Ask a reader and advisor how 1996 looks for plastics processors and see what the crystal ball coughs up. But what gives processors their economic insights: second-guessing, fiscal angst, market savvy? On the whole, processors' outlooks for this year run more negative-or less positive, take your pick-than the past two years, according to a recent Plastics News fax poll.
The responses read a little like a top 10 list of worries, with customer growth or cutbacks out front as the No. 1 factor in determining expectations for 1996. The cost and availability of resin, last year's top concern, is a close second; many seem wary of outrageous resin prices repeating on them like New Year's sauerkraut.
Whether their own businesses shrink or grow will depend on how their customers fare this year, most processors said.
``Fortunately for us, the niches that we are involved with continue to have strong demands,'' said Dave Kincman, president of Styletek Inc. in Lowell, Mass.
Oddball niches, such as golfball night lights and gun holster parts, keep the small injection molder healthy.
``These are little niches that I just wake up every morning and hope nobody finds,'' said Kincman, who was among 300 processors who responded to the poll by Dec. 22.
Robert Daboub, sales manger of Inplex Inc. of Des Plaines, Ill., says contracts for extruded parts used in appliances, autos and toys depend on consumers, whose buying power already may be curbed by debt. If consumer confidence lags, key customers won't reach their sales projections-and neither will they, several processors said.
The threat of losing business has companies beefing up customer bases, and striving for larger market share of leading products. But those deeply entrenched in one market, like automotive supplier Sheboygan Substrates of Sheboygan, Wis., worry about slipping sales, said general manager Kevin Gohr.
``Auto sales determine our fate,'' agreed Gordon Wright, president of 21st Century Plastics Corp., which molds car parts in Potterville, Mich. ``Also, the hot-selling cars we're on are not so hot any more.''
A majority of processors-almost 55 percent-still think they will see more profit in 1996; while about 40 percent think this year's and last year's gains will be much the same.
``1995 was an outstanding year,''said Plasticraft Corp. President Richard Grota.
The Darien, Wis., rotational molder boosted capacity 50 percent to accommodate new customers and new products - mainly consumer goods, he said.
Sheet extruder Mitech Corp. of Twinsburg, Ohio, saw its export business grow significantly because of packaging demands for electronic components, said David Lally, operations manager.
But not everyone thinks the future looks rosy.
``Foreign competition seems to be forcing our customers to reduce costs,'' said Greg Farrell, president of injection molder Precise Plastics Inc. of Fairview, Pa. ``The result is we can't increase pricing.''
``Fortune 500 companies continue to buy offshore,'' complained A.W. Seavey, president of Plastech Corp., an injection molder in Branford, Conn.
Ron Douglas, who heads up Technical Plastics Corp., said three of his original equipment customers recently added operations in Mexico, ``taking little bits and pieces'' of their electrical components business with them, with the threat getting bigger as time goes on. ``Customers want you close,'' the Poplar Bluff, Mo., molder said; but, following your customers, even only as far as Mexico, isn't so easy when the business volume doesn't merit opening a satellite shop.
Just the same, plastics processors are pursuing business outside North America through acquisitions, joint ventures, licensing agreements and distributorships. Many already have plants from Scotland to the Pacific Rim.
``We have two plants in Europe: Belgium and Italy. We exhibited at two trade shows in China [last year]. We export to every continent,'' said Leo Gans, president of Action Technology, a Rockaway, N.J., firm with roughly $102 million in tubing and profile sales.
About 15 percent of Pulsar Plastics Inc.'s products are shipped offshore, said Dale Pashea, president of the Carlyle, Ill., injection molder.
``But we have made no effort to attain this,'' he said.
Still, many companies continue to rely on regional work.
``There is plenty of work right here,'' said Dennis White, general manager of Phoenix thermoformer Eagle Engineering Inc.
Of the processors polled, 30 percent said they will spend more on property and equipment this year than last; 30 percent will pare those costs down. But most expect capital spending to stay the same. About 45 percent plan to buy new machinery to increase capacity in 1996. Nearly half of those polled, 49 percent, say interest rates will figure largely into the picture.
More important, processors said, are the effects that raw material pricing and possible shortages will have on returns,even for big companies like Plexco, the Bensenville, Ill., division of Chevron Corp.
``Material margin continues to slip since finished product price changes have not been adequate to recover material [costs],'' said Plexco President Paul Petro, whose firm sold roughly $140 million worth of high density polyethylene pipe in 1995.
The situation has several executives pointing fingers.
``Irresponsible and irrational pricing announcements ... make processors and their customers nervous, creating instability in the marketplace,'' said Eric Strom, vice president of Spin-Cast Plastics Inc., a rotomolder in South Bend, Ind.
On the flip side, thermoformer Chris Grimm, of Grimm Bros. Plastics Corp. in Wapello, Iowa, put an auspicious slant on the past years' bad news: ``After 18 months of increases, the latest round of decreases will have a very positive impact on our '96 business.''
Though most processors - 57 percent - think staffing levels will stay flat this year, they still are questioning the caliber of the work force: The availability of qualified workers looms large in their overall expectations.
``Generally low education levels [have] made our focus of getting qualified people to train difficult-especially in light of our ISO 9001 project,'' said Catherine Boettner, sales manager for Cleveland Tubing Inc. of Cleveland, Tenn.
``We have a serious problem attracting qualified, motivated workers at any wage,'' concurred Mark Fox, plant manager at Fenton, Mo., molder Four Process Ltd.
When asked what issues affect his outlook for the year, Step 2 Corp. President Thomas Murdough succinctly summed it up for almost everybody: ``The economy, the economy!''
With Congress and President Clinton butting heads about the budget, many processors question whether they will progress towards solving the country's fiscal woes. The stalemate stems from government's inability ``to set clear goals for the future,'' said Bill Blaiklock, head of Bonar Plastics Inc., a rotomolder in Newnan, Ga.
Fellow rotomolder Neal Graham, president of XL Specialty Percussion Inc. in Huntertown, Ind., bluntly agreed: ``The idiots in Washington [are] playing politics instead of following fiscal responsibility.''
The fax poll indicates that processors equally fear the kindred issues of inflation and the federal debt. But more taxes are not part of the fix.
``Governments at all levels think businesses can keep paying all kinds of taxes. They can't anymore,'' said Ronald Mack, general manager of Techna-Plastics Inc., a Lehighton, Pa., molder
Don Rumpel, chairman of Kellogg Plastics Ltd., a molder in Smelterville, Idaho, seemed to second that.
``Unless the liberals get off their tax-and-spend attitude, we will all be closing up shop,'' Rumpel warned.
The unscientific poll was faxed to 989 processors in the United States and Canada. Processors were chosen from companies included in Plastics News' rankings of injection and blow molders; film and sheet manufacturers; pipe, profile and tubing extruders; thermoformers; and rotational molders.