Down the Pipeline
To say that many Canadian extruders have had a tough year would be a gross understatement. Extruded product manufacturers have been confronted by the same recessionary pressures as the rest of the ind...
To say that many Canadian extruders have had a tough year would be a gross understatement. Extruded product manufacturers have been confronted by the same recessionary pressures as the rest of the industry, but their problems have been compounded by softness in traditional markets.
In Canada, the building and construction sector is still the largest market served by extruders. According to the 2008 Extrusion Benchmark Survey conducted by Canadian Plastics, over 70 per cent of plants were serving the construction market. And with the continuing housing crisis in the United States, Canada’s largest trading partner, many of the traditional markets for extruded products are depressed.
“The market’s a little soft right now,” noted Tom Brown, general sales manager at Cincinnati Milacron Extrusion Systems. “The vinyl siding market has been relatively soft for the last couple of years, and the same with window profiles.”
Industry experts agree that Canada’s housing market isn’t headed for a subprime mortgage crisis like the one in the U. S., but housing starts are expected to level off over the next year. According to the Canada Mortgage and Housing Corporation, housing starts will decline to 178,000 units in 2009. That’s above the average of less than 150,000 starts annually during the 1990s, but well below the average of over 225,000 annual starts between 2003 and 2007.
Additionally, several manufacturers of vinyl and wood plastic composite (WPC) decking products haven’t been able to weather the storm. Most recently, CPI Plastics Group Ltd., the Canadian manufacturer best known for the Eon line of decking products, announced that it had been unable to withstand the current economic crisis (see pg. 13).
Despite the torrent of bad news and bankruptcies coming out of traditional markets for extruded products, extrusion equipment manufacturers say that are seeing pockets of growth in several areas. And recent governmental measures may bring some much-needed relief to manufacturers with depressed work volumes.
STRONG PULSE IN MEDICAL
Although the current economic crisis has managed to take the wind out of most sectors, OEMs continue to see modest growth in the market for extruded medical prod- ucts over the next several years.
“Medical extrusion is going to continue to grow for the next year, and probably for the years to come,” said Antonio Pecora, vice president, sales and business development chief at downstream extrusion equipment manufacturer CDS Inc. “Our society is getting older, so you’ll always need more medical apparatuses, especially in medical tubing.”
Medical tubing may be the most common extrusion application that comes to mind, but manufacturers note that the process is required for several other applications. For instance, medical products such as catheters, blood bags and blood drains are made of extruded plastic.
“Small catheters and multilayer medical applications, that’s where we are finding our new applications,” added Bill Conley, technical sales at tooling manufacturer Guill Tool & Engineering. “Everything needs to be smaller, with thinner walls or more walls, and with smaller diameters. They could be using up to five materials to form five layers on one tube.”
For medical products, the focus is often on minimizing the amount of scrap and limiting the tolerances. For example, CDS’s Pecora notes that the company supplies high-precision vacuum tanks for medical applications.
“When they are doing complex procedures on patients, there are much tighter tolerances,” said Guill’s Conley. “Typically, they are trying to hold walls in tenths of inches.”
According to Wendell Whipple, vice president of pipe and profile extrusions at Davis-Standard, LLC, cleanliness requirements also mean that the equipment has stainless steel piping, with no copper or iron piping in any of the downstream equipment.
“And some of the materials can actually be very expensive, so you need to make sure that there is very little scrap,” continued Whipple.
Given the needs of medical extruders, suppliers often offer value-added services to ensure that the client’s specs are met. On the medical extrusion tooling end, “we do a lot of work with flow analysis,” said Conley.
Meanwhile, at Davis-Standard, a sophisticated lab line at the company’s Technical Centre in Pawkatuck, Conn. Is engineered to support new applications in medical tubing technology. The line is equipped for R&D processes ranging from screw design to the extrusion capability of specific polymers, materials such as FPVC, PEEK, PEBAX, fluoropolymers and other medical grade resins.
