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Plastic Perspectives

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 incremental thinking?

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 in 2004!

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

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