(Sept. 1, 2003) — For the past three years, processors have fretted about the economy while keeping an eye on overseas competition, mainly China. Most hope that when the market starts to turn around, they'll discover that the biggest problem they've faced has been the slowdown, and not an exodus of work that isn't coming back.
Call it cautious optimism — or perhaps in some cases hopeful pessimism is a more accurate description. One thing that is clear, though, is compounders see the same issues, and they're reacting.
First, we're beginning to see more major U.S. compounders spending time and money on an Asia strategy. They're not blazing the trail alone: Mostly they're following original equipment manufacturers (and some processors) that are shifting work overseas, or simply tackling new, fast-growing markets. It's a lucrative region that compounders would be mistaken to ignore.
You can draw other parallels between what's going on in compounding and other segments of the plastics industry. For example, with PolyOne Corp. you've got a megamerger that most people thought was a good idea back in 2000, but that's now running into some financial tough times. That tune must sound awfully familiar to the folks at Plassein International Corp. and Pliant Corp.
Also, there's overcapacity. With so many extruders out there, compounding is mirroring the film industry. Firms have spent millions to retire old machines and replace them with modern equipment.
Our leaders in Washington seem to believe the economy is back on an uphill climb, and with a national election on the horizon, it's likely to continue to pick up.