Polyurethane machinery returns to the trend

The polyurethane machinery industry is highly entrepreneurial and is made up of large and small firms. How did they find 2017?

From large to small, advanced to simple – the polyurethane machinery sector is a complicated place. In 2017, companies were less optimistic than in 2016, as sentiment levels returned towards the long-term average.

In terms of materials, 2017 was characterised by shortages, tightness, and high prices. Several senior members of the industry were worried that it could lead to other materials taking the place of polyurethane.

Machinery capital purchases are made by companies with a view to the next two or three years. Looking at the data from the machinery survey, it is too soon to say if the high price of raw materials is having an impact but, according to figures from the UTIMcIndex, which is compiled from the responses to our survey, machinery makers are slightly more pessimistic in 2017 than they were in 2016.

The index has dropped from 4.8 to 4.2 over the course of a year and has returned to about the same level as it was between 2012 and 2015. During that time, it fluctuated between 4.5 and 3.8. See Chart 1.

This index is calculated by taking responses from the survey about whether companies are planning to build, buy, consolidate, divest or close one or more of their plants. For more details, see the box below.

This year is noteworthy because, according to the survey, there were approximately twice as many companies considering building new facilities than the long-term average. Approximately twice as many are looking to divest a polyurethane machinery manufacturing business as the long-term average.

All the other numbers that go to make up the basis of the UTI machinery index were very close to the five-year averages.

Although not included on the list of company plans in Table 2, Urethanes Technology International has had an expansion confirmed confidentially. This is expected to be formally announced at UTECH Europe, to be held in Maastricht 29-31 May.

Diving into product sectors

The survey asks respondents to rate which of the five important business areas in which they believe machinery purchase is highest at present. We specifically study automotive parts, furniture and bedding, refrigerated appliances, building and construction, and general industry. In three of these areas – automotive parts, refrigerated appliances and general industry – in 2017 more respondents said that machinery purchases were high in those sectors than did in 2016. In all three cases, respondents’ levels of optimism are rising, and are now closer to the mean between 2012 and 2016. However, in furniture and bedding, and also building and construction, respondents believed that, although sales were high, fewer felt as optimistic than they were in 2016. Furniture and bedding as a sector is very close to the consumer, and it is possible that the higher price of diisocyanates in 2017 may have depressed demand slightly. In the construction sector, Kingspan was especially vocal about passing on price rises to its customers in 2017, and has taken the hit in terms of volumes, according to its CEO, Gene Murtagh. His company believes that there has been ‘a structural shift’ towards phenolic boards. Time will tell if that is sustained and significant enough to dint the growth of machinery for rigid polyurethane and PIR boards.

Regional differences

In 2017, respondents said that sales were growing fastest of all in North America. There was a three-way tie for second between Central/Eastern Europe, Middle East/Africa and South East Asia. Western Europe and China tied for fifth behind them, while South America comfortably held off Australasia. Japan came last. Those are the headlines but, looking more deeply, it is clear that respondents have believed that sales are growing fastest in North America. This confidence has grown steadily since 2014, apart from a slight dip in 2015. The feeling that the US is the fastest growing market for polyurethane machinery has now almost reached its 2011 level That was the peak level of our data series. The contrast with South America is very marked. Although the perception is that sales in the region increased in 2017 compared with 2015 and 2016, it is still at about half the level it was in 2014. This, in turn, is about half the level it was in 2011. It is interesting to see where people feel that sales are growing, but the reality of actual sales in 2017 was quite different, according to the survey. Reported sales were lower in 2017 in all regions than in 2016. In fact, sales, according to the data in 2017, they were lower than the average between 2012 and 2016 in all regions. It is hard to see if this is related to a single year of high raw materials prices dampening demand. This will become more clear when the survey is repeated in 2019.

What are we going to do next?

