Optimism reigns in Plastics News' 2000 processors poll. Last year's jitters over the economy have subsided, and most processors are toasting the new year with rosier forecasts. Nearly 85 percent of those who responded to the survey said they have a favorable or very favorable outlook for the economy in 2000. That's 23 percentage points higher than last year. Those with very favorable outlooks totaled about 29 percent — the highest percentage since Plastics News started the fax poll in 1994.
"Demographics are very positive for the economy with the baby boomers in their peak spending years," said Godfrey Mackenzie, vice president of quality and planning for VPI LLC, a film and sheet manufacturer in Sheboygan, Wis.
Wally Mohammad also is upbeat about the new year. "I hope the economy continues the same path as it did in '97, '98 and '99," said Mohammad, plant manager at Stepco Corp., an injection molder in Arlington Heights, Ill.
About 87 percent of the 337 companies that responded to the poll by Dec. 17 said they plan to buy new machinery, and about 81 percent plan to spend the same or more on capital projects as they did last year — 11 percent more than in the 1999 poll.
While processors are celebrating the economy, they're more conservative about their own businesses. Slightly more than half said they expect to be more profitable in 2000.
It's probably no surprise they're concerned about their customers. Customer growth or cutbacks has been processors' top concern for three years in a row. About 72 percent said it could affect their results this year.
"As a job shop, the success of our original equipment manufacturer customers is the big issue," said George Duncan, president of profile extruder Certified Thermoplastics Co. Inc. in Burbank, Calif.
But the growing worry going into 2000 is raw material pricing and availability. Nearly 60 percent of processors said they are anxious about resin prices in 2000, while only about 40 percent cited it in 1999.
"Resin price hikes are going to hurt!" said Ron Douglas, president of Technical Plastics Corp., a Poplar Bluff, Mo., injection molder.
"Unwarranted polymer price increases are the biggest threat to molders in 2000," said Paul Sebern, vice president of manufacturing for Elgin Molded Plastics Inc., an injection molder in Elgin, Ill.
PVC, especially, was cited as a worry. After falling about 8 cents per pound in 1998, PVC prices increased about 14 cents per pound in 1999. A robust construction market and some plant outages during the year tightened supply, and no real additional capacity is expected for 2000.
"PVC resin price increases and 2000-02 supply is a concern," said Richard Morgan, marketing director for Mikron Industries Inc., a Kent, Washington-based profile extruder.
"A major concern is raw material costs for PVC vs. lower-cost substitutes," said Roger Simon, executive vice president of profile extruder Gossen Corp. in Milwaukee.
Last year's No. 2. concern, the availability of qualified workers, was a close third in this year's poll, with about 59 percent expecting it to play a significant role in 2000 business. In October, the U.S. jobless rate hit its lowest point since 1970 — 4.1 percent, according to the Bureau of Labor Statistics. With about 47 percent of processors planning to hire more workers, their concern is understandable.
"Availability of workers is the greatest challenge to growth," said George Kraemer, president of Kracor Inc., a Milwaukee-based rotational molder.
Eric Strom agrees.
"I see a locally very tight labor market restricting our ability to grow profitably in 2000," said Strom, vice president and general manager of Spin-Cast Plastics Inc., a rotational molder in South Bend, Ind.
Frustrated by the problem, some companies, such as thermoformer Visual Packaging, are exploring alternatives to hiring new workers.
"The low unemployment rates have made it difficult to find any workers. We are looking to automate to do more," said John Altman, sales director for the company, which is based in Cranberry Township, near Mars, Pa.
Processors also indicated that interest rates are a concern. More than 100 respondents said it was an important issue for them this year, while only 68 said they are concerned about inflation.
When asked whether the Society of the Plastics Industry Inc. and American Plastics Council should restart merger talks, many processors were decidedly — well, undecided. Nearly 60 percent said they didn't know. The memory of last year's failed talks may have influenced their responses, but processors haven't given up on the idea: Just 6 percent said they opposed restarting the merger discussions.
The unscientific poll was faxed to 1,570 processors in the United States, Canada and Mexico, yielding a 21.5 percent response rate. Processors were chosen from Plastics News' rankings of injection and blow molders; film and sheet makers; pipe, profile and tubing extruders; thermoformers; and rotomolders.