The past few weeks it seems like there's not much good news for plastics processors.
Resin prices are going up. Every day, it seems, there's some new development that hints that prices will go even higher.
In the meantime, energy prices are rising, additive prices are rising, transportation prices are rising, interest rates are rising, inflation might be rising, health-care costs certainly aren't dropping ... and customers aren't eager to accept price increases.
Most processors are old hands at managing pricing changes. In fact, for a lot of companies, higher prices are better over the long run, because they're able to pass through raw material price hikes. But that's not the case for everyone, and some companies are taking a real beating right now.
One market segment that's hurting is automotive - and it happens to be one of the largest and most important segments of the plastics processing industry.
Consider this: The top three North American injection molders, according to Plastics News' sales-based ranking, are Collins & Aikman Corp., Delphi Corp. and Visteon Corp. Despite some efforts to diversify, all three are focused darn well exclusively on automotive customers.
The bad news is, none of these companies is doing very well:
* C&A is in Chapter 11 reorganization and preparing for big changes - possibly new ownership, probably significant asset sales.
* Delphi is in Chapter 11 reorganization and preparing for who knows what - definitely some belt-tightening, probably asset sales and plant shutdowns.
* Visteon avoided bankruptcy court, but is reorganizing with the help of its biggest customer, Ford Motor Co. Again, big changes are in the works, including some likely plastics-related asset sales.
It's quite possible that within a few months, our ranking of injection molders might have three brand-new names at the top.
There could also be some new names in the middle too - many of the second- and third-tier automotive molders also aren't doing great right now. And while the troubles at C&A, Delphi and Visteon will offer some opportunities to smaller competitors, it's also likely that their problems will spread to others.
After all, bankruptcy usually leaves someone holding the bag. We know the employees and retirees will probably see their pay and benefits cut. But who else will help pay for fixing the Big Three's supply problems?
