It’s going to be a seesaw year for energy costs and
therefore costs of most of the plastics in our industry.
We are seeing continuing increases in most resins and
shapes with no apparent end in sight – after many years
of stable and even declining prices.
Prices in April followed a swift decline in crude oil and
gasoline prices but in May reversed course and trended
upward. Fuel prices will start easing again by fall as non-OPEC
producers crank up production in a bid for greater
oil market share and the peak summer driving season
comes to an end.
Prior to the U.S.-led invasion of Iraq, most oil analysts
had expected the price for a barrel of crude oil to spike
around $50 during the war. Instead crude has slipped to
around $28 from $37 in early March as allied forces
made surprisingly quick progress and there was little or
no self-inflicted damage to Iraq’s oil fields. Meanwhile the
risk of severe supply disruptions in Venezuela and
Nigeria – two OPEC producers subject to political and
labor strife – has eased.
By our best estimates, based on good research we have
read, by year’s end crude oil will retreat to as low as $20
a barrel – and gasoline prices will fall to $1.15-1.20/gallon
– as Russia, Mexico, Norway, Angola, Kazakhstan and
Azerbaijan step up oil exports. Then watch for plastic
resin and shapes prices to fall back to 2002 levels. The
specter of deflation still looms in the background, and
thus inventory planning should reflect this. Bottom line –
pricing fluctuations will abound – and spot buying versus
inventory buildups should be a 2003 strategy.
Plastic currency, made from PVC film is a growing movement
in the Pacific Rim – begun by Australia and New
Zealand and soon to be followed by India. This, of course
will account for growth in PVC film and laminating industries
but in addition, synthetic paper made of UHMW,
HDPE and PP will be utilized in this currency movement
sure to continue throughout the world.
Why didn’t I think of that? That is often the next big
idea, the future, the million dollar growth opportunity. This
is today’s product or service – the cash cow. This is the
reason that doesn’t happen! It is the result of incremental
thinking not innovative thinking which results in that.
Innovative thinking starts with:
- Identifying and defining core skills
- Creating disruptive change
- Challenging convention
- Identifying unarticulated customer needs
Where does your company stand in innovative versus
What do you do with a customer who demands a product
that doesn’t suit their needs? Try asking questions –
leading questions, that is, that lead them to discover their
own mistake – rather than tell them they’re wrong. The
end result may not be a sale but “when you win you earn
and when you lose you learn.” Remember, customers
might occasionally say things that are wrong, but using
questions to lead them to see the errors of their thinking
keeps the conversation going, hopefully toward a signed
purchase order and a satisfied customer.
These are some ideas to help our industry resume the
growth pattern we were accustomed to over the past
decades and have seen abate in the last few years. Here’s
to a great second half of 2003 and a sustained good year
For more information, click on the Author Biography link at the top of this page.