Plastics

Plastics Machinery and Moulds

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.

Return to Top of Page
Top of Page


Size and Structure of the Industry

In 2009, the machinery subsector comprised 96 establishments, employed 3,750 people and generated shipments of $920 million, reflecting the impact of the recession as this represents a drop of 14 percent in shipments and 14.2 percent in employment from 2008 levels. The mould subsector was made up of 502 establishments, with 5,300 employees and shipments of $790 million representing a drop of 25 percent in shipments and 22 percent in employment from 2008 levels.

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. During the past decade, shipments by the machinery subsector remained largely flat until last year when they fell sharply, shipments from the mould subsector grew, until 2005 when a sharp drop in shipments started. For more detailed statistical information, see the Statistics page.

Figure 1: Shipments (millions of 1997 constant dollars)
Figure 1: Shipments (millions of 1997 constant dollars) [Description of Figure 1]

The slower growth from 2000-05 resulted from factors such as a slow-down in global economies following September 2001, 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. In the last 18 months firms in both categories have been undergoing transformation from production and growth mode to survival mode as the impact of the global recession has hit home.

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 including: Husky Injection Molding Systems, Wentworth Technologies, StackTeck Systems, Omega, Active Burgess, Reko, Valiant, Concours, Windsor , and Build-A-Mold. Of the top 10 North American mould makers in 2010, six were Canadian companies with Husky and Wentworth ranked first and second. Canada has a reputation for being world-class suppliers of moulds utilizing leading-edge technology.

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.)

Return to Top of Page
Top of Page


Trade

Both subsectors are highly export oriented.

Exports by the machinery subsector in 2009 were $722 million, which represented 92.5 percent of total industry output. The main export markets were the United States (54 percent), China (6 percent), Luxembourg  1 (7 percent), and Mexico (4 percent). Imports in 2009 were $360 million. Again the United States was the largest source (51 percent), followed by Germany (12 percent), Italy (10 percent), and Japan (7 percent).

In 2009, mould exports totalled $682 million, which represented 78 percent of shipments. Most of the exports went to the United States (87 percent), followed by Mexico (3 percent) and Germany (1 percent). Imports in 2009 were $336 million. The main sources were the United States (72 percent), China (4 percent) and Japan (4 percent).

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

Figure 2: Trade - Machinery (percent)
Figure 2: Trade - Machinery (percent) [Description of Figure 2]
Figure 3: Trade - Moulds (percent)
Figure 3: Trade - Moulds (percent) [Description of Figure 3]

In the context of global trade, the largest exporting countries in 2009 for machinery were Germany, Japan, Italy and the China. These four countries accounted for 54 percent of global machinery exports. Canada ranked in ninth position. For moulds, Canada was the seventh largest exporter, trailing China, Japan, Republic of Korea and Germany. These four countries were responsible for 43 percent of total exports. In 2009, China was the largest importer of machinery, followed by the United States. For moulds, the U.S. has slipped to third behind China and Mexico.

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.

Return to Top of Page
Top of Page


Regional Distribution

On the basis of number of establishments, 75 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 21 percent of mould establishments. On the basis of shipments, however, the industry is much more concentrated in the province of Ontario, accounting for 96 percent of machinery shipments and 90 percent of mould shipments.

Return to Top of Page
Top of Page


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. The machining sector in Canada has consistently outperformed the U.S. industry. For moulds, margins were higher in Canada until 2005 after which the trend reversed. Between 1997 and 2004, gross margins declined slightly for the machinery subsector, and remained essentially constant since that time. The mould making subsector, after reaching a peak in 2003, has declined since that time.

Figure 4: Gross Margin - Machinery (percent)
Figure 4: Gross Margin - Machinery (percent) [Description of Figure 4]
Figure 5: Gross Margin - Moulds (percent)
Figure 5: Gross Margin - Moulds (percent) [Description of Figure 5]

Labour Productivity

Salary levels in the United States had generally been higher than those in Canada for both subsectors (Figures 6 and 7) until 2005. Since then salaries in Canada have been higher. However, since 2005 both subsectors have dropped the salary levels in the U.S. explaining the rise in margins. Productivity, as measured by real value-added per employee, has tended to be lower in Canada than in the United States (Figures 8 and 9).

Figure 6: Average Salaries - Machinery (thousands of constant 1997 Canadian dollars)
Figure 6: Average Salaries - Machinery (thousands of constant 1997 Canadian dollars) [Description of Figure 6]
Figure 7: Average Salaries - Moulds (thousands of constant 1997 Canadian dollars)
Figure 7: Average Salaries - Moulds (thousands of constant 1997 Canadian dollars) [Description of Figure 7]
Figure 8: Value-added per Employee - Machinery (thousands of constant 1997 Canadian dollars)
Figure 8: Value-added per Employee - Machinery (thousands of constant 1997 Canadian dollars) [Description of Figure 8]
Figure 9: Value-added per Employee - Moulds (thousands of constant 1997 Canadian dollars)
Figure 9: Value-added per Employee - Moulds (thousands of constant 1997 Canadian dollars) [Description of Figure 9]
Return to Top of Page
Top of Page


Technology

Canadian machinery manufacturers and mould makers have made extensive and creative use of electronic commerce. Mould makers have used their web sites 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 adaptable and flexible 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.

Return to Top of Page
Top of Page


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.

Return to Top of Page
Top of Page


Prospects for the Future

Despite the recent 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.

Recent developments in several key markets have reduced output, thus directly impacting Canadian firms. Their focus has shifted to exploring and expanding into new lines of business not previously thought of as conventional markets. Canadian firms and associations have changed their mindsets and continue to demonstrate their ingenuity and resilience.

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.

Return to Top of Page
Top of Page


Major Firms

  • Extrusion — Blown Film
    • Alpha Marathon
    • AR Engineering
    • Brampton Engineering
    • Macro Engineering
  • Extrusion — Corrugated Pipe
    • Corma
  • Injection Mulding
    • 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

Further Information

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

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

1 Most of the exports to Luxembourg are probably intra-company transfers by Husky Injection Molding Systems. (Return to text.)