Plastics processing machinery falls under President Donald Trump's additional 25% tariffs spanning $34bn (€29bn) worth of goods from China that began 6 July, but officials of injection press importers say not to expect an immediate price jump, since they have machines in stock at US facilities.
However, executives are concerned about what a prolonged trade war could do to the larger economy. A trade-conflict-driven downturn in automotive, an important market segment for plastics machinery, would damage the equipment sector, they said.
Trump has proposed tariffs of up to 25% on foreign cars and trucks. General Motors Co. and other automakers have warned that tariffs could significantly raise prices of cars sold in the US, reduce sales and cut jobs.
And while those tariffs remain up in the air, China has retaliated by launching its own tariffs covering agricultural products, autos and other products on 6 July.
"It's all connected, at least in my mind. I'm a little more concerned about what happens on the macroeconomic scale," said John Beary, president of Yizumi-HPM Corp.
Executives of Absolute Haitian Corp., Yizumi-HPM and CH-America, which sells Chen Hsong presses, said they have injection moulding machines in stock at their US facilities. Because those presses were in the US before the tariff, they are available at the regular price, the officials said.
CH-America President Ken Heyse said the Torrington, Conn., company bought a large number of machines in anticipation of the tariffs. He said there will be a transition period.
"It's not like everybody is going to wake up Monday morning to higher prices," Heyse said.
Looking at plastics equipment, the China tariffs cover more than injection moulding machines. Chinese-made extruders, blow moulding machines and thermoformers are on the list, as well as machine beds, platens and some other parts and hydraulic assemblies.
Also on the list: moulds for injection and compression moulding.
Injection moulding machinery officials contacted for this story said customers have only recently started to ask about impacts of the tariffs. But the tariffs — which cover a broad range of industrial goods, not just plastics machinery — probably haven't sunk in yet with many processors, they said.
"I would say the last two to three weeks, the majority of our customers have at least mentioned it as we're quoting new machine sales opportunities," Beary said.
Facing potential tariffs, Beary said that Yizumi-HPM, based in Iberia, Ohio, began talking in February and March with Chinese parent Guangdong Yizumi Precision Machinery Co. Ltd. to increase the injection press build schedule for 2018.
"We don't anticipate having to raise our prices," Beary said. "We were fortunate enough to plan with our parent company earlier this year, so we have quite a few machines that are in our inventory here, stateside. Going forward, we are still working with Yizumi to develop an appropriate strategy. We want to do what we can do to minimise any negative impact for our customers."
Yizumi also has a factory in India, giving it some flexibility to move production for presses bound for the US, depending on how long the tariffs last.
Glenn Frohring, president of Absolute Haitian, said customer phone calls began to pick up in late June, as the 6 July tariff date loomed. The company based in Worcester, Massachusetts, sells injection moulding presses made in China by Haitian Plastics Machinery Ltd., one of the world's largest plastics machinery manufacturers.
"Basically, there's a cost, and the cost is going up. Our strategy is to work together with Haitian and our customers to limit the tariff exposure to them," Frohring said. "Let's work with this together so it's not just one party absorbing the tariff."
Absolute Haitian tries to keep its US machinery levels high and worked to bring presses over before the tariff kicked in, he said. The company is selling machines out of that stock.
Frohring, like Beary, is concerned about the impact of a trade battle on the broader economy, especially automotive.
Officials of Absolute Haitian will travel to China later this month to discuss the tariff issue. Haitian has manufacturing operations in China, Brazil, Germany, Vietnam and India, so company leaders could consider building presses for the US market in locations outside of China, he said.
Absolute Haitian officials announced at NPE2018 the company is building a 116,000-square-foot facility in South Carolina to house stock machines, parts, sales, service and training.
Tim Erdmann, principal of Plante Moran's manufacturing consulting group, said his firm is not yet fielding many calls from plastics processors asking about the China tariffs.
"I've gotten much more reaction on the steel and aluminum tariffs," which began 1 June, he said. "Folks are actually starting to see the impact that the steel and aluminum tariffs have created."
Erdmann thinks the China tariffs are still too new for processors to digest. The tariffs on Chinese goods, like the levies on steel and aluminum from several countries, are part of the Trump administration's negotiating tactics, he said.
"They are shots across the bow. How many of these will remain in force, and how long?" Erdmann said.