That’s the big picture, but what do individual companies expect to do over the next few weeks and months? It is clear that they will keep innovating and, excitingly, this year we have a new entrant into the polyurethane machinery sector, with Nitroil. The company is offering a range of machines that will be launched officially at UTECH Europe 29-31 May 2018 in Maastricht, the Netherlands. Several companies used the survey to notify us of new product offerings. OSV said it plans to start composites machinery manufacturing, with the brand-new OSV Combi Ultra machine. This is designed to process a mixture of liquid polymers and dry abrasive fillers for the composite sector. Alexey Kuznecov, a director at the company, added that OSV plans to build, equip and start up new production hall of 1000 m².  

Table1 : Ranking polyurethane equipment suppliers by sales of new machinery
Company Name	PU Sales, $m 2017	Total Sales $m 2017	Total Staff	PU staff
Cannon	179	255	1070	680
Albrecth Baumer	53	77	371	371
Fecken-Kirfel	34.5	49	200	140
Saip	23.4	23.4	50	50
Edge-Sweets/ESCO	13	16	50	50
Dolphin Pak	3.5	7.8	40	40
Tec Mac	2.15	2.45	16	16
AutoRim	1.9	1.95	11	11
OSV	1.45	1.9	47	17
Modern Enterprises	0.75	0.8	70	70
Krauss Maffei	NG	NG	5000	550
Hennecke	NG	NG	500	500
Frimo	NG	267	1.5	200
Rim Polymers	NG	25	85	45
Fincorp	NG	0	35	35
Con-Tek	NG	0	27	27
IPF	NG	0	17	17
Technoelastomeri	NG	16.7	57	8
NG= Not Given
Note: information in $ if supplied in other currencies converted on 5 March 2018

  Kuznecov said that his company has benefitted from a 2014 decision to focus its exports from the Ukraine towards Europe, rather than Russia. Marco Rigobello, VP sales, Cannon USA said 2017 ‘was a great year’. Speaking at the recent Foamex event in Novi, Michigan, he said the US business started 2017 with momentum from 2016. ‘For the first six months, we benefitted from the previous year,’ he explained. ‘A lot of the momentum carried through 2017 was good in terms of sales. We were going well in the first six months. Now [in 2018] we see a small slow down, but we have many quotes outstanding... if a few big projects come in it will be a good year again.’

Cars and fridges

For Rigobello, the business highlights of 2017 were ‘automotive but also rigid, especially for refrigerators’. Rigobello was referring to a decision Electrolux took to revamp two of its refrigerator plants, one in the US, the other in Mexico.

‘We shared the contract with Hennecke, but still, this is going to be a long, big project. It will feed the whole group for a couple of years,’ he said.

He added that the automotive sector is always good for Cannon USA. ‘It depends on

the year, but it can be above 30-40%, sometimes even 50% of our business,’ he said. ‘It is moulding, mainly. And as a company, we focus on composites.’

 

Table 2: Machinery Companies -- general data and plans
				R+D sales%		Services supplied						Plans for 2018
Company	Location	Plants	Total m2			T	R	S	P	TS		E	A	D	U	C	B	Co	Web address
Albrecht Baumer 1	Germany		9150	7		●	●	●	●	●		●			●		●		www.baeumer.com
AutoRIM 2	UK	2		NG		●	●	●	●	●								●	www.autorim.net
Cannon	Cannon		100,000	5								●							www.cannon.it
Con-Tek Machine 3	US	1	2,300												●				www.con-tek.com
Edge-Sweets Co (ESCO)	US	1	8300			●	●	●	●	●					●				www.edge-sweets.com
Fecken-Kirfel 1, 4	Germany	1	16000	5		●	●	●	●	●					●			●	fecken-kirfel.de
fincorpengineering	Lebanon	1	1300	5		●	●	●	●	●									www.fincorpengineering.com
FRIMO Group GmbH	Germany	5	NG			●	●	●	●	●		●		●					www.frimo.com
Hennecke	Germany		NG			●	●	●	●	●									www.hennecke.com
IPF	Spain	1	NG	5		●		●	●						●				www.ipfing.com
KraussMaffei 5	Germany	7	NG			●	●	●	●	●									www.kraussmaffei.com
Modern Enterprises	india	5	8000	5		●	●	●	●	●		●							www.foam-machinery.com
OSV 5	Ukraine	1	1,800	15		●	●	●	●	●		●			●				www.osv-europe.com
Rim Polymers 7	singapore	2	NG	8		●	●	●	●	●		●	●		●				www.rimpolymers.com
Saip 8,9	Italy	1	10,000	5		●	●	●	●	●		●						●	www.saipequipment.it
TecMac	Italy	1	8500	6								●							www.tecmac.com
Notes
Services	T= Turnkey; R= Trial Runs; S= After Sales Support;P= Spare Parts; TS=Trouble Shooting; NG = Not given
Plans	E= Expand; A= Acquire; D=Divest; U=Upgrade; B=Build; C=Close; Co= Consolidate
No information=No listing
1	Cutting Tools
2	Derbyshire and West Midlands
3	Plus additonal land
4	Aachen
5	Area Not given, sites in Germany(Munich, Viersen, Gorgsmarienhutte); Italy (Abbiategrasso); US (Florence, Kentucky); China (Haiyuan), Slovakia (Sucany); Japan (Aichi)
6	Service Centres in Lithuania, Poland, Bulgaria
7	Singapore and China
8	Ineregio, Como, Italy
9	Machines and lines upgrading -- Technical training for operators

