Unmistakable signs of a slump.
Last year closed on a down note for most of the 450 custom processors in our fourth-quarter survey. Average machine-capacity utilization dropped two points to 69%, its lowest level since the second quarter of 1983. The 48% of respondents reporting a drop in capacity utilization from the previous quarter was the highest since the end of the 1982 recession; the same was true for the 26% reporting that they had reduced the number of shifts or hours worked from the level of the previous quarter. What's more, the percentage of negative or pessimistic comments about business conditions outweighed favorable or optimistic comments by 50% to 45%. Although that balance was less heavily weighted toward pessimism than in the third quarter, those two quarters together represent the gloomiest outlook since we began evaluating optimism/pessimism quantitatively in 1986.
As the graphs show, operating rates were down for the quarter in all processing types except custom thermoforming. Custom injection was at its lowest level since the third quarter of 1983, and custom compression/transfer at its lowest since 1982.
On a regional basis, New England was again the softest region for custom processing (and injection in particular), while the South Central region was once again the busiest. Capacity utilization in the North Central region, the traditional Midwest manufacturing heartland with the greatest concentration of injection molding, was at its lowest level since early 1983.
TOOLING ORDERS PLUNGE
On top of the sobering current data, an important leading indicator--new tooling orders--was down as well. The 235 mold and die shops in the survey reported almost no growth in dollar value and a three-point decline in units--the first time that had happened since fourth-quarter 1986. Also, the 30% of toolmakers reporting shorter lead times (a sign of lower backlogs) was the highest since early '86. Most of the drop was at South Central and Western toolmakers. [Graphs 1 to 8 Omitted]
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|Title Annotation:||custom plastics processors|
|Date:||Apr 1, 1991|
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