After reading the April 14 “Spring Materials Update,” I take exception to the position taken by Jeff Lipton of Nova Chemicals Corp. (“PE makers bemoan price protection thorn,” Page 9) and Peter Sykes of Dow Chemical Co. (“PS producers looking to regain control,” Page 10).
It is common knowledge among the majority of small to midsize operators that the two firms being quoted have concentrated their efforts toward large users. Today, the small to midsize processor gets some level of price protection because the two firms in question saw their market penetration diminishing and they needed to get back in partnership with this group. Of course it was all “hush-hush” so the big users wouldn't find out and ask for even better prices and more protection … yeah, sure.
Wake up, Nova and Dow, there are no real secrets. You folks started the snowball rolling and now you don't like the direction or the size — too bad. It's not our fault; you taught us all how to play the game.
The other part that is so totally frustrating is that both of these firms, like most in the resin business, have varying degrees of vertical integration. That puts their raw materials operations in record profit levels while the resin plants are crying about how badly they are doing.
So, ultimately, we come down to Business 101. Do these two gentlemen really think that the converters can pass along the price increases they are trying to impose? Maybe they should stop buying raw materials, we should stop buying resins and our customers should stop buying our products.
Hey, there's a plan: Let's shut down the economic machine of the country. No, we can't do that. After all, we have to ensure that these big corporate executives don't see their seven- or eight-digit incomes decline.
I got it — they all could take a realistic salary and then we would see real profits at all levels of the economy without price increases. No, that won't work, it's too practical and logical. Let's just raise prices and see how many converters can be put out of business, which will help grow their large customers who will continue to have great prices and price protection regardless of all the rhetoric. That's it, that's the plan!
And if you don't buy these concepts, ask Mr. Lipton why his “struggling” company is buying up resin plants and shutting them down. Could it be to control the supply-demand ratio as justification for prices to be raised? No, they wouldn't do that, would they?
Lon E. Frye