 

Changes to the exchange rate caused by a strengthening Euro have not had much impact on the US business. ‘We are not really affected by the Euro because we manufacture in house in the US,’ Rigobello explained. ‘Some important components come from Italy, but they are not affecting our prices.’

However, he warned that the uncertainty about whether the US will renegotiate Nafta or start a tariff war are slowing the market for machinery in the US.

‘Customers are postponing their orders,’ he said. ‘They are waiting and watching. They think that some decisions made at a government level could affect their business.’

Returning to the Automotive business, Rigobello added thatOEMs are driving the decision for the Tier 1 supplier. ‘This has positive and negative effects,’ he said.

‘On the positive side, they are increasing the use of MDI for automotive seats and other applications. They are pushing Tier 1 to use MDI when they are set up for TDI. Our Tier 1 clients are looking for alternatives. Most of the time they are forced to implement MDI. In an existing line, that is a major revamping. For us it is a good business.’

He added that there is a growing trend for front seats to be treated differently to back seats. ‘That wasn’t expected by Tier 1 suppliers,’ he said.

In the US in 2017, Cannon made 30 or 40 dosing units, and all the ancillary equipment. ‘Sometimes they are small simple presses for steering wheel applications,’ Rigobello explained. ‘Other times they are complicated with materials handling, material moving and heating, possibly thermoforming and back foaming.’

Change your head

Rigobello added that sales of his firm’s SR special rotor mix heads are starting to take off in the US. These have hammer shaped cleaning pistons. ‘The mix head was introduced two or three years ago,’ he said. ‘Now they are gaining momentum in rigid applications because they enable greater laminar flow and throughput than earlier models.’ He believes that customers don’t want to make significant changes. ‘If they have an 18 mm diameter hole [to inject polyurethane] they want to keep it the same size,’ he said. ‘But refrigerators are getting bigger and bigger. They need to inject more and more foam, or they need to reduce production time by reducing pouring time.  

Table 3: Sales by Geographic Region (%)
Company	West Europe	CEE	MEA	North America	South America	SEA	China			ROW
Albrecth Baumer	28	22		21	10	5	12			 2
AutoRim	92									 8
Cannon	37			30		20				13
Con-Tek				100
Edge-Sweets/ESCO				150
Fecken-Kirfel	27	12	5	23	6	13	5			9
Fincorp	5	15	65	5	15
Frimo	30	20	5	20			20			5
Hennecke	20	14	1	21	9	7	17			11
IPF	21	24	1	22	20	12
Krauss Maffei
Modern Enterprises			20			80
OSV	10	85	5
Rim Polymers	0		15	5	0	30	40			5
Saip	45	6	27	9	6	7
Tec Mac	25	35	25	0	10	5
Companies which have not supplied this data do not appear in this table

