News item: Schmalbach-Lubeca AG of Germany on May 11 opened an aluminum can factory in Radomsko, Poland. The $112 million plant is the largest and one of the first large-scale foreign investments in Poland. News item: Philadelphia-based Crown Cork & Seal Co. Inc. plans to participate in a joint venture that will build a metal can plant in Hanoi, Vietnam. The cost of the proposed project is pegged at about $40 million.
Metal can companies are rushing into China. Glass bottle manufacturers are storming Eastern Europe.
In plastics packaging, however, the level of international activity is definitely less exciting. What's holding back plastics companies from tackling the world's emerging economies?
Actually, a variety of factors.
First, North American processors do not need to look far afield for growth opportunities - there still seems to be plenty of room to expand here.
According to PaineWebber packaging industry analyst George Staphos, North American shipments of PET bottles jumped more than 18 percent in 1994, and demand for non-PET food containers rose 7 percent.
Plastics markets continue to grow in North America, eating away market share from metal, glass and paper packaging.
Second, due to occasional shortages of some resins, plastics processors may not have the capability to keep up globally with metal and glass companies. How easy do you think it would be to find 20 million extra pounds of PET in, say, Vietnam?
Third, cost factors favoring plastics are not nearly as attractive in places like China or Poland. The labor-related cost of glass bottles, for instance, is significantly higher than that for plastic bottles, making plastics less attractive in low-wage nations.
Still, plastics processors and their suppliers have to keep an eye on these emerging markets.
As the economies in those countries advance, consumers - increasingly urban, and with more disposable income - will buy more packaged food and other goods. Metal and glass packaging companies are banking on that trend.
In Peru and India, for example, per-capita consumption of glass containers currently is about five annually, according to Owens-Illinois Inc. of Toledo, Ohio. An increase to six per person per year would mark a phenomenal 20 percent increase.
If it increases to 15 - the current rate in Brazil and China - well, you get the picture. The current per-capita rate in the United States is 173 containers annually, according to Owens-Illinois.
It all shakes down to a matter of risk vs. reward. Right now, glass and metal companies are betting heavily on the world's emerging markets. Plastics companies can watch from afar and learn from their competitors' mistakes - but not forever.
Loepp is news editor of Plastics News.