Slight uptick in hourly rates for 2005.

* Custom injection molders' machinehour rates were mostly flat last year, though there were signs of a rising trend in the second half. According to survey responses from 117 custom plants, average hourly rates rose 0.6% from June to December after a similar increase in the first half. The cumulative increase for the year was just over 1%.

In both survey periods, almost 80% of respondents left their hourly rates unchanged. But in the second half, 17% raised their rates (by an average of 8.5%) while only 4% lowered them, a 4:1 ratio. That's stronger evidence of a trend than in the first half, when 14% raised rates and 10% dropped them (see table below). Last year was the first time since 2001 that more respondents raised rates than lowered them in any six-month period and was the first time the percentage raising rates reached double digits. It was also the first time that the average change--though small--was positive rather than negative in any sixth-month period. Apparently, it took five years for custom molders to be able to escape the deflationary impact of the 2000 recession and the economic shock of 9/11.

More positive signs

Custom molders' capacity utilization rose an average of 1.5 points in the second half of 2005 to 56%. It was the first time since 2000 that our semiannual surveys registered two consecutive increases. Northeastern custom molders reported the highest utilization for the fourth survey in a row, and South Central molders had the lowest utilization.

Fifty-four percent of respondents predicted improving business conditions in the near term, while only 24% foresaw worsening conditions and 21% expected no change. Optimism was most prevalent in the West and lowest in the N. Central area.

Another favorable sign is the 4% gain in new tooling orders reported by 77 mold shops in the survey. That follows a 3% increase in the first half. Those are the first two successive increases in mold orders in these surveys since 2000.

SEMI-ANNUAL CHANGES IN HOURLY RATES

Period    Average   % Of Molders' Rates That
Ending    Change       Rose   Fell   Same

4Q 2000   +1.0%        15%    8%     77%
2Q 2001   -11.6%       26%    47%    28%
4Q 2001   -1.1%        6%     14%    80%
2Q 2002   -1.3%        5%     12%    83%
4Q 2002   -1.5%        6%     14%    80%
2Q 2003   -1.0%        7%     11%    83%
4Q 2003   -0.6%        8%     10%    82%
2Q 2004   -0.6%        6%     7%     87%
4Q 2004   -0.4%        7%     8%     85%
2Q 2005   +0.6%        14%    10%    77%
4Q 2005   +0.6%        17%    4%     79%

CUSTOM INJECTION MOLDERS' MACHINE-HOUR RATES
WITH OPERATOR, PROFIT MARGIN INCLUDED (a) (117 PLANTS)

                            Dollars Per Hour (High/Average/Low)
                                      4th Quarter 2005

Tonnage Range                  <50    50-99   100-299   300-499

Northeast                   $73.21   $80.00    $79.02   $116.20
(ME, NH, VT, MA, CT,        $36.82   $41.71    $44.68    $58.16
RI, NY, NJ, PA)             $25.00   $25.00    $25.00    $25.00

Southeast                   $40.00   $62.00    $60.00    $65.00
(DE, DC, FL, GA, MD,        $34.16   $38.20    $43.87    $48.92
NC, SC, VA, WV)             $29.05   $12.00    $27.10    $27.10

North Central              $100.00   $74.53    $81.30    $94.85
(IL, IN, MI, OH, WI, IA,    $35.74   $34.91    $39.86    $46.73
KS, MN, MO, NE, ND, SD)     $14.91   $17.62    $18.78    $23.24

South Central               $42.00   $49.68    $57.00    $80.00
(AL, KY, MS, TN, AR,        $26.51   $31.06    $36.58    $46.50
LA, OK, TX)                 $11.52   $12.87    $16.26    $21.53

West (CA, OR, WA,           $75.00   $75.00   $140.00    $86.00
AK, HI, AZ, CO, ID, MT,     $40.07   $43.27    $53.58    $66.30
NV, NM, UT, WY)             $15.46   $17.66    $19.87    $45.00

National Average (c)        $35.66   $38.01    $43.51    $53.17

Average Change in Hourly Rates

In Second Half 2095:         +0.6%

Tonnage Range              500-749   750-999   1000-1499   1500-1999

Northeast                   $35.00    $40.00      $81.34
(ME, NH, VT, MA, CT,        $35.00    $40.00      $65.67
RI, NY, NJ, PA)             $35.00    $40.00      $50.00

Southeast                   $80.00   $100.00     $125.00
(DE, DC, FL, GA, MD,        $70.06   $100.00     $125.00
NC, SC, VA, WV)             $60.72   $100.00     $125.00

North Central              $108.40   $115.18     $125.50     $179.28
(IL, IN, MI, OH, WI, IA,    $62.98    $77.02     $108.56     $132.08
KS, MN, MO, NE, ND, SD)     $42.01    $55.20      $81.47      $60.72

South Central              $100.00   $108.40     $149.05     $182.93
(AL, KY, MS, TN, AR,        $56.58    $70.77     $124.76     $143.24
LA, OK, TX)                 $21.58    $21.53      $90.00      $96.05

West (CA, OR, WA,           $82.80    $98.00
AK, HI, AZ, CO, ID, MT,     $82.80    $98.00
NV, NM, UT, WY)             $82.80    $98.00

National Average (c)        $59.39    $72.96      $99.46     $134.45

Tonnage Range              2000-2999     3000+   Index (b)

Northeast
(ME, NH, VT, MA, CT,                                 84
RI, NY, NJ, PA)

Southeast
(DE, DC, FL, GA, MD,                                 83
NC, SC, VA, WV)

North Central                $175.00   $374.67
(IL, IN, MI, OH, WI, IA,     $263.08   $349.38       78
KS, MN, MO, NE, ND, SD)      $374.67   $324.08

South Central                $237.13   $338.75
(AL, KY, MS, TN, AR,         $228.71   $281.95       69
LA, OK, TX)                  $185.92   $242.88

West (CA, OR, WA,
AK, HI, AZ, CO, ID, MT,                             100
NV, NM, UT, WY)

National Average (c)         $255.77   $335.03

(a) An adjustment factor is used where data did not already include
profit and labor. (b) Relative to highest-cost region (which equals
100); value shown is a weighted average for all size ranges.
(c) Weighted geographically according to PLASTICS TECHNOLOGY'S
Manufacturing Census.

CUSTOM INJECTION
CAPACITY UTILIZATION

2nd Qtr 2003   51
4th Qtr 2003   55
2nd Qtr 2004   55
4th Qtr 2004   51
2nd Qtr 2005   54
4th Qtr 2005   56

Note: Table made from bar graph.