LEARNMORE

 Shop & Business Management Zone

GETMOREINFO

For more information visit the Mountaintop Economics & Research, Inc. MMT Online Showroom.

MMTTOOLS

 Print This Article

Activity levels for many segments of the moldmaking industry tend to taper down during the summer months. Following the gains registered in the late-Spring, business for North American moldmakers held mostly steady in July and August. Based on the latest survey for our Mold Business Index (MBI), the MBI value for August was 47.7. This is a 2.3 percentage point decrease from the July value of 50.0. Small gains in New Orders and Production offset modest declines in Backlogs and Export Orders. The rise in Materials Prices continued, but Mold Prices also posted a small gain. Future Expectations were cautiously optimistic at 61.4 in August.

Business levels trended downward in the early months of 2006 then things stabilized over the summer. The forecast calls for improvement over the next few quarters, but uncertainties about war in the Middle East and energy supplies remain a concern.

Global demand for molded products is expanding, and the capacity utilization rates for most sectors of the North American injection molding industry are rising. These factors will spur increased capital investment for new injection molding machines and tooling during the next few quarters. Our forecast calls for a trend of gradual improvement in moldmaking activity through the remainder of 2006 and into 2007. The downside risk to this forecast is the continuing uncertainty stemming from the war in the Middle East and its impact on energy prices.

The crucial sub-index for New Orders of molds was 52.3, which means that the amount of new business in August increased a bit when compared with the previous month. Future gains in the total MBI depend on steady increases in new orders of molds. Production levels also increased modestly, as the latest Production sub-index was 52.3.

The Mold Prices sub-index for August was 54.5. This means that the prices received for new molds were again higher on average in the latest month. But the prices paid for materials also increased, as the latest sub-index for Materials Prices was 72.7. The Future Expectations sub-index for August was 61.4. This is a positive reading, but it is significantly lower than the 69.0 recorded in the previous month.

The most-cited problem confronting North American moldmakers at the present time continues to be offshore competition, particularly from China. But there also were several mentions of a shortage of good people in the industry. Other problems receiving multiple mentions were: the struggles of the Big 3 automakers; the high costs of materials and energy; increasing pressure on cash flow and delivery terms; and ill-conceived U.S. trade policies.