By Simon Robinson, editor
Polyurethane machinery survey 2014
Capital goods, like polyurethane machinery, are some of the most sensitive lead indicators of economic mood.
Polyurethane machinery is particularly sensitive because it is priced relatively modestly, compared to other types of machinery, such as presses or injection moulding machines.
Polyurethane equipment is often sold by small/medium-sized companies to other SMEs. All companies guard their capital jealously because one misplaced investment can be a matter of life or death for SMEs, which typically have restricted reserves of capital. So companies which may buy polyurethane machines are typically cautious.
However, the lower cost of some types of polyurethane processing machinery and often short build times can be an advantage for the sector.
It is possible for processors to win an order and buy a machine, or part of a machine for the job. This lies at the heart of the PU industry’s responsiveness to change and opportunity.
Some areas are clearly growing strongly at present. Anything to do with building insulation products are likely to be doing very well at the moment. This is because builders are gearing, or have geared, up for changes in legislation that force them to construct buildings with greatly enhanced levels of thermal insulation. This is driving machinery sales on both sides of the Atlantic.
Granted, the most optimistic people tend to respond to the opportunity of a telephone interview. There are a number of upbeat people in the industry serving thermal insulation markets with rigid foam machinery and the general industrial sector with cast elastomer machinery.
Low pressure resurgence
Philip Hindson of AutoRIM, a UK firm which is an agent for Hennecke and makes its own low pressure dispensing machinery, said: “The final quarter of 2013 saw the back of the recession. I can’t remember a time like the first quarter of 2014,”
AutoRIM is serving the machinery market for insulated building panels. These are growing strongly as people gear up for changes in UK building regulations in 2016.
Hindson believes the machinery sector is a good lead indicator for the economy. Machinery can be an item of discretionary spending he said. In 2013, this report was dominated by the feeling that companies were refurbishing machinery and mending equipment, Hindson added.
This year he is seeing clients buying low pressure dispensing machines.
AutoRIM makes machines for structural insulation panels. Hindson says his firm’s RimMix machines are selling well.
Speaking at the JEC exhibition in Paris, Eraldo Greco, commercial director of Impianti OMS, said: "In 2013, Western Europe, North America and Russia were all very good markets. We sold the first high speed line for flexible facing panels on the Russian market.”
OMS has been working with an experienced Russian polyurethane technologist and this was its first success in Russia in 2013.
The company offers a complete processing line starting from unwinding metal sheet to pack-and-stack of finished bundles of panels.
Greco explains that it seems like 95% of the current building insulation market in Russia is mineral wool.
“There's a lot of potential to attack this with higher performance polyurethane,” Greco said. His firm is one machinery company helping to produce highly insulating foam in a number of markets.
Although OMS had success in Russia in 2013, the firm continued to install lines in other European countries. Greco said: “We sold and installed a high speed lamination line at Recticel's plant in Bourges, France."
OMS also finalised new contracts for high speed lamination lines, including one for one of its existing French customers. In view of the increase in production demand, the companies - Knauf and Unilin System - decided to invest in new high speed lamination lines which OMS is going to install in the near future.
The ability to provide an end to end solution to insulated panel manufacturers came about after OMS recognised an opportunity. “Five years ago we opened OMS Automation, a fully in-house facility for the design and construction of dedicated cutting and handling systems for continuous and discontinuous panel lines.”
This enables the firm to offer to the end-user a turnkey solution designed and manufactured from a single source, starting from the unwinders of the substrates to the final packaging and stacking unit.
One key part of the process is the panel's cooling phase said Greco. This uses dedicated vertical cooling towers to efficiently let the boards achieve their final dimensions. Once the boards have done this they are further processed by automatic cutting and stacking equipment. “We can supply the full package” said Greco, “while other companies have to buy several parts of systems.”
He added that 2013 was also marked by the supply of three high speed lamination lines in the North American Market to important manufacturers of insulated boards.
Greco says that business is looking strong for OMS in the first half of 2014.
He added: “We want to reinforce our position in the market of metal-faced panels for industrial and cold store applications.”