  ‘We developed this head to give higher flow at the same size without jeopardising the quality of the foam. That concept was so good we were able to not only succeed in rigid and also introduced into flexible applications. We have decided to develop a multi-stream head with this concept, and we have four- and six-stream models.’ Derbyshire, UK-based AutoRIM has also had some success in the automotive sector in 2017. ‘We have just installed our 90th made-in-Britain Rim-Mix low pressure machine at Complexia in Derby,’ director Ann Hindson said. ‘Complexia makes parts for Jaguar Land Rover.’ AutoRIM also believes that Brexit appears to be having an impact on the psyche of UK customers, and is experiencing an upturn in business for technical support on all brands of production equipment, Hindson added that, ‘2017 was an interesting year with a strong finish, with 50% of our turnover in the final 3 months.’

Changing approach

Hindson said that this had taken the company forward with a very strong order book into 2018. ‘The year has started very well, largely driven by Brexit and customers showing an interest in UK based manufacture,’ she claimed. AutoRim is an agent for German machinery pioneer Hennecke, and the slabstock business at Hennecke had a change of approach in 2017, according to Miodrag Konstantinovic, head of sales for slabstock. ‘We are far more active, we have employed a number of people to travel the world, visit our customers and be present,’ he explained. In addition to actively visiting slabstock customers, Hennecke will also be strengthening its presence in the Asian market. ‘We will have a resident sales person in Southeast Asia. One of my team is going over there for a couple of years,’ he said. Looking at 2017, Konstantinovic said, ‘The market was good. Some old projects just came good. You work for a couple of years and you never know when the order is going to come. We were lucky in the second half of the year, and we got almost as much, maybe, as we would get sometimes in two years.’ How did Hennecke manage that burst of business in production? ‘That’s the challenge, we have a couple of discussions with the whole team about how we could deal with it,’ Konstantinovic explained. ‘We found some extra work is always possible, and some outsourcing is always possible, but on a very low level. We are specialists, no one else can build those machines, but there are some simple activities within the process that can be outsourced.’ He added that delivery times for conventional machine are between 8-9 or 10-11 months. ‘We are now at 10-12 months, which is virtually nothing 10-20% longer than usual],’ he said. ‘We have to wait to see what the second half of this year will show if all measures we have introduced are sufficient to fill this capacity. We are pretty sure we will manage it, with the usual level of slight delays in this business.’

In 2017, orders were spread around the world. ‘[We sold machines in] north and south America, south east Asia, China, India, eastern Europe, and only western Europe is slower,’ Konstantinovic said.

All round the world

Saip also had a good year. ‘Business was great, [in 2017] we were very busy, and we are very busy now, said Luca Ceresa, the compnay’s commercial manager for Europe, north and south America. ‘It was a tremendous year for our company, we have done a lot of new jobs in different fields.’

He added that the company has consolidated its presence in sandwich panels. ‘We now feel we are one of the leading companies, with the great help of our research and development centre Cedepa in Spain,’ he said. ‘We have sold lines worldwide.’

Ceresa added that his company has done business in South America, Mexico, the Middle East and China. He also expressed surprise that there were quotes – and some good orders – in Europe.

‘The market is quite mature, it is quite saturated,’ he said. However, Saip gained business because, he explained, there is still a tendency, especially for Italian companies, to set up new lines in Europe rather than in other regions.

‘At the moment we are setting up a new sandwich panel line in Spain, and we have sold one of the most advanced, state-of-the-art lines for industrial refrigeration, also in Spain,’ he said. Asked if this was due to the effect of having Cedepa in Spain, he confirmed, ‘Yes, for sandwich panels.’

Ceresa added, ‘For industrial refrigeration, it has been a Saip effect We sold a lot of machines for the oil and gas industries, including ship-born machines that insulate newly welded pipes.’

This was not the only large project in 2017. ‘We had a big order from France for a new fully automatic carousel with three robotic systems to inject, and load parts to make clinker façades,’ Ceresa said. He explained that these are used in the building industry, and are lightweight façades that appear to be made out of bricks and mortar. In such façades, he said, polyurethane is often used as a sealant.

