HOUSTON (April 10, 5:10 p.m. EDT) — Since he buys more than half a billion pounds of plastic resin a year, Bemis Co. Inc.´s Bruce Wilson is abundantly qualified to speak on the resin market — even when the market doesn´t do the things he wants it to.
"The resin market is like a pet snake," Wilson said at the CMAI World Petrochemical Conference, held March 28-30 in Houston. "We watch it cautiously for months at a time. It settles into a routine in which we feed it, care for it, occasionally clean up the mess, and get used to its presence.
"Then, when we are just too comfortable, it bites us. Most of us got bit by the market in 1999."
That bite occurred when U.S. polyethylene prices, which most industry participants thought would stay flat because of abundant supply, shot up 16-18 cents per pound, fueled by higher-than-expected demand and several force majeure-related shortages.
Wilson has served as Bemis´ vice president of purchasing since 1995. More than 90 percent of his half-billion-pound sales total is PE, which Bemis converts into film for myriad markets.
Bemis, based in Minneapolis, employs 5,000 at 23 film plants. The firm ranked second in Plastics News´ 1999 ranking of North American film and sheet manufacturers, with $1.2 billion in film sales.
Bemis survived its 1999 miscalculation by working closely with its resin suppliers. Wilson — who has purchased "everything from lab rats to paper clips" in a 25-year career that included a stint at Monsanto Co. — stressed that such relationships will continue to be important in the plastics industry, even as it marches into e-commerce.
"Having resources available to respond ... was critical to our success," he said. "With a plan and adequate resources we survived the substantial increase in prices.
"In the process of purchasing resin, our success depends largely on two things: our ability to effectively interpret the market, and how effectively we act upon that interpretation," Wilson added.
The PE market of late 1999 also threw some curves at Bemis and other buyers, as PE prices dropped briefly as producers shed inventory, before moving up again in early 2000.
"We got letters from polyethylene suppliers saying on one side that prices are going to increase and on the other side saying, `By the way, we´re reducing our prices.´" Wilson said.
Wilson emphasized openness and communication between resin buyers and suppliers.
"I don´t want to sound like a Boy Scout here, but the issue of integrity in relationships is frequently overlooked," he said. "In business relationships, it is often assumed to exist, so it is seldom discussed."
Maintaining openness also requires flexibility on the part of both the buyer and supplier. That was the case in 1999 when octene monomer shortages led some film processors to switch from octene-based linear low density PE to hexene-based LLDPE.
"Instead of waiting for the problem to be solved, convertors addressed the problem with existing technology and made changes to meet their customers´ needs," Wilson said. "Much of that business was permanently changed (to hexene-based LLDPE). (Resin) producers need to remain flexible and be prepared to work in a changing market."
Bemis also made a calculated risk when it opted not to build large resin inventories in advance of Y2K. The risk paid off when the New Year arrived without any supply problems developing.
"We gained assurance that the resin producers were as prepared as we were," Wilson said. "We were able to meet all of our obligations ... without having to face the negative impact of high inventories in a falling market."
Wilson also proposed changing the old adage, "The customer is always right," to, "The customer is not always right, but he is always the customer." Such a philosophy would encourage resin makers and processors to work through any challenges together, he said.
"The customer is sometimes wrong because the price is up across the market despite his protests, because he can´t possibly use 30 rail cars at his plant in the next week and because there´s no way he´s going to run out of resin tomorrow," Wilson said.
Wilson added that he hopes personal relationships still hold their value in an Internet age, which is pushing electronic buying.
"If we totally depersonalize and rely only on electronic trade, we´re headed for trouble," he said. "Then it will just be pounds and dollars, and there will be nobody there to say, "What happens if you run out of resin you bought on the Internet?´´