In 2011, OMS founded a joint venture with CBM machines - a company which has a good reputation for roll-forming machines - to grow the market for insulated metal panels. The company called FIRST Srl has given good results in terms of sales volume, he said.
This combination has seen OMS machines installed at a garage door company Epco in the south of Belgium.
In 2013, OMS delivered its first such machine to CHI in Indiana, US, also HESCO in Saudi Arabia and Izocam - an insulated roof panel maker based in Turkey.
The company is involved in a range of products for the rigid insulated structural panel market, said Greco. These include a new plant in Quebec, near Montreal, with a possible start-up date in 2015.
For Belgium-based customer Unilin Systems, OMS installed a second line in the middle of France.
The Irish Group Xtratherm Ltd has also decided to invest in a new line at Seneffe, Belgium, in a bid to build on its continental presence, and supplement the existing production lines in UK and Ireland.
Additionally, there is a new line due to be shipped and installed in the second quarter of 2014. This will be in Cassà de la Selva near Barcelona and is the second line that OMS will proudly provide to the Spanish firm Poliuretanos, said Greco.
“We are riding the wave of the energy savings demand,” he added.
Austria’s Polytec EMC group, which builds low-pressure dispensing machinery, is unusual. the company has explicit plans to expand production at its site in Marchtrenk, Austria.
Roland Schuetz, Polytec EMC's sales manager, said: “Last year we had good sales and we realised that we need to increase production and personnel to be able to handle our increase in business.
“Our business is growing quite well and we have good market share in some markets.” He added that “there may be some countries where we are down, but overall the business is consistently growing.”
“The first quarter of the year  is looking very positive and we look forward to the next months.”
Schuetz said: “We are preparing for the future.”
Chris Summers, sales manager at StateMix of Canada, said: “Last year was one of the best we have had. We are now distributing in Europe.”
StateMix has appointed Dusseldorf, Germany-based Miex and has “increased sales by 15-20%." StateMix traditionally exports around 75% of production into the US and it appointed Miex because the company has “got to expand everywhere”, said Summers.
He added that Miex had helped his firm gain European Union certification for its range of cast elastomer machinery.
Alessia De Tongi said: "2013 was very positive and we sold lots of machinery for bedding and mattress packaging machines, little, if any, of this business went to Italian locations."
Also in Italy, Luca Lanticina - a consultant at GSL Progetti, said 2013 had been an even year for the company, which subcontracts for other Italian machinery makers.
In 2014, the company is studying its options for creating its own identity, gaining new certification and expanding its design, sales and marketing operations.
Progetti is a diversified company making moulds as well as equipment for refrigeration systems, bedding and insulated panels, said Lanticina.
There is considerable optimism in the US this year, said Ross Willoughby, vice president, finance at ConTek. He added that the second half of 2013 “was really good and busy." For his business, 2014 started out the same way he said with 'the big increase in food service applications.”
Food service, in this context, means chiller cabinets and the walk-in freezers that are being installed by large US retailers. The move is being driven by “big box stores and there is a lot of capital being invested at moment" said Willoughby.
Things are going well for the Minnesota-based firm, which supplies equipment to these markets, but there are no plans for expansion. “We like to do things in controlled way,” he said. The firm is planning to take on some people to help with peaks in demand, he added.
Philippe Jeantin, global head of machines division at polyurethane elastomer machinery maker Baule, said 2013 had built on a strong 2012 and that 2014 was looking good in prospect.
There had been generally good growth across a range of sectors in 2013, he said adding that the market for low-pressure machines for cast elastomers is quite small and has always needed firms “with a good understanding of the processes and chemistry and extensive experience in design and component selection.”
The market is characterised by a wide spectrum of clients from startup companies which need hand-in-hand guidance to help them buy the machine they need to the highly-sophisticated players who specify machinery in some detail, Jeantin said in a telephone interview.
Baule is considering building to increase production capacity and while Jeantin declined to say where or how much additional capacity it would be likely to add to production.
Rick Hungerford at Edge-Sweets said that 2013 had been a year of two very different halves. The first half of the year was very quiet in the US, he said. In the summer people may have taken longer breaks than normal. In Q3 2013, business picked up and the firm “slightly exceeded its budget in 2013,” he said.