Short or long term?
Frohring, of Absolute Haitian, said if the trade war is short, it could mitigate the need to charge more.
"I don't think we're going to raise prices, because if the tariff goes away, the price stays the same. And it's just working together to manage the tariffs," he said.
Heyse said that the uncertainty over the duration of the China tariffs makes it hard to plan for the future. Hong Kong-based Chen Hsong formally kicked off its effort to sell in the US and Canada, through CH-America, at NPE2018. Now the tariffs come just as the business is starting. The firm does have some machines in inventory, he said.
"We don't know how long it's going to last. We don't know how much of the tariff to pass through to our customers, so we are really trying to take a step-by-step approach to this," Heyse said. "We are looking at raising prices, hopefully temporarily."
CH-America gave customers and sales representatives advance notice about the pending tariffs. "We gave [customers] a fixed date of a week past the tariffs to purchase the machines at the existing prices, and after that prices are going to be increased."
Tariffs on equipment from China will hit the broader plastics machinery sector, as most primary equipment manufacturers have become highly international, securing components overseas for US press assembly operations, and even exporting completed machines.
Austria-based Engel Holding GmbH builds its general purpose injection press, Wintec, in Changzou, China, and this year started selling them in the US.
"We'll continue to proceed forward with Wintec," said Mark Sankovitch, president of Engel Machinery Inc., the company's US operation in York, Pennsylvania.
Sankovitch said Engel could shift some Wintec production to another country. The e-win electric Wintec press is not made in China now, he said.
As a global player, Engel is trying to be proactive and inform customers about the situation, Sankovitch said. But he said all major machinery companies face challenges, especially for machinery ordered months ago, and under construction, which now fall under the tariff.
"You may be so far along in the schedule of that process that there's no turning back, in the sense that I can go and maybe have this manufactured someplace else. It doesn't work that way. So now you're stuck," he said.
In a case like that, the machinery supplier and customer have to strike a compromise, since neither side can absorb the full 25% increase, he said.
Meanwhile, Engel announced at NPE2018 that it will resume US assembly of large-tonnage injection presses in York this year.
Sankovitch said the company is dealing with Trump's executive order for China tariffs on a day-to-day basis. "As quickly as it comes, it can go away. So it's the stroke of a pen by Trump," he said.
Milacron Holdings Corp. is based in Ohio but has far-flung manufacturing operations around the world. Showing how global manufacturing and supply chain issues make the tariff issue more complicated, in May, Milacron CEO Tom Goeke filed comments about the tariff with the office of the US government, saying the company favored tariffs on finished Chinese plastics machinery that it competes against, but arguing that tariffs should not be enacted on Chinese-made components that Milacron uses.
Contacted for this story, Milacron Chief Financial Officer Bruce Chalmers said the publicly traded company would not comment until after it releases second-quarter financial results on 26 July.
Many customers are asking about tariffs, said Peter Gardner, vice president of sales and general manager of Daiichi Jitsugyo America, the US distributor of Niigata injection presses from Japan and moulding machines from South Korean builder LS Mtron Ltd. Country-of-origin issues can be confusing, since some Japanese and European machines are made in China today, he said.
Gardner said he will take advantage of the low duty of Japanese-made machines, 3.3%, and the zero duty on Korean-made presses.
"While some will say it will put Chinese-made machinery at a disadvantage, others may say it will simply level the playing field," Gardner said.
Manufacturing is being hit with a dizzying array of tariffs and growing trade wars, with the China tariff battle, the tariffs on steel and aluminum and potential auto tariffs, plus renegotiation of the North American Free Trade Agreement.
The wide range of opinions about the tariffs on moulds from China illustrates how, when it comes to protectionism, every company has its own angle of self-interest.
"My processor clients of course are very concerned, because several of them have tools in China already," consultant Laurie Harbour said. "Mould bases and all are included [in the tariff]. So they are absolutely going to get impacted by it."
Harbour said smaller US mould makers are happy about the tariff move. But larger ones, with operations or partnerships in China, will get hit.
"This 25% tariff could theoretically eliminate the cost advantage of going to China," she said.
And Canada, already a formidable competitor to US mould makers, could be a wild card, if China exports tools to Canada to get around the tariffs. Harbour thinks customs officials will require more paperwork certifying the country of origin, significantly adding transactional costs.