The Australian plastics industry wants to work with the country's government to set up a task force to encourage investment in the industry.
The move follows the industry's launch of its 1996 results, which showed the sector was depressed, said John Foote, president of Melbourne-based Plastics and Chemicals Industries Association and managing director of Sydney-based DuPont (Aust) Pty. Ltd.
Foote said the industry recorded a 5 percent return on investment for 1996, which would not attract new investment. He said investment commitments for new, one-year projects had dropped from A$713 million (US$525.8 million) to A$297 million (US$219 million) since 1995.
``Investment decisions are made at the international level and companies are deciding where to locate the next generation of world-scale plants,'' he said. ``We have a window of opportunity of about two years and if the government introduced more competitive investment and tax policies those projects could well go ahead, producing substantial benefits to the country.''
A tough economic climate, increased import taxes and falling tariff levels contributed to a decrease in aftertax profit of 18 percent to A$262 million (US$193.2 million), he said.
Total sales, including exports, were down 4 percent to A$5.58 billion (US$4.1 billion) and imports were up 8.7 percent on the previous year, Foote said. The industry can expect similar results this year, but faces a better outlook for 1998, he said.
This year's outlook has been influenced by a strong Australian dollar and lower tariffs, which encouraged imports and reduced export activity. He said the industry had absorbed the tariff reduction but, combined with a 3 percent tax on raw material imports, had been ``hit with a double whammy.''
``With a 5 percent level of protection [against imported plastic products and resins] the industry is virtually down to a free-trade environment,'' Foote said.
Robert Fairley, managing director of Melbourne-based Kemcor Australia Pty. Ltd., one of Australia's largest resin manufacturers, said Kemcor has coped with the tariff reductions, which have dropped from 45 percent in 1986.
``Realigning our operations to become world-competitive has been painful and our profits have not been as spectacular, but we have become a highly competitive organization,'' he said.
Foote said research and development expenditures by plastics processors fell 13 percent last year, a decline that will continue because of the government's decision to cut tax concessions for R&D projects .
PACIA has warned that Australia could lose A$6 billion (US$4.4 billion) of investment in the plastics and chemical industries if the government fails to remove impediments to new investment.