The Plastics Blog
By Don Loepp | About The Plastics Blog

Lender warns: Bag bans threaten value of plastics machinery

By Don Loepp | May 2, 2013 10:15 am ET

Here's an off-beat angle to plastic bag legislation: a financial company is warning that bans are a potential red flag for asset-based lenders.

In other words, some lenders might start discounting the value of the machinery that plastics processors use to make plastic bags. But before film extrusion executives climb out on the ledge of their cooling towers, keep reading.

Kevin Boland, an assistant vice president with New York-based Tiger Group LLC, wrote in the April issue of the Commercial Finance Association's The Secured Lender magazine that a global backlash against plastic bags "threatens to undermine the recovery value of dedicated merchandise and equipment in this sector."

Tiger Group sent out a news release about the article -- headlined "Blowing in the Wind: Are plastic-bag bans the death knell for related M&E?"

Boland argues that the issue is significant for secured lenders because film equipment can be expensive -- worth $1 million or more.

But even if the single-use plastic bag market disappears -- unlikely, despite all the headlines to the contrary -- Boland notes that much of the equipment is actually likely to hold its value, because it could be repurposed to make other products.

"With a bit of retooling, extruders can be used to make a variety of other products, including plastic film and sheeting as well as profile extrusions such as moldings, trim products, pipe tubing and insulation for wire and cable," Boland writes. "Likewise, winders can sometimes be reapplied to the likes of textile products or plastic sheeting. Auxiliary equipment would include any number of grinders, hoppers, vacuum loaders, dehumidifiers, temperature controllers or even robots, while general support equipment could include things like chillers, cooling towers, vacuum pumps, air compressors and boilers."

"Even the widespread imposition of plastic bag bans would not totally decimate the recovery value of M&E employed in these facilities," Boland writes. "Still, it is a good idea for lenders and appraisers to keep an eye on the bag-banning trend."

This is one of the strangest bag-ban-related news releases I've seen. But it still doesn't top the debate about whether using reusable bags spreads disease.

Anyway, it's interesting to see the financial services community paying attention to bag bans.

And it's nice to see that their first word on the topic is that, although the issue is a potential concern, bans are not a "death knell" for plastics machinery and equipment.


Recent Blog Posts

Plastics industry blasted for stance in green building debate   July 22, 2014 2:45 pm ET
'Genericide' and plastic product trademarks   July 21, 2014 10:52 am ET
Great idea: Family Day at the factory   July 10, 2014 12:14 pm ET
Great moments in plastics inventions: the pool noodle   July 8, 2014 10:44 am ET
Congrats to the Entrepreneur of the Year winners with plastics connections   July 7, 2014 5:29 pm ET
Tubing extruder hosts local politician to discuss ESOP benefits   June 30, 2014 3:38 pm ET

Comments

Lender warns: Bag bans threaten value of plastics machinery

By Don Loepp

Published: May 2, 2013 10:15 am ET
Updated: May 2, 2013 10:49 am ET

Post Your Comments


Back to story

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events