“The whole purpose was to show our customers that we do provide full systems for medical tubing,” noted Whipple, adding that the line is booked for use every week. “It gives them a chance to run some trials where they wouldn’t want to take up room in their cleanrooms.”
THIS AND THAT
Medical seems to be the standout when it comes to growth, but extrusion machinery and tooling suppliers are also seeing strength and growth in a number of other markets. According to one supplier, the packaging products market seems to be holding its own in the current economy.
“Another industry that would be on the move would be the oil and gas industry, we see an uptake in pipeline requests,” said Davis-Standard’s Whipple. “Gas and oil exploration is still going on.”
According to Whipple, there is a demand for high-density and coated pipe in the oil and gas industry, as well as multilayer structures with gas valves.
Guill has also seen significant growth in polyethylene pipe applications, which is a new market for the company. Guill has introduced a die design specifically for the market.
“It’s the specific industries of oil, water and gas that are seeding this market,” explained Conley.
Additionally, when it comes to custom applications, suppliers note that there are several pockets of activity.
“We are still getting some orders in custom extrusion, which is promising,” said Pecora at CDS. “It doesn’t mean that the market is totally dead, you just have to go looking for it.”
“There are pockets of activity out there,” agreed Brown at Cincinnati Milacron. “They are driven by the customer’s application, these are not projects where you would have an extruder right off the shelf.”
“Many of the projects that we are looking at are highly customized and, in some cases, involve combining the different technologies that Cincinnati Milacron has to offer, like extrusion and injection molding,” Brown continued. “We’re looking at how best to utilize the different processing technologies to achieve the customer’s highly specialized product.”
EYES ON INFRASTRUCTURE
Without a doubt, suppliers say, infrastructure-related projects are a big target market for extruded products.
“We’ve been getting into large diameter sewer pipes,” said Brown. “You go into cities around the country, and any time you see a water main break, that needs shoring up and replacing. And PVC is an excellent choice for that.”
With an aging infrastructure and a deepening recession, infrastructure-related products may soon present an opportunity for some manufacturers. Both the federal government in Canada and the new Obama administration in the U. S. have promised to invest in infrastructure projects. In January, Minister John Baird announced that the Canadian government would spend $7 billion on infrastructure.
But there is some doubt about whether that potential growth market will immediately materialize over the next year.
“With unemployment that high, capital expansions or replacements and improvements are not going to happen,” noted Brown. “The infrastructure is a large part of the market in the long run. The question is whether those kinds of projects will happen in 2009.”
CDS Inc. (Lachine, Que.);
Cincinnati Milacron Extrusion Systems (Batavia, Ohio);
Accuplast Solutions (Kirkland, Que.);
Davis-Standard LLC (Pawcatuck, Conn.);
Auxiplast Inc. (Sainte-Julie, Que.);
Guill Tool & Engineering Co. Inc. (West Warwick, R. I.);
(for B. C.) Equipment Resources NW Inc. (Portland, Ore.);
(all of Canada except B. C.) Ontor Ltd. (Toronto);
COURT APPROVES SALE OF CPI PLASTICS
The Ontario Superior Court of Justice has issued an order approving a sales process for the business and assets of the Mississauga, Ont.-based CPI Plastics Group Ltd., according to interim receiver and manager Deloitte and Touche.
Deloitte has also brought a motion to the United States Bankruptcy Court for the Eastern Division of Wisconsin for an order recognizing the Canadian order and the application of the sales process in the U. S.
According to the receiver, offers will now be sought for the assets of the company. “At this time there is no certainty as to the outcome of the receiver’s sales process,” said Deloitte. “It is unlikely that there will be any value for holders of CPI’s shares following the completion of any transaction resulting from the receivers efforts.”
The profile and film extruder was placed into receivership early in January, after the company announced plans to restructure its finances late last year. The company’s assets have since been put up for sale.