‘We have consolidated our position in industrial refrigeration, and have duplicated our set up in Electrolux in Italy,’ he said. ‘Three years ago, that company ordered a new line for refrigeration. This is a very special fixture, with a drum system on both sides which can inject material with automatic mould changeover.’

Building sales

‘We’re doing a lot of new jobs in the United States,’ Ceresa added. ‘We are a little new in the market; we have been investing properly for 4-5 years. We have installed new industrial refrigeration lines in the US and Canada. This year, we are setting up a continuous line for a special siding product that is a brand-new application. We focus on tailor-made projects.’

Saip uses a distributor in the US to reach the market. ‘We have stock of spare parts and technicians here, so we are well-supported here,’ Ceresa said. ‘In the US, Saip is represented by Foam Supplies. We are happy with their support, and getting good results.’

In Asia, the company has supplied machinery for sandwich panels to China, Thailand and Korea. ‘We supplied a domestic refrigeration line in Pakistan 2017,’ he said.

The company is also doing well in North Africa. ‘The market for insulation is going well there,’ he added. ‘Algeria is doing quite well; at the moment it is the top country for us in North Africa  Service has always been very important, but nowadays it is a crucial part of all markets. We are always looking to improve our support to distributors, but without good service it’s impossible.’

Cutting and slitting firm Fecken-Kirfel also had a good year in 2017, said Francis Pinckers, vice president. ‘Last year we had a record year again,’ he claimed. ‘The demand is there, we have a lot of customer requests, but we also have a team of seven sales guys and we travel around the world whether or not we have projects. We travel a lot to visit customers.

This helps to maintain relationships and we are in regular contact with our customers.’

Cut to the chase

Pinckers said that having a wide range of machinery in his company’s portfolio was a great help to sales. ‘We have smaller machines and if you have a good customer they can buy a new machine every year,’ he said. ‘So you have to take care of the relationship’.

It is important that the customer is 100% happy with the machine and that the machine is running according to the customer’s specifications he added. ‘We are a little more expensive, but we give the best possible service that we can. We have to compensate for the price difference with good service and advice.’

Pinckers found that business was well distributed around the world in 2017. ‘We deliver machines worldwide, with a nice percentage and spread all over the world,’ he explained. ‘There is a nice spread of business across the world. Our biggest customer is maybe 5% of our turnover, and also the machines are spread into different sectors. We have about 20% in technical foams, and 30% that is polyurethane foam.

While other attendees at the Foamex show may have been worried about President Trump’s talk of imposing tariffs to protect US workers, Pinckers saw that as a possible opportunity.

‘In the short term,’ he said, ‘it could be good for business. He wants to reduce imports and create jobs for local people. People have to make products, and they may buy machines from us. There could be a [business] advantage.’

Esco/Edge Sweets said it had a solid year in 2017. The company had a new smaller slitting machine on its stand, the VPX vertical contour machine, at this year’s Foamex event. Its president, Rick Hungerford, said, ‘The design is deliberate. The vertical cutting height is 36" (1m) and the width is 60"(1.52m), so this fits a lot of technical materials such as viscoelastic and BASF’s Basotech, cellulose foams, and many different products.’

The new machine does not have powered upper guides, and so it is more affordable than the larger machine it was scaled down from.

This new model, which is only available in the US, will fit into a van trailer. ‘I could make one that splits but it starts getting expensive again,’ said Hungerford. ‘It is very easy to set up. Set the base, level it, put the two conveyors in, plug in the computers and turn it on. It’s that quick.’

Be cool

‘Business was really good in rigid panel and food service/cold chain equipment,’ said Ross Willoughby, at Con-Tek Machine. ‘There were a lot of sales from that and HVAC enclosures.’

The HVAC enclosures that house heating, ventilation and air conditioning units on the roofs of buildings have historically been insulated with glass wool or mineral wool, but there is a move towards polyurethane, and that is benefitting his company.

