Volatile resin prices and the toy-market slowdown dropped North America's rotational molding growth into the single digits from 1994-96, down from double-digit annual rates, according to a new study.
But the report from Plastics Custom Research Services called the troubles a ``short-term slowdown'' and a ``growth pause,'' not cause for alarm.
Peter J. Mooney, president of PCRS, said rotomolding will continue to prosper.
``There are few signs of classic economic maturity in this business, so it can support double-digit growth for some years to come if the rotomolders spend the time and resources necessary in sales/ marketing efforts,'' he said in the study.
PCRS, based in Advance, N.C., said North American rotomolding grew about 5 percent a year from 1994-96. Mooney's company put out its first study of rotomolding in 1995. Believed to be the first comprehensive study of rotomolding, the report set benchmark figures, looking at 1994: Rotomolders turned out 800 million pounds of resin into $1.25 billion worth of products.
That first study predicted annual growth of more than 10 percent through 1999, but some events got in the way, Mooney said.
In the current study, Mooney said rotomolders in the United States, Canada and Mexico consumed 893 million pounds of plastic, making products valued at $1.6 billion.
PCRS surveyed more companies this time, 191, up from 170. Of companies common to both studies, PCRS talked to 100 U.S. molders, 12 from Canada and three from Mexico.
Mooney, an economist, said the outlook is hardly gloomy, despite the past two ``problematic'' years, particularly in the toy business.
He thinks the industry may be returning to double-digit growth this summer.
``The American economy is on very stable ground and growing,'' he said in a telephone interview.
Rotomolding remains a small-player industry. PCRS said 57 percent of companies had resin throughput of 1 million pounds or less; another 19 percent had a volume range of 1 million to 3 million pounds.
Why did the slowdown happen? The report gives several reasons, including:
Rough times in toys, other key markets. Several markets including toys, textiles, municipal trash containers and lighting globes ``were characterized by either no growth or a decline in the demand for plastic parts over the past two years.'' That factor alone reduced the overall North American growth rate by 2.5 percent.
The report said that the largest rotomolder, Little Tikes Co., alone accounts for about one-fourth of all production.
Resin price volatility. Prices of polyethylene and vinyl plastisol soared in 1995, then plunged in 1996. Mooney thinks that factor reduced industry growth by 2 percent.
Mooney said he recommends rotomolders increase spending on sales and marketing, including use of the Internet. They also should improve communications with customers to understand their changing tastes in design.
The study, ``The Recent Pace and Pattern of Growth in North American Rotational Molding,'' also includes profiles of rotomolders.
The cost is $1,200 for the general public and $600 for rotomolders. Extra copies cost $250. Telephone PCRS at (910) 998-8004, or fax (910) 998-8044.