresses in the part and can cause warping and other defects. The variotherm process seeks to eliminate this problem by heating the polymer above its melting point and then maintaining a constant temperature as it is injected into the mold. This should produce a part that is almost stress-free, requiring little to no post-molding operations. In many cases, the part is taken above its crystallization temperature to further optimize material properties. This process is quite a radical change from what is currently the industry standard, and as such, the high costs and risks have limited its development. However, there is significant long-term potential for the technology, and it is worth keeping an eye on.
One primary area of advancement has been the development of electric and hybrid drive technology for injection molding. Traditionally, hydraulic machines have been the only option available to molders, and machinery manufacturers have focused on optimizing these machines to be as efficient and effective as possible. However, more recently, the focus has shifted toward providing the market with a viable alternative to the hydraulic machine. The research and development of electric machine technology has now reached a point where it is a very competitive option to the traditional hydraulic machine. In fact, in many cases, it is superior. High-performance electric motors are now able to provide a much higher sustained power output than the equivalent-sized hydraulic motor. This means that the machines are capable of providing greater forces for the same energy input, leading to improved precision and shorter cycle times. Usually, the power transmission system in an electric machine is also far simpler than that in a hydraulic machine, making maintenance much easier. In the past, the cost of electric machines has been a deterrent, but the gap is closing as technology advances and the benefits of lower running costs and reduced energy usage become more significant.
The plastic machinery industry has experienced dramatic changes over the last few decades. The primary objective for the future would be to keep innovating to let plastic parts compete with parts made from alternative materials. Plastics are generally very cost effective, easy to manufacture, lightweight, strong and tough, and this is a trend that is not expected to change. However, to stay competitive with other materials, the way that they are manufactured must continually improve. This includes a few different aspects, from the materials and design of the parts to the processes by which they are manufactured. Recent advancements in technology are allowing machinery manufacturers to provide their customers with significant improvements in the cost effectiveness of plastic part manufacture.
Shift towards Sustainable and Environmentally Friendly Solutions
Recent years have seen a large shift in focus towards more sustainable and environmentally friendly solutions in many aspects of our lives, and the plastic industry is no exception. Due to increasing concerns about the environment and pressure from various environmental groups and government legislation, there has been increasing demand on the plastics industry to clean up its act. Traditionally, plastics have been made from a wide range of polymers, a large proportion of which are derived from fossil fuels. There are efforts to shift production to biopolymers, polymers derived from renewable resources, and plastics derived from such polymers. Whilst the production of biopolymers is a large area of research and development, with potential to bring both social and economic benefits, it does not necessarily lead to a more environmentally friendly end product. A large proportion of such materials are designed to be biodegradable, taking a ‘cradle to cradle approach’, with the aim of reducing the amount of pollution and waste caused by disposal of waste plastics, whilst recycling is also a target for the vast amount of traditional polymers still in use. Another area of current research with potential future applications is the development of ‘intelligent’ plastics, which if damaged, can heal themselves, potentially reducing the energy and pollution costs associated with recycling and remanufacturing damaged plastic items. Despite the potential benefits and current research and development in these areas, it is a long road to bring such technologies to a commercially viable market.
Automation and Industry 4.0 Integration
The next phase of automation in plastics processing, and the machinery used, is the integration of “Industry 4.0” systems. The term Industry 4.0 originates from a project in the high-tech strategy for Germany, which promotes the computerization of manufacturing. This concept includes enhanced connectivity and data exchange using IIoT (industrial internet of things) between machines, centralized data collection, the use of cloud computing, and cyber-physical systems which will monitor processes and make decentralized decisions. This will bring “smart factories” to the plastics industry, where it is envisioned that with minimal human input, machinery will run complex optimization and production cycles in order to fulfill a desired output, and where self-monitoring and diagnosis of machinery will enable preventative maintenance, which will reduce downtime and maintenance costs. While most of the technologies for Industry 4.0 are in the developmental phase, it will not be long until they are able to be implemented in the plastics industry, where machinery producers are already beginning to implement basic offerings of Industry 4.0 concepts. Ettlinger Kunststoffmaschinen, for example, has developed a melt filter which uses sensors to monitor contamination level and will stop the filtration process when it deems the level to be acceptable. It will store this data for retrieval via network in order to optimize filtration in the future. Industry 4.0 is seen as a way to gain a competitive edge through more cost-effective and higher quality production.
In the face of global competition, the need to be competitive is a driving force for the plastics processing industry. Manufacturers are pressured to increase the effectiveness and efficiency of their production processes in order to remain viable. Automation has been a driving force in helping companies justify the cost of new machinery by reducing direct labor costs. In the machinery production sector, the plastics industry is a major customer. During the last 30 years, it has purchased an increasing amount of injection, blow molding, and extrusion machinery to increase output.
Emerging Markets and Opportunities
The trend towards large corporations dominating the plastic product manufacturing industry has caused a concentration of production into a smaller number of larger, high-output facilities. High-output plastic processing equipment is being increasingly utilized, and there is a growing demand for turn-key solutions and global support from machinery suppliers. Large facilities often require long production runs, and the ability to maintain continuous production with minimal downtime is essential. This will drive the demand for new machinery with energy-saving features and the replacement of old machinery with new machinery to reduce maintenance costs and increase productivity.
Furthermore, many manufacturers in these countries will be aiming to export their products to developed countries and thus will need to meet the quality and standards required to compete in the global market. This will increase the demand for high-precision and high-quality plastic processing equipment in these countries. For machinery suppliers in developed countries, there will be opportunities to establish local production facilities or joint ventures to produce machinery in these countries, in order to avoid or reduce import/export costs and to be closer to their customers.
