LA QUINTA, CALIF. — The Society of the Plastics Industry Inc.'s new, major dues cut for processor members may result in a revenue shortfall of about $1 million for the trade group initially, but President Larry Thomas is confident SPI will be able to cover that loss without having to make cuts elsewhere.
Even if SPI has miscalculated, and fails to recoup the lost revenue funds as anticipated, Thomas said it will not raise dues for any other member groups. Instead, the Washington-based trade association will look to close the funds gap by squeezing further efficiency gains out of core SPI operations, he said in a March 14 interview at the joint annual meeting of the SPI Molders and Moldmakers divisions in La Quinta.
But Thomas sincerely doubts that will become necessary. He said several factors should combine to more than offset the loss of income prompted by the lowering of maximum membership dues for processors to $10,000 a year from the previous cap of $164,000.
The new dues structure took effect March 1 for new members, and will kick in on June 1, 1998, for existing members. After mid-1998, SPI processor members' dues will average roughly one-third of the amount they had been paying, he said.
First, Thomas expects an influx of new processor members, and he did not have to wait long to reel in one of his primary targets. Nypro Inc. of Clinton, Mass., one of North America's largest custom injection molders, signed on earlier this month, shortly after the new dues structure went into effect, according to Jerry Taylor, SPI's vice president for membership. Thomas for years has been trying to convince Nypro to join the SPI fold.
Taylor said several other processor firms that would qualify as ``maximum dues payers''—meaning they have annual sales of at least $56 million — are ``very likely to join by the end of the month.'' He declined to identify the companies. In almost all cases, though, Taylor said, the new dues structure played a major role in those companies' decisions.
He said SPI has not specified the number of new processor members it wants to recruit, but he pointed out that it would need 100 new member firms paying the maximum dues of $10,000 a year to offset the expected $1 million revenue shortfall projected as a result of this change.
Thomas also cited the continuing growth of the plastics industry in general as another reason for his optimism, plus the fact that 1997 is an NPE year. The international plastics exposition in Chicago, held every third year, is a big revenue generator for the association, which organizes the event.
Thomas acknowledged that SPI's last effort, in 1994, to entice more processor members did not succeed.
The group's processor membership has continued to hover between 800 and 1,000 firms, which is just a fraction of the total number of U.S. plastics processor companies.
That less-dramatic initiative involved allowing processor members to deduct at least some of the costs of resin and glass-reinforcing materials from their net annual sales, to determine the number upon which their dues were based. But, he said, growth in the plastics industry since 1994 led to increased sales for processors, which offset the materials-cost reductions, resulting in little real change in the cost to companies considering joining SPI.
Taylor pointed out that when the previous dues-calculation change was first implemented, existing processor members were allowed to deduct only half of their resin and glass costs. Come this June 1, those firms will be able to subtract 100 percent of such costs from their sales to determine their SPI dues level.
Thomas also commented on the much-discussed prospect of an SPI merger with the American Plastics Council. He said ``the central issue is protecting everybody's interests,'' and maintaining a balance of representation among resin suppliers, processors, machinery manufacturers and mold makers.