The Plastics Distributor and Fabricator - Your Industry Magazine
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The second quarter of 2000, begins as the first quarter ended -- higher prices in view for most products in our industry. PVC has been climbing and was joined by PE, PP, PS and ABS. Now it appears that engineering thermoplastics will join the fray. To be followed by acrylic and polycarbonate sheet to be sure.

Once again the incessant equation of supply vs demand is at work -- very little new capacity has come on stream and with the incessant growth of most markets in the past several years the stage is set for selective single digit price increases in 3Q 2000. Although gasoline price increases have moderated, the inflationary pressure on petrochemicals continues.

The biggest ameliorating effect on prices and also on market growth will be the classic hesitancy of the buyer to pay a higher price without shopping the incumbent supplier. When this is coupled with the new internet auction mentality, which is becoming all-pervasive, we could see a slowdown by 4Q 2000.

This is the time for expense control as well as inventory monitoring as the classic business cycle renews itself after a dormant period that saw ever upward sales and profits. Some publications that may serve as guidelines to intelligent planning for the plastics distribution and fabrication industry are: "Manufacturing and Distribution Supply Chain Management -- Alliances and Competition" -- published by the Marketing Science Institute, Cambridge, Mass. Also look into "Technology Roadmap for e-Distributors" -- published by IBM. Always useful in this segment of the business cycle is "Inflation in Wholesale Distribution" -- published by the Distribution Research and Education Foundation, Wash. D.C. and available through NAW.

It's always interesting to look at Plastics Worldwide -- and here is some data for readers to ponder as they assess their business future, especially in these days of e-business:

(breakdown by industry in % - production in tons)

Electricals, Electric Engineering 7.9%

Furniture 4.5

Agriculture 2.6

Textiles 0.8

Sports, Games 0.8

Mechanical Industry 1.1

Household Goods 2.7

Automotive Industry 6.3

Packaging Industry 31.6

Construction Industry 18.4

Others 23.3


Europe 63

USA 89

Canada 80

Japan 58

Russia 17.5

Africa 3.2

India 1.0

Latin America 7.5

China 10.7 (est)

Others 3.0

In other developments, recent reports show a large growth in the Biaxially Oriented Polypropylene (BOPP) market which is now reported as 2.4 million tons globally. This was originally a replacement product for cellulose acetate film and dominated packaging markets for some time.

Look for continuing growth in PETG sheet as it encroaches on traditional MMA and PC applications, especially in the display and exhibit industry. A strong marketing blitz by Eastman Chemical (Spectar™) is largely responsible for this growth, with Sheffield and Spartech the leading extruders.

We hear so much about e-commerce and b2b initiatives these days, and certainly the mega-websites such as Grainger, Cadillac, U.S. Plastics, to name a few, are leading the way -- followed by alliances of manufacturers in the petrochemical industry. Remember the NAPD (now IAPD) which was originally formed as a coop buying organization to mitigate the buying power of the "big 3"? It stands to reason that as the plastics distributor/fabricator business model changes that the internet be used jointly by heretofore competing firms. Perhaps alliances can be formed among "competitors" in different countries -- since the world wide web knows no borders or time zones. One thing seems certain -- the time is ripe, especially for fabricators, to strike out using the internet for buying and selling -- all the basic functions of companies in our multi-billion dollar (U.S. and Euro) industry are in place. The International Plastics Fabricators Association (IPFA) may be their solution. Time will tell us!

For more information, click on the Authors Biography at the top of this page.

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