Edge-Sweets became the US agent for Korea’s Ureatac in February after the two firms met at the K2013 trade show in Dusseldorf.
Hungerford said the relationship is complementary. Ureatac has good high-pressure mix head technology and ESCO has good access to the US market for polyurethane machinery. This also gives ESCO access to good quality high-pressure mix-heads and could see the firm enter the US market with a range of machines in the next year or so, Hungerford said.
He added that in 2013 he had launched a new website PU-RIM.com which is aimed at promoting the relationship. “We’ve planted a seed with the website and it will take a few years to grow into a tree,” Hungerford said.
Saip president Walter Pozzi said 2013 had been a similar year to 2012 in terms of sales. The year was “as good as expected." However, he was very upbeat about the prospects for 2014 during a telephone conversation.
He said: “The 2014 forecast is very positive. We've already secured a significant amount of orders and we can only exceed 2013. We are quite satisfied.”
Most of the business is in insulation panel machinery and is coming from eastern Europe and the former Soviet Union, he said.
"There has been an increase in the number of enquiries from the UK and Northern Europe as well,” he said. There is stiff competition, he said and “the market is still tough, the competition is very, very tough,” but “that is our business”.
Machinery by Numbers
Looking at the average machinery sales by type between 2011 and 2013 (Chart 1) there is a marked rebound in a couple of areas compared to the 2012 survey. Sales into the elastomer sector were much higher in 2013 at an average of just over 16 units compared to just under four in the 2012 report and just under six in the 2011 survey.
The drive for greater energy-efficiency in building and construction as well as the chill chain was shown by strong growth in the rigid panel sector amongst the survey's respondents.
In this area, which collapsed in 2012 according to the responses of firms at that time, the big year for supply was 2011 with an average of 10 machines per respondent in the sector. In the 2013 survey, each respondent in the sector saw sales of just under eight machines.
Additionally, the rigid block market for machinery more than doubled, according to respondents, to around four machines per respondent from under two. Rigid appliance machinery sales were also stronger. However the rigid spray sector was flat compared with 2012 for respondents, and reaction injection moulding, storage and handling machinery sales were down along with slabstock sales.
Paradoxically, the refrigerated appliance sector is the least likely to be named as a high performer if companies are asked which application sector is experiencing high machinery sales at the moment. (Chart 4).
The general industrial sector and automotive parts application areas are experiencing higher levels of purchasing than was the case in 2013. In furniture and bedding and in building and construction, purchasing levels are below those of 2013 according to respondents.
In the 2013 survey, the fastest-growing region was the Middle East/Africa,(Chart 2) however, central eastern Europe, which had been consistently strong in 2011 and 2012 surveys, closed the gap. Western Europe and South East Asia both saw improvements in sentiment in 2013 with a higher proportion of respondents suggesting they were the regions growing faster in 2013 than in 2012.
North America is the largest region for sales amongst respondents, followed by western Europe which rocketed back up from a disappointing sales level in 2012 when it ranked below the Middle East and Africa, central Europe and South-East Asia.
The regions with the biggest falls in sales were central and eastern Europe, South America where there were relative collapses in sales volumes reported by respondents. Central Europe and the Middle Eastern markets may have fallen as more attractive markets in the Eurozone came back on stream after a hard period in 2013. Sales to China have steadily declined between 2011 and 2013 surveys. In 2011, sales to China were on par with the whole of South East Asia. Now, South-East Asia is relatively twice the size of China in sales terms.
Optimism starts to grow
Report respondents were slightly more optimistic in their replies in 2014 than they were in 2013. According to the UTImcIndex, optimism increased from 4.12 to 4.21 on our scale. This was due in part to firms looking at increasing capacity. This is the first time in three years’ of responses that a machinery firm has made such a commitment in the survey.(Chart 5)
One respondent is looking to buy more capacity through acquisition. Â On the whole though, respondents to the survey are less likely to be trying to expand, upgrade or consolidate their operations than they were in their responses in 2013.