Engel cites drastic decline in global machinery market

DUESSELDORF, Germany—Economic uncertainty and unresolved global issues are dragging down market volumes in the injection molding industry worldwide, according to Engel executives.

During an Oct. 16 news conference on the first day of K, the Austrian injection molding machinery maker said the impact of punitive tariffs and sanctions, a continuing lack of Brexit clarity, and an ongoing debate concerning regulatory tariffs and diesel driving bans as the biggest drivers leading both consumers and business decision-makers to delay purchases and investments.

"The declines are drastic and noticeable worldwide," said Christoph Steger, chief sales officer of Engel Holding GmbH.

Steger said the company is seeing an inconsistent picture across industries. Technical molding, the company's second-largest contributor to sales, is "on budget," he said, and the company is experiencing continued growth in medical technology.

But the automotive industry—the largest of Engel's five business units—has been the hardest hit.

"There is, within the (plastics machinery) industry, a significant decline in the automotive industry," Steger said, pointing to the monthlong United Auto Workers strike in the U.S. that has cost General Motors Co. millions of dollars a day from lost production. The union and GM had reached a tentative settlement Oct. 16.

Engel's recent report of a global decline, especially in automotive, echoes what the Austrian company previously had warned of earlier this year in an annual earnings report.

Globally, all regions are hurting from a slowdown in the automotive industry, but China and German-speaking countries in Europe especially have been impacted. Those two regions contributed the largest share of Engel's 6 percent sales growth for the 2018-19 fiscal year that ended March 31. Sales for that fiscal year were around $1.78 billion.

Steger said the uncertainty of global issues, mainly political, are making forecasting for the year "very difficult," but for the company's current 2019-20 fiscal year, he is anticipating significantly lower sales.

Sales for the current year are projected to decline by 19 percent to near $1.45 billion.

Opportunity in the downturn
But new market opportunities—as a result of more digitalization, the disruption and transformation of the automotive industry and a growing focus on the circular economy—could soften the negative impact, the company told press attendees.

Though the plastics industry has increasingly come under pressure, the company reported its packaging business unit has been nearly unaffected by bans on single-use plastics.

"We call it 'plastics bashing' here," Steger said, while acknowledging that plastics pollution is a very serious problem that deserves the industry's attention and should not be neglected.

In regard to the circular economy and recycling, specifically, he said it is "not an obstacle" for the plastics industry, but an opportunity.

Engel's top executive, CEO Stefan Engleder, also spoke of the company's commitment and responsibility in the circular economy.

"It is of utmost importance that everybody contributes to close the circle. … We are part of the problem, of course, but we are also part of the solution," said Engleder, adding that if everyone works together—this includes the plastics industry, consumers and governments worldwide—"real solutions, concrete solutions" can be found.

In other news, the company's 2020 investment program is nearly complete. The strategy involved pumping about $445 million into capacity expansions and upgrades across its sites, including the large-scale production plant in St. Valentin, Austria. There, Engel is building a customer technology center and expanding the Center for Lightweight Composite Technologies.

Earlier this year, Engel opened a customer center at its headquarters in Schwertberg with about 18,300 square feet of production space. The center is connected via network to Engel's other technology centers in the U.S., Mexico and China, and is equipped with the full Inject 4.0 portfolio.

In automotive, future-focused trends such as new mobility, autonomous driving, car sharing as well as a gradual global ramp up of electric vehicles are also carving out opportunities for plastics, composites and injection molding applications, the company said. This includes integrated smart surfaces and an increasing demand for components for vehicle electronics such as connectors and seals.

As more electronics go into vehicles, innovations in lightweighting becomes more important, too.

From digital to real

Engel also disclosed its collaboration with Autodesk Inc., a global 3D design, engineering and construction software firm, on a product called Sim Link.

Sim Link, which will be available globally to both Engel and Autodesk customers next year, is designed to connect the simulation with the real injection molding process.

At K, Engel is demonstrating this by showing how the results of simulations performed using the Autodesk's Moldflow simulation software can be transferred to Engel's CC300 control unit. The optimized process and measurement data can then flow back to the machine for use in the simulation.

"They are very keen on this product," Engleder said of early feedback from customers.

With Sim Link, the company said, the optimized simulation parameters can be converted into a setting data record, or recipe, that can be used directly in the injection molding machine. The process parameters and measurement results can also be imported from the injection molding machine back into Moldflow.

This also allows unfavorable process settings to be analyzed, enabling adaptations to be implemented more rapidly and precisely, the company said. And, as a result, it is becoming a more affordable competitive advantage for small injection molding companies, too.