Canadian Extruders: A Profile

Building on previous results, we present the third annual Extrusion Benchmark Survey — the best snapshot of how Canada’s pipe and profile extruders are faring right now. now If you’re looking for info on purchasing intentions, markets served, average plant sizes — or virtually anything else relating to the Canadian extrusion industry — we’ve got it here.

If you’re anything like us, you’ve had it up to here with hearing about what a difficult year 2009 was. Yes, but…the fact remains that it was a tough one — the first recession in Canada in almost two decades. And as we all know, virtually everyone making a living in the plastics industry struggled with downturns in key markets.

So, how did Canada’s extruders hold up in the face of this almost unprecedented challenge? That’s the question that the third annual Canadian Plastics extrusion survey tried to answer. How well have we answered it? We’ll let the facts speak for themselves. Read on.

The Basics

When asked how many employees worked at their plant, answers from the survey respondents ranged from one worker to 200, with the average shop employing approximately 66 workers, compared to a 69-worker average in 2009 and a 134-worker average in 2007. It should be noted that one respondent to the 2007 survey reported having approximately 800 employees at their facility — there was no sign of anything approaching that level this time around.

Of this year’s respondents, 56.3% were involved in profile extrusion, 37.5% were involved in pipe extrusion, and 25% in tubing extrusion. Additionally, 43.8% of respondents said that they were involved exclusively in proprietary extrusion, 12.5% were involved in exclusively custom extrusion, 18.8% were involved in captive with some custom extrusion, and 25% were involved in custom with some proprietary extrusion.

The vast majority of respondents — over 81% — reported that their shops were involved in the construction and building market, which represents an uptick from the 71% involved in these same markets in last year’s survey. Also, exactly 50% of this year’s respondents are molding consumer goods, and 12.5% are involved in the automotive industry.

All of the respondents this year said that their shops are involved in rigid PVC extrusion, while 76.9% are involved in making wood-plastic composites.

Over 55% of those surveyed this year said that their plant already has either ISO or QS9000 certification, with 7.1% saying that certification was currently in process. The vast majority of respondents (68.8%) are located in Ontario; of the remainder, 12.5% are in Quebec and 6.3% each in the provinces of New Brunswick, Manitoba and Alberta.

Machinery & Purchasing

When asked about the number of extrusions they have at their plant, 40% said that they have between one and five machines, which is up from the 15% with between one and five in last year’s survey. Thirty-three per cent of respondents this year have between six and 10 extruders, 26% have between 11 and 25, and only 6% had 26 machines or more. The vast majority (81.3%) were working on single screw extruders, but several respondents (31.3%) also reported having counter-rotating machines, and 12.5% had co-rotating twin screw units.

Here’s some bad news for extruder suppliers: on average, 80.5% of the machines owned by those surveyed are five or more years old. This compares with only 70% of the machines from the 2008 survey being five or more years old. In other words, there don’t appear to have been many new extruders snapped up within the past year — not surprising, given a worldwide economic meltdown. Also, 40% of respondents this year said that all of their machines had hit the five-year-old marker.

Not surprisingly again, almost three-quarters of respondents (73%) said that their shops had no plans to buy a new extruder during 2010. When asked if they were more likely to buy a complete line — including extruder, tooling and downstream equipment — or a unit extruder, 75% of respondents opted for a complete line. Respondents were split right down the middle, though, on the question of whether new equipment would replace old machinery or be used to add capacity. Answers to another question also mirrored the tough year just that’s just passed: sixty-six per cent of respondents said that their plants had not purchased new extruders in 2009. Similarly, 64% hadn’t purchased any new auxiliary equipment in 2009, and 57% hadn’t purchased any downstream extrusion equipment, either.

But here’s a pleasant surprise: despite the e conomic f ree f all of the p ast 12 months, the average machinery utilization rate among the respondents was 71% — a falloff of only 2% from the 73% reported in 2008, and a much better result than the 62% utilization rate reported in 2007.

FINDINGS ON FINANCES

In 2008, extrusion firms allocated an average of 4% of their annual budget to employee training and 9% to product research and development. How did these totals hold up during the tough times of 2009? Money set aside for employee training fell among this year’s respondents, but not by much: down from the 4% mentioned above in 2008 to 3.5% in 2009. Research and development spending, meanwhile, was much harder hit: just 4.9% of spending on average per shop in 2009, compared to the 9% already mentioned for 2008.

Based on this year’s survey results, the average hourly wage of the average machine operator at the average Canadian extrusion shop fell slightly over the past year, but probably not enough to be noticed: the average operator is paid $16.08 an hour, excluding benefits, compared to $16.67 in 2008.

If you’re looking to learn by how much orders to extrusion facilities slowed down in 2009, look no further than this figure: the average extruder consumed 9.34 million lbs. of resin during the past 12 months — down from 15.2 million lbs. among the respondents in 2008.

Overall, looking at estimated plant revenues, the average extrusion shop will bring in projected revenue of approximately $8.8 million in 2009. Believe it or not, this is an improvement on the $8.4 million average in 2008 — although it should be noted that the 2009 total was skewed upward by one extruder that reported raking in a whopping $40 million during the past year. Absent this one shop, it’s probably accurate to say that profits for the majority of shops are slightly down, although by how much is hard to say.

LOOKING ABROAD

As we all remember from our geography lessons, there’s a great big world out there beyond the borders of Canada. How are extruders faring when it comes to doing business, or establishing a presence, outside our fair country? Exactly 50% of survey respondents said that their facilities ship less than 25% of products outside of Canada. Twenty-five per cent of respondents shipped between 26% to 50% of goods beyond our borders and another 25% shipped over one half of their products outside of Canada.

When it comes to setting up an actual presence outside of Canada, 69% of respondents have a presence in the U.S., 23% in China, 23% in Europe, and 15% in India. Survey answers reveal that there’s more than one way to reach these foreign markets, too. Sixty-six per cent of extruders said that they have a foreign sales office, 66% also have a manufacturing facility, 33% have a joint venture with a local firm, while 11% have so-called “sister facilities”.

And it seems that most of the extrusion shops without a foreign presence are quite content to keep it that way: fully 83% of them indicated that they have no plans to enter these markets. The remaining 16% reported having at least tentative plans to go global within the next 12 months.