'04 may bring route to recovery
In spite of vexing economic issues and the proverbial China thorn in their sides, processors are looking favorably down the road of 2004.
In a fax poll by Plastics News, 73.3 percent of responding processors said they have very favorable or somewhat favorable attitudes toward the economy in 2004. That's a leap of 18.7 percentage points compared with answers to those same questions last year.
The number of processors expecting a very favorable economy jumped to 18.8 percent, an increase of 11.9 percentage points over last year, while the number expecting a somewhat favorable outcome rose to 54.5 percent, from 2003's 47.7 percent.
The northward bump is a marked improvement over the past few years, perhaps in step with a recovering economy. Historically, the 73.3 percent ``very favorable/somewhat favorable'' number is the highest since 2000's 84.8 percent. The PN fax poll started in 1994.
This year's polling indicates processors can't keep their minds from the issues of customer growth/cutbacks, which again topped the list of external factors expected to affect processors this year. While 77 percent of respondents cited the topic as a key external factor, that number is a drop from last year's 81.4 percent.
Raw materials pricing and interest rates remained, respectively, the second and third most-pressing external factors for processors. Raw materials pricing, at 54.7 percent, showed a slight rise from 54.3 percent last year.
Concern about interest rates was at 25.5 percent, a 0.2 percentage-point dip from 2003.
China takes hits
In a repeat of last year, just 24.8 percent of processors polled named trade/ NAFTA/GATT issues among external factor concerns. And like last year, when it comes to fair-trade issues, processors' responses show China remains a source of unbridled aggravation:
``China manufacturing is a major problem for domestic manufacturers. I'm not sure how to deal with it.''
``The trade deficit with China must change! This is a must to save manufacturing and the U.S. middle class.''
``China - not a level playing field.''
Christopher Robson laments U.S. trade practices with China. The president of Girard, Pa.-based injection molder Robson Co. Inc feels stymied by what he sees as an unfair advantage China holds over U.S. manufacturers, and believes original equipment manufacturers compound the issue with their eagerness to head to China.
``On a custom molding side, there is a significant decrease in opportunities,'' he said. ``Before, at least, there was an opportunity to compete. Now we're not even given an opportunity to quote - [jobs] are automatically outsourced to China.''
Ken Grimes, vice president of Gwynneville, Ind.-based injection molder Pearl Custom Plastic Molding, suggested putting an extra tax on everything made in China, to be paid by the purchaser.
``If you go to a department store and buy something made outside the USA, then you pay an extra tax,'' he wrote.
While the pending war atmosphere of early 2003 left processors with uncertainty, the latest poll reveals surprising little mention of the ongoing war in Iraq. Processors seem more stirred by a continuing economic turnaround. Respondents' economic views are reflected in a boost in the number of processors expecting a more profitable year in 2004: 64.8 percent. That's a rise from 51.6 percent last year.
V&S Molding Inc. was able to maintain profit last year, in part, by keeping overhead low, having no debt and refining processes to be more efficient. President Ben Veltien said he expects the Longmont, Colo., injection molder to do even better in 2004.
``We've been able to stay profitable through the whole thing,'' he said. ``2000 was our best year. In 2002 we dropped about 10 percent, but we got it back. I'm forecasting this year to be the best we've ever had. We're going to turn that corner.''
Still, many polled processors had to maneuver to stay afloat. Some efforts include temporary layoffs, cutbacks on executive salaries, hiring more part- time workers to save on benefits and even calling customers to ask for orders.
Despite some rare political input - ``The president feels compelled to run every country except the one he was elected to run,'' ``The economy is improving, tax cuts are working!'' ``Don't play into the hands of politicians [who are] striving to kill the economy for personal/political gain'' - most processors are more focused on the business of doing business.
The number of polled processors expecting to add staff jumped to 40.6 percent, a bounce of 12.5 percentage points from last year.
Despite war still being waged and the economy still nursing its wounds, the poll indicates processors are rolling down Highway '04 with a renewed optimism, perhaps best summed up by suggestions from two respondents: ``Hang in there,'' and, ``Suck it up.''
Plastics News faxed the unscientific poll to 1,365 processors nationwide, and received responses from 165, or 12 percent. Processors were chosen from Plastics News' rankings of injection and blow molders; film and sheet manufacturers; pipe, profile and tubing extruders; thermoformers; and rotational molders.