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Hourly Rates Rose Despite Slump.

* Custom injection molders increased their machine-hour rates an average of 1% in the fourth quarter of 2000, even while molders' capacity utilization in the same period plunged to its lowest level in 17 years. Fourth-quarter survey responses from 158 plants indicated that average hourly rates rose 6.5% from the first quarter to the fourth quarter of last year. The largest increases affected presses of 500 to 999 tons. The biggest increase for all machine sizes was in the South Central region. Larger-than-average increases were also posted by molders in the Southeast and West, but those in the North Central heartland actually lowered their hourly rates during the last year.

Ominous signs

At 60% capacity utilization, custom molders' plant operating rates in the fourth quarter were six percentage points lower than in the first quarter of last year. In the fourth quarter, 49% experienced lower capacity utilization than in the previous quarter, while 16% had higher utilization and 35% saw no change. Meanwhile, 15% of molders raised their hourly rates in the fourth quarter, while 3.5% cut their rates, and 82% left them unchanged.

Another sign of a slowdown was reflected in molders' views of future business conditions for the near term. Only 35% of respondents expect business to improve soon, while 39% expect it to worsen, and 26% foresee no change. That is the lowest level of optimism seen in our surveys since 1986 and the first time that pessimists outnumbered optimists. North Central molders were least optimistic. On the other hand, a majority of respondents from the South Central area expect improving business.

Tooling flat

Ninety mold makers across the country reported no change in new orders for injection molds during the fourth quarter as compared to the quarter before.
 CUSTOM INJECTION
 CAPACITY UTILIZATION
1st Qtr 1999 66
2nd Qtr 1999 65
3rd Qtr 1999 64
4th Qtr 1999 64
1st Qtr 2000 66
4th Qtr 2000 60
Note: Table fade from bar graph
 PROFIT & LABOR IN HOURLY RATES
 Deduct these amounts [a] from the figures in the larger table to
 arrive at rates without profit, operator, or both.
Press Tonnage Without Profit Without Operator Without Either
[less than]100 12.2% 16.5% 30.4%
100-299 8.3% 12.4% 24.2%
300-499 7.3% 10.0% 20.6%
500-749 5.7% 10.0% 17.7%
750-999 6.1% 12.5% 21.4%
1000+ 2.2% 11.5% 15.8%
(a.)Cumulative national averages over several surveys.
 CUSTOM INJECTION MOLDERS' MACHINE-HOUR RATES
 WITH OPERATOR, PROFIT MARGIN INCLUDED [a] (158 PLANTS)
 Dollars Per Hour (High/Average/Low) Fourth Quarter 2000
Tonnage Range [less than]50 50-99 100-299 300-499
Northeast $70.00 $72.00 $81.00 $80.00
ME, NH, VT, MA, CT, $37.54 $40.60 $46.91 $50.71
RI, NY, NJ, PA) $23.04 $17.28 $20.74 $32.26
Southeast $58.00 $44.04 $63.00 $50.65
(DE, DC, FL, GA, MO, $41.81 $36.01 $41.73 $43.77
NC, SC, VA, WV) $31.68 $21.89 $27.65 $33.41
North Central $100.28 $100.28 $92.16 $115.20
IL, IN, MI, OH, WI, IA, $30.24 $34.06 $38.75 $49.81
K5, MN, MO, NE, ND, SO) $10.70 $8.39 $14.69 $26.42
South Central $57.60 $63.36 $80.00 $74.88
AL, KY, MS, TN, AR, $31.59 $35.33 $41.86 $45.87
LA, OK, TX) $6.35 $8.69 $16.04 $22.73
West (CA, OR, WA, $55.00 $85.00 $95.00 $80.64
AK, HI, AZ, CO, ID, MT. $40.27 $46.16 $52.40 $63.70
NV, NM, VT, WY) $23.04 $25.00 $31.42 $49.55
National Average [c] $35.11 $38.13 $43.77 $51.41
Tonnage Range 500-749 750-999 1000-1499 1500-1999
Northeast $106.00
ME, NH, VT, MA, CT, $59.56
RI, NY, NJ, PA) $41.47
Southeast $62.21
DE, DC, FL, GA, MO, $57.16
NC, SC, VA, WV) $45.00
North Central $207.36 $90.92 $109.44 $161.28
IL, IN, MI, OH, WI, IA, $66.29 $61.66 $90.78 $161.28
(5, MN, MO, NE, ND, SO) $34.56 $40.00 $69.12 $161.28
South Central $82.58 $107.35 $137.63 $167.90
AL, KY, MS. TN, AR, $52.97 $73.98 $118.96 $140.79
LA, OK, TX) $34.56 $50.87 $100.28 $113.65
Vest (CA, OR, WA, $95.62 $124.42
AK, HI, AZ, CO, ID, MT. $92.31 $119.21
NV, NM, VT, WY) $89.00 $114.00
National Average [c] $66.79 $78.07 $96.78 $156.92
Tonnage Range 2000-2999 3000+ Index [b]
Northeast
ME, NH, VT, MA, CT, 86
RI, NY, NJ, PA)
Southeast $242.00
DE, DC, FL, GA, MO, $231.65 80
NC, SC, VA, WV) $221.30
North Central $460.80
IL, IN, MI, OH, WI, IA, $436.40 75
(5, MN, MO, NE, ND, SO) $412.00
South Central $167.13
AL, KY, MS. TN, AR, $167.13 76
LA, OK, TX) $167.13
Vest (CA, OR, WA,
AK, HI, AZ, CO, ID, MT. 100
NV, NM, VT, WY)
National Average [c] $167.13 $392.03


Average Increase in Hourly Rates

In Fourth Quarter 2000: +1.0%

(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.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
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Article Details
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Author:Naitove, Matthew H.
Publication:Plastics Technology
Article Type:Brief Article
Geographic Code:1USA
Date:Apr 1, 2001
Words:924
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