The St Paul, Minnesota-based business won 15 projects in the cold chain and food service industries in 2017. ‘The food service business just got going, with customers in restaurants and grocery chains,’ Willoughby said. ‘A couple of years before, it was big box stores like Target and Walmart that were our customers as they got into the food business. The cold chain moved to the front of the store. It was good for us.’

TecMac’s Massimo Moncherro, said that his company had seen success with block foam plants in 2017, and it had sold machines into the Czech Republic and Spain.

TecMac had success in supplying machinery to companies that themselves supplied automotive companies such as Mercedes, Audi and VW.

On the rigid side of the business, TecMac had had supplied a re-bond foam plant for rigid scrap.The rebonded foam makes Batons that support rigid panels in storage or transit. These recycled polyurethane batons replace softwood. ‘This can repay its investment in under two years,’ Moncherro claimed.

The company’s business in North America is handled through a distributor, he said. And, like many small machinery companies, it exports a great deal of its production. ‘We export to over 118 countries, and a local distributor is a must,’ he said.

About the survey

The survey was sent to more than 100 named individuals in the polyurethane industry and was completed between 12 February and 5 March.

How we calculate the UTIMcIndex

The UTIMcIndex is calculated by counting the number of companies in our survey that say they have specific plans. We take the sum of the number of companies who say they have specific plans, and then divide that number by the total number of respondents in the survey.

A factor is used to multiply that number. The factor accounts for how positive the action is. Acquisition and building new factories are the most positive and are multiplied by 10. Expansion is multiplied by seven; upgrading, three; consolidation is one and divestment is –10. All of these figures are then added together to produce the index.

 

...Other machinery views

Eduardo Muratyan, sales manager at  PU Mix Technologies,said that 2017 was ‘not bad’ for his company.

He said the highlight of 2017 was the number of automatic rotary machines that the company produced. ‘We make tailor-made machinery,’ he said. ‘We do not focus on one particular industrial sector. We have just finished one big machine for an automotive customer, in Mexico. We are talking about another new machine with our customer.’

In a nod to the diverse range of machines that many smaller polyurethane machinery makers can produce, he said PU Mix is working on a machine to manufacture polyurethane footballs for the French-headquartered sporting goods retailer Decathlon.

‘The product is very cheap, but the machine is not so easy to make,’ Muratyan said. ‘Because [the footballs are] cheap, we have to make a lot of parts. This means the machine must be highly automated. The customer comes to us with a part or an idea, and says we need to make this part. We make the machine to produce that part.’

One of the most complicated parts that his business has helped to make is a professional bicycle saddle. This has six layers with six different materials inside, he said. The saddles are priced between $300 and $500, said Eduardo.

‘Most of our machinery sales are in Europe,’ he said. In the US, PU Mix has used an agent for a year. This is working out very well, Muratyan claimed. ‘He has sold a couple of machines for us already and we are talking about building a filter machine for swimming pools in California,’ he said. ‘We are happy with what we’re doing now.’

So although the company does very little marketing, PU Mix will be present at UTECH Europe in Maastricht, Muratyan said.

Hyma’s CEO Kaj-Olav Granas said that business was growing ‘fastest in the UK at the moment. This mirrors the view of AutoRim’s Ann Hindson

Granas added: ‘A lot of companies are buying standard machines.’ That is happening, he said, at both new and existing customers. ‘Things have been extremely good for the past three years,’ he added.

The company has 3200 m² production space in Denmark and is 100% self-funding. ‘We expect to grow over the next two years,’ Granas added.

At AS Enterprises, business has grown by 10-15% each year of the past three years, according to its managing director, Anurag Puri. ‘There has been growth in new peel and profile machines,’ he said.

The Delhi, India, based company made a breakthrough in 2017. ‘We sold cutting and batch foam equipment to a small company in Chicago which makes mattresses,’ Puri said. ‘We have a reference now that potential clients can go to in Chicago and see a machine.’

Puri is optimistic about the future for the company. ‘The US and Canada are big markets,’ he said. ‘Sales will come. You have to trust the market. It is there, that is for sure.’