Your Jan. 7 Viewpoint (“'02 brings new look at plastics agenda,” Page 6) was nice. In fact, I thought the list was pretty complete except for the omission of motherhood and apple pie. Unfortunately, our industry is facing some far more severe issues that won't be addressed by putting them on the things-to-do list.
* Foreign competition. The mold-making community in Erie, Pa., will assure you that its overseas competitors enjoy unfair trade advantages that allow them to be even more competitive than their low hourly rates, government subsidies and advanced technology should allow.
* Electronic reverse auctions. The mindless pursuit of the lowest possible piece price at the expense of quality, productivity and customer service by itself could force one-third of the molding companies in this country out of business. Having worked so hard for so many years to clean up our industry's quality image, the message from our customers is that it “don't matter no more; just give me the lowest price and I won't ask no more questions.”
* The myth of the annual price decrease. Most of us have been lowering prices annually for the last 20 years. We have run out of the low fruit, the medium fruit and the high-hanging fruit. If customers really want lower prices, they're going to have to get braver about material specifications, wall thicknesses, colorants and everything else that drives cost.
* Growth capital. Given the typical low margins, volatility and high risk, it's getting harder and harder for the banks to love plastics processors. This will become the new Catch-22 as low profitability makes it harder to get capital to drive productivity to restore profitability.
* Product liability.
* Workers' compensation.
* The Occupational Safety and Health Administration.
* Disgruntled workers receiving minimal wage increases/pay freezes.
* The new “adversarial relationships” philosophy of many of the original equipment manufacturers and Fortune 500 customers.
The business issues we face this year and for the next three years are intimidating if not overwhelming. The recent Loranger [Manufacturing Corp.] bankruptcy should hit all of us close to home, as it represented the best in quality, customer relationships, technology and family-owned and -run philosophy.
Unfortunately, I only offer issues, not solutions. Frankly, if I had the answers to all of the above they would not be shared because they would be our “competitive advantage.”
Seriously, though, the current overcapacity- and margin-ectomies surely show that our industry is entering into one of the most difficult times in the short history of plastics processing in the American economic story. All of us need to steal some time from putting out the daily fires to strategically deal with these issues before it's too late. Hopefully Plastics News can help to provide a forum to craft these solutions.
Erie Plastics Corp.