Plastics Machinery and Moulds

• Introduction
• Size and Structure of the Industry
• Trade
• Regional Distribution
• Canada-U.S. Comparisons
• Technology
• Human Resources
• Prospects for the Future

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Introduction

This profile examines two related subsectors that are parts of the integrated plastics sector: manufacturers of plastics processing machinery and manufacturers of moulds and extrusion dies. Both are both necessary in order to form plastic products. The types of machinery and moulds that are used are customized to the nature of the plastic product to be produced.

The machinery subsector consists of manufacturers of machines and auxiliary equipment used to produce a wide range of plastic products, using a variety of different processing technologies. The main processes for making plastic products are injection moulding, extrusion, blow moulding, thermoforming, and rotational moulding. The main end-use markets for plastic products are packaging, construction, and automotive, with smaller consumption in electrical and electronic components, furniture, and a wide variety of other end uses.

For the most part, companies in the mould subsector specialize in this product area, although there are a few firms that make both machinery and moulds. For each plastic product, a unique mould must be designed and manufactured that meets the needs of the final customer. The same machine can be used to produce a variety of plastic products simply by changing the mould. In many cases, the mould is proprietary to the plastics processor. In other cases, the mould is owned by the final customer, and it is provided to the plastics processor under a contractual arrangement to make parts on a custom moulding basis.

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Size and Structure of the Industry

In 2008, the machinery subsector comprised 94 establishments, employed 4 600 people and generated shipments of $920 million. The mould subsector was made up of 524 establishments, with 7 200 employees and shipments of $1.2 billion. The current global recession became acute in the latter half of 2008, significantly reducing demand for many commodities. Weak demand has continued into 2009 so output for the current year is also expected to be adversely affected.

The trend lines for shipments are shown in Figure 1. The data has been adjusted to a constant dollar basis in order to show the true underlying performance, factoring out price-related influences. Both subsectors showed strong growth in the early 1990s. For the past decade, shipments by the machinery subsector have remained largely flat, while shipments from the mould subsector have continued to grow, albeit at a slower rate than in the early 1990s. For more detailed statistical information see these tables.

Figure 1 — Data Table

In the period 1990–1999, growth in both subsectors was driven by the rapid development of new plastics applications and through substitution for other materials, particularly in the packaging, construction and automotive industries. Slower growth in recent years is due to factors like the rise in the value of the Canadian dollar relative to the U.S. dollar, increasing energy costs, and the emergence of significant competition from developing countries, particularly China.

The Canadian manufacturers of machinery are typically small and medium-sized companies. Companies in this subsector have become highly specialized in order to compete in domestic and international markets. Canadian machinery manufacturers have gained an international reputation in the production of high quality injection moulding, thermoforming machinery, blown film extrusion systems, and extruders for corrugated pipe and other plastic profiles.

In the Canadian mould making subsector, firms also tend to be small to medium-sized but there are a few relatively large firms. Of the top 10 North American mould makers in 2007, six were Canadian companies with Husky Injection Molding Systems, Wentworth Technologies, and Omega Tool ranked first, second and third.

A more comprehensive list of major firms can be found at the end of this profile.

Auxiliary production, material handling, and decoration equipment are also produced in Canada and these firms compete internationally. Examples of this category include dryers, loaders, feeders, granulators, shredders, chillers, sealer-welders, robots, extruder screws and machine controls. (Most of these auxiliary equipment and parts are not included in the data for plastics machinery.)

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Trade

Both subsectors are highly export oriented.

Exports by the machinery subsector in 2008 were $900 million, which represented 98 percent of total industry output. The main export markets were the United States (54 percent), Luxembourg (7 percent), China (6 percent), Brazil (3 percent) and Mexico (3 percent). Imports in 2008 were $478 million. Again the United States was the largest source (51 percent), followed by Germany (11 percent), France (7 percent), Japan (7 percent), and China (5 percent).

In 2008, mould exports totalled $833 million, which represented 67 percent of shipments. Most of the exports went to the United States (77 percent), followed by China (6 percent), and Mexico (4 percent). Imports in 2008 were $390 million. The main sources were the United States (50 percent), Germany (16 percent), and China (10 percent).

The long-term trade trends are shown in Figures 2 and 3.

Figure 2 — Data Table

Figure 3 — Data Table

In the context of global trade, the largest exporting countries in 2007 for machinery were Germany, Italy, Japan, and the United States. These four countries accounted for 52 percent of global exports. Canada ranked in 9th position. For moulds, the largest exporters were Japan, China, Germany and Italy. These four countries were responsible for 41 percent of total exports. Canada ranked 6th. In 2007, China was the largest importer of machinery, followed by the United States. For moulds the same countries occupied the top two positions, but the order was reversed.

As Canada continues to negotiate bilateral and multi-lateral trade agreements around the world, machinery and moulds are usually an area of export interest for which Canada seeks improved access into foreign markets.

