(Feb. 28, 2005) — The U.S. manufacturing economy may be settling down, and growing again. Don't get too comfortable, because two huge users of plastic packaging are becoming one. Procter & Gamble Co. is buying Gillette Co. The financial press is running a lot of stories that speculate more deals will be coming, names like Unilever, Clorox, Colgate-Palmolive and Kimberly-Clark.
A mammoth deal like P&G and Gillette helps both companies, as they can cut costs to deal with Wal-Mart Stores Inc. and its kind. They can consolidate some factories, let some people go. The consumer products giants get even more power to squeeze suppliers — and at the top of that list are companies that blow mold bottles and injection mold the closures.
The uncertainty is back.
After a several-years´-long boxing match, the plastic processing industry took some hard shots and lost some of its luster. Note to someone living in a cave: That describes the United States, not China.
No more glory days, my friend. You hear it at industry events and business lunches every day. Too bad the words aren't catchy, 20-year-old lyrics by Bruce Springsteen. There is one reason you can't get this one out of your head: It's reality. The glory days are over.
The U.S. plastics industry is still exciting. Processors are moving forward. Some are adding automation and new types of molding and extruding technologies to shave off a profit even as resin prices rise. You can still make some money.
Packaging has remained one of the bright spots, with plenty of U.S. manufacturing to serve the huge domestic market for everything from takeout containers to deodorant sticks.
Equally true is that the packaging sector has undergone its own consolidation, and some more big firms reportedly are for sale.
The basic workings of capitalism sound kind of savage — huge retailers grinding down on consumer product makers until it stops at the blow molder, film extruder or injection molding outfit — but that's our system.
Moving on to an even harsher form of capitalism, did you hear about the guy who wants to ship cars over to North America from China? Base models will start at about $7,000.
OK, read that again. Boats from China loaded with cars. Will Americans buy them? If they do, in large numbers, you can kiss much of American manufacturing goodbye.
Malcolm Bricklin is going to bring us the Chinese-made cars from Chery Automobile Co. He says it won't be all about cheap entry-level cars. It'll be about cheap performance cars, too. Top-end models selling for around $20,000 will have turbocharged V-8 engines, according to newspaper reports.
First the good news about Bricklin: A few decades ago, he brought Americans the Yugo. And the bad news? He also brought over the Subaru.
You can stop laughing now.