Developing countries such as China, India, Brazil, South Africa, and Indonesia are experiencing substantial economic growth. This is driving their industrialization and urbanization, which in turn is increasing the demand for plastic products. Plastic product manufacturers in these countries commonly utilize outdated machinery and methods, and the products produced are often of low quality. However, as the demand for plastic products increases, these manufacturers will require more modern equipment and processing methods. As a result, there are significant opportunities for machinery suppliers to provide new technology and machinery to these countries in order to improve the quality and productivity of their plastic product manufacturing.
Future Prospects and Growth Opportunities
Specific product sector per capita consumption disparities between developing and developed countries will continue to fuel investments by developed world processors in plastics machinery in efforts to establish operations in these nations. This international sector is expected to grow at an average annual rate of 6.9% to reach a value of $24.6 billion in the year 2021. With the size and importance of a country’s plastics industry being dependent on usage, machinery sales are highest in countries with major packaging, consumer, and automotive product manufacturing. Japan, United States, China, Germany, and India are the largest plastics machinery markets. Total industry consumption. North America and Western Europe will continue to represent nearly 40% of the global market due to their large packaging and consumer goods industries. Machinery demand in Asia Pacific and other developing regions will grow at a faster rate as their plastics industries continue to expand.
Future prospects and growth opportunities in the plastics machinery industry may be analyzed by studying the forecasted market growth and potential, investment opportunities, and challenges and risks to consider. The forecasted market growth and potential for the industry is positive. Growth rates in the plastics machinery industry are expected to be similar to the trend in global polymer demand indicating a nearly doubling of sales between the year 2000 and 2010. The need for plastics machinery in developing countries will continue to fuel export sales by suppliers based in developed areas of the world. Elektrisola, a leading supplier of fine and ultrafine magnet wire, sees a high potential for growth in the plastics machinery industry, “with industries purchasing new equipment and the coming of new industries in developing nations or shifting to further modernize production with new technology”.
Forecasted Market Growth and Potential
This section is forecasted to grow from its current modest size to a 5 to 6 billion pound industry within the next five years. The markets in Eastern Europe and the developing countries of Asia will be the fastest growing areas. The chairman of Britain’s Brown and Sharp Trading Ltd. said, “The next five years in the computer industry will see the same amount of change as the last 20. I would say the same thing for the plastic industry.” Much of the industry speed can be attributed to the ever-rapidly changing computer and information technologies of modern times. Presently, over 35% of U.S. machinery utilization is in drives or position control. European and Asian machine builders have known this for the past decade due to the high costs of energy and production in their countries. Now, U.S. builders are implementing these control systems to be more competitive globally. With such technology, machine capability grows. The old machines were over-engineered for the low resale material costs. This is inverse today and builders can now build machines tailored to customer applications. Many sources agree that injection molding is a high-growth market. Custom injection molders for industrial, automotive, and consumer electronic products will see increasing demands. The packaging market is the largest user of injection machines and this will continue to be the case with good leading growth in North America. Co-injection and gas-assisted molding are advancing as well for packaging. Today’s medical industry is using injection molding more than ever with exponential growth in the disposable device market. This will carry into plastic machinery. The next two most rapidly growing processes are expected to be extrusion and blow molding due to the consumer market shift from metal and glass converting. This is highly noticed in North America and Europe but global market increases in these processes will be parallel. Currently, China is one of the fastest-growing markets for extrusion and has the potential to be a leader. Devices such as screws, barrels, and dies have a long history of being built to best guesswork due to abrasive wear. The extrusion market also shows guaranteed demand for replacement component sales.
Investment Opportunities in the Plastic Machinery Industry
One of the most critical choices to consider is if a manufacturer should buy new or used machinery. Since plastic machinery spans a wide range of equipment, new machinery can vary from $800,000 for a plastic extruder to $50,000 for mold/tooling equipment. In an attempt to narrow the price margin on new equipment, small companies may exclude larger high-tech equipment due to its price. In this case, it would be wise for such companies that injection mold products to invest in newer, more efficient machines. As for used machinery, it’s best for companies that aim to reduce cost in the short run manufacturing simple parts that require standard equipment. Although the used equipment option may generate short-term cost savings, used machinery investment carries a certain level of risk due to potential quality, maintenance, and efficiency problems.
In the rapidly changing world of plastic machinery, manufacturers need to be aware of the big investment decisions. If the right choices are made, the expected annual growth rate of 4.5% for plastic machinery over the next few years will help achieve a potential payoff in the near future. The types of investments vary from company to company simply because different applications call for different types of plastic machinery and tooling.
Challenges and Risks to Consider
There are still a variety of challenges that are expected to be faced by the plastic machinery industry. Some of the key challenges include the growing trend of moving production operations to low cost countries such as China due to cost pressures. This trend has considerable effect on the machinery sector where it is expected that investment in new machinery will decline due to the relocation of older machinery from other industries. This will force machinery producers to relocate operations to the same countries as their customers, and to find new ways to supply to customers who have moved abroad. Another major challenge will be the increasing cost of meeting environmental legislation. The effect of China in the industry will be both a help and a hindrance, as the industry will see increasing competition from Chinese machinery producers both in China and abroad. However, an opportunity exists for those who supply machinery in China, where it is predicted that foreign investment in China will continue and the packaging and automotive industries will maintain good growth. This contrasts sharply with the situation in Western Europe, where machinery sales will be limited and the packaging and automotive industries will see little growth. Foreign investment will continue in the Middle East where the packaging and construction sectors will grow, and this presents another good opportunity for machinery sales. The industry will also continue to see growth in Eastern Europe. However, there are still concerns about political instability in this region. A major disaster for the industry would be any increase in protectionist policies around the world, as the industry thrives in a free market.