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Regional Distribution

On the basis of number of establishments, 77 percent of machinery firms and 71 percent of mould makers are located in Ontario. The next largest concentration is in Quebec, which accounts for 13 percent of machinery and 20 percent of mould establishments. On the basis of shipments, however, the industry is much more concentrated in the province of Ontario, accounting for 95 percent of machinery shipments and 86 percent of mould shipments.

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Canada-U.S. Comparisons

Gross Margins

Figures 4 and 5 show gross margins (defined as value added minus production salaries divided by shipments, and used as a proxy measure for profitability) for the machinery and mould subsectors in Canada and the United States.

Figure 4 — Data Table

Figure 5 — Data Table

Labour Productivity

Salary levels in the two countries are shown in Figures 6 and 7. Productivity, as measured by real value-added per employee, is shown in Figures 8 and 9.

Figure 6 — Data Table

Figure 7 — Data Table

Figure 8 — Data Table

Figure 9 — Data Table

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Technology

Canadian machinery manufacturers and mould makers have made extensive and creative use of electronic commerce. Mould makers have used their websites to convey information, to promote electronic collaboration and to speed the design process. It is a way for an individual company to distinguish itself from the other precision machining companies. Machinery companies are now able to offer remote support of their equipment via the internet and so enhance the value of their product.

Canadian machinery manufacturers compete internationally, but generally within limited product and size ranges. The vast majority of the machinery is custom-engineered, with particular emphasis on quality, performance, and customer service.

Factors that determine the competitiveness in both subsectors include a demonstrated capability to design and build high-quality equipment, modern production facilities using advanced manufacturing technologies, skilled work force, price, commitment to customer service, and delivery time.

Canadian producers in the mould subsector have a strong position in a wide range of injection moulding and blow moulding capabilities. They are able to sell into the U.S. market because of their strong technical skills, high quality, specialization in specific mould types and relatively short delivery times. Even though it appears that moulds are quickly becoming a commodity, one of the most essential elements within this subsector is still the fostering of a close business relationship between the mould makers and the plastics processors. This relationship is of particular importance where the processor requires a mould for a proprietary product.

In addition, some mould makers act as project managers of the entire design and testing process of the moulds. This turnkey service differentiates these mould makers from their competition and encourages longer-term relationships with their customers.

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Human Resources

The use of advanced manufacturing technologies in both subsectors requires highly skilled machinists and technicians. In the recent past, there have been shortages in these skilled trades, particularly in the mould making subsector. With the current economic slowdown and several key bankruptcies, the demand for skilled labour has eased somewhat, but it is expected that this situation will reappear once demand for machinery and moulds rebounds.

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Prospects for the Future

Despite the current recession, in the longer-term the plastics industry is regarded as an industry that will continue to grow faster than the overall global economy, so the demand for machinery and moulds is expected to continue to show solid growth. The marketplace is very competitive, however, and becoming more competitive with the emergence of serious producers in developing countries. Canadian manufacturers will need to continue to refine their strategic plans as they develop and implement new technologies, maintain existing markets, and exploit new market opportunities.

There is concern that developing countries, and especially China, will capture large segments of current markets served by Canadian and other western producers, driven largely by advantageous production costs. This is already occurring in some areas, and affected Canadian firms need to protect their competitiveness either through new technologies or by redirecting their product focus. While China is a threat, it also represents opportunity. This opportunity can take the form of direct export — China imports three times as many machines and twice as many moulds as it exports. It can also take the form of developing supply chains that include China components as a means of lowering overall production costs.

For further information concerning the subject matter contained in this analysis, please contact: 

John Margeson
Resource Processing Industries Branch
Industry Canada
235 Queen Street
Ottawa, Ontario K1A 0H5
Telephone: 613-954-3016
Fax: 613-952-8988

Mike Breen
Resource Processing Industries Branch
Industry Canada
235 Queen Street
Ottawa, Ontario K1A 0H5
Telephone: 613-941-6307
Fax: 613-952-8988

Major Firms

Extrusion — Blown Film

• Alpha Marathon
• Brampton Engineering
• Macro Engineering

Extrusion — Corrugated Pipe

• Corma

Injection moulding

• Husky Injection Molding

Thermoforming

• GN Plastics

Major Canadian Mould Makers

Blow Moulds

• Aar Kel Moulds
• Compact Mould
• Garrtech
• Ryka Molds
• Wentworth Mold

Cap and Closure Moulds

• StackTeck

Extrusion Dies

• Aar Kel Moulds
• Active Burgess
• Reko
• Wentworth Mold

Hot Runners

• Husky Injection Molding Systems
• Mold-Masters

Injection Moulds

• Aar Kel Moulds
• Active Burgess
• AP Plasman
• BTM Tooling
• Cavalier Tool
• Concours Mold
• DBM Reflex
• Husky Injection Molding Systems
• Lamko Tool and Mold
• M2M International
• Omega Tool
• Redoe Mold
• Reko
• StackTeck
• Top Grade Molds
• Valiant Mold
• Weber Manufacturing
• Wentworth Mold
• Windsor Mold

Rotational Moulds

• Weber Manufacturing

Thermoforming Moulds

• Cavalier Tool
• Ontario Die