Processors have a more optimistic outlook for this year than last, with most projecting higher growth for their companies and the economy. But worries about customer cutbacks, resin pricing and labor shortages cloud otherwise hopeful forecasts for 1998, according to a recent Plastics News fax poll.
The No. 1 concern for processors this year is the growth of their customers' companies. Many believe the prosperity of their own firms depends on how well their customers do in 1998, with 30.3 percent naming it a major concern.
``Our level of business and profitability depends on our level of projects,'' said Dwight Davidson, president of Engineered Plastics Inc., a Gibsonville, N.C., thermoformer.
The automotive sector, in particular, is causing a great deal of anxiety for some processors this year.
``When will the next downturn occur?'' asked Daniel L. Rhoads, plant manager of Tallmadge, Ohio-based blow and dip molder Steere Enterprises Inc., who said he is concerned about the automotive ``sales cycle.''
Paul A. Nazzard, president of Injectronics Inc., a Clinton, Mass., injection molder, showed similar concern: ``We hope that inflation stays low and consumer confidence stays high to avoid a negative effect on the automotive piece of our business,'' he said.
Other processors, like Steve Simmons, are more upbeat.
``I believe demand in the automotive sector will remain strong,'' he said.
Simmons is president of Highland Plastics Inc., an Alma, Mich., film and sheet manufacturer.
Last year's No. 1 concern — the high cost and scarce availability of resin — fell to second in this year's poll, with 17.5 percent expecting resin prices to play a major role in 1998 business.
Several processors complained about increasing demands for technical service and quality.
``Many customers are not accepting price increases,'' said Dennis Chadwick, vice president of Artistic Plastics Inc., an Anaheim, Calif., injection molder.
Gary J. Thibault, president of Oscoda, Mich.-based GT Plastics Inc., agrees.
``[There is] pressure to lower pricing,'' he said . ``At the same time [there are] increased quality requirements.''
For nearly 17 percent of the processors, a tightening labor market is an ongoing frustration. About 47 percent said they expect their company staffing levels to increase in 1998, but with U.S. unemployment under 5 percent, many cannot find enough workers to help meet the demand of their growing businesses.
``Skilled and unskilled people are scarce,'' said Sam Longstreth, president of Brentwood Plastics. "If you can't find a job now, you don't want to work.''
``Because of low unemployment rates, labor is priced higher and is less competent at entry,''said R.L. Francken, president of Containerware Inc., a Phoenix-based thermoformer.
The majority of processors polled — nearly 81 percent — have a favorable attitude toward the U.S. economy in 1998. But concern about interest rates, inflation and the global economy prevents many from getting carried away with optimism.
``[The] 1998 outlook is uncertain as is any given year,'' said Bob Petrozziello, president of Garwood, N.J.-based Petro Extrusion Technologies Inc. ``We anticipate a promising [new] term with cautious optimism.''
A.J. Koller Jr., who heads up Koller Enterprises Inc., a Fenton, Mo., molder, also is approaching the new year with caution.
``Things have been too good for too long,'' he said. ``Something is bound to happen.''
Still, processors seem enthusiastic about their companies' performances in 1997 and generally confident in their projections for 1998. More than 89 percent plan to buy new machinery this year, and nearly 64 percent said they expect to see more profit.
``[We] increased sales in 1997 by 45 percent to $11 million [and] expect to increase in 1998 by 40-45 percent,'' said Frank Shea, president of Sheaco Engineering Inc., a Wauconda, Ill., injection molder.
Ron Midili, president of Meese Orbitron Dunne Co., a Saddle Brook, N.J., rotomolder, also is anticipating a strong 1998.
``We are positioning ourselves with additional capacity, marketing programs and sales personnel, so [the] 1998 outlook is very optimistic,'' he said.
Processors also are feeling positive about the public's attitude toward their industry. Asked to rate public perception of the plastics industry on a scale of 1-10, with 10 being the best, 59 percent gave it a seven or eight. Many attribute the public's improved attitude to a better quality of plastic products and to advertising by the Washington-based American Plastics Council.
William J. Michael, president of Michael Bros. Inc., a Chino Valley, Ariz., rotomolder, summed up the prevailing sensibility: ``I feel the public attitude toward plastic is getting better. It is outperforming older methods, which is good, [but] we need to recycle more than in the past.''
The unscientific poll was faxed Dec. 9 to 1,408 processors in the United States, Canada and Mexico; 342 firms responded. Processors were chosen from Plastics News' rankings of injection and blow molders; film and sheet manufacturers; pipe, profile and tubing extruders; thermoformers; and rotomolders.