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Saving Grace: Can Machinery Investments Help Companies During a Down Economy?

Post Time:Feb 27,2009Classify:Industry NewsView:301

The Italian Trade Commission announced recently that the value of U.S. imported Italian machinery in 2008, including glass machinery, saw significant growth in 2008 compared to years prior. Italian glass machinery specifically was reported to have increased 7.4 percent ($26 million)--though U.S. glass machinery imports overall declined.

While the numbers may look positive, some machinery experts say the increase may not be completely reflective of current conditions, as they say glass machinery sales were down last year.

According to Mike Willard, executive vice president of Salem Distributing Co. in Winston-Salem, N.C., which represents several Italian machinery companies, the numbers might also not be reflective of the fluctuating exchange rate.

"Plus, those figures could be skewed from the purchase of one or two major lines," adds Willard.

Michael Spellman, president of Jupiter, Fla.-based IGE Solutions Inc., which also represents a number of Italian manufacturers, does agree that 2008 was a good year for the Italian suppliers.

"We had our best year in 2008 with our long-standing Italian client Forvet," says Spellman. "We were up more than 300 percent in 2008 compared to any other year."

He says while they had started to see the economy going down very late in 2007/early 2008, they really did not know what to expect. But he says that in 2008 many companies still had money to spend and still had access to money. He adds that many machinery purchases/capital investments had been in planning stages since 2005, 2006 or 2007.

Spellman also gives a lot of credit to how focused the Italian companies are, saying many of them have been working with glass processing machinery for more than 30 years.

"The Italians will always be a force in the marketplace because they are fine engineers, they have beautiful style and experience in the glass industry," says Spellman.

While 2008 may have been a good year, the forecast for 2009 does not look as encouraging. According to Spellman, there is still sales activity.

"Right now we are seeing the large players will not release any money for capital expenditures until at least April. Where we are seeing some activity is at the mid- to small-size company level-the companies that have kept lean during the good times, who have money and want to step up to the next level. Those are the companies taking steps toward fabrication and [producing] safety glass," Spellman says.

And though the market for traditional glass and other building products may be slow, now may be just the time to explore new markets.

Willard says they have had a lot of interest recently in their new HOAF laminating line, which does not require the expense of an autoclave.

"This is one way companies can get started with custom laminating," says Willard. "It also allows them to get started in the decorative business, creating products for applications such as partitions and skylights." He continues, "We are trying to show customers how they can create new avenues for growth."

Spellman has a similar view. "Companies could focus on other areas to utilize the equipment that they already have, which could allow them to penetrate other markets," he says. For example, Spellman recently traveled to Australia where he saw many fabricators producing backsplashes for kitchens and bathrooms. The backsplashes were made through the use of the same equipment many companies in the United States use-a tempering oven and low-iron glass.

"Companies here already have the capabilities to do something like that, and it's a minimal investment to get started," Spellman adds.

Source: USGNN.comAuthor: shangyi

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