While the overall economy is poised for another year of steady growth, and while the majority of plastics processors consider the outlook for 2006 economically favorable, the stable of optimists is getting smaller and smaller.
A Plastics News' economic outlook survey for 2006 yielded a favorable outlook from 63 percent of 113 respondents. While 63 percent positive feedback is by and large a good thing, it should be noted that the percentage of favorable responses is down 10 full points from two years ago.
Cheerful outlooks related to expansion and profitability have been cooled over the past couple years primarily by fears related to costs of raw material and health care. Competition from processors in China is a bit of a sore spot for some processors, as well.
``It seems some pricing of raw material is way out of control,'' said Wayne Lenhart, president of WDL Enterprises Inc., a Clifton, Kan.-based injection molder.
``Raw material pricing may put me and others out of business,'' said another.
Energy prices and availability of qualified workers also were cited among the top external factors causing concern.
For Brainerd, Minn.-based Nor-Pac Industries Inc., resin pricing and soaring natural gas costs are the biggest obstacles to strengthening the rotational molder's bottom line in 2006, said President Jack Olson.
But despite any concerns, 81 percent of processors - the same amount as a year ago - said they expect profitability at or above 2005 levels. About 41 percent expect to be more profitable.
About 94 percent expect staffing levels to stay the same or increase next year, with nearly 35 percent of respondents planning to add jobs. Some 77 percent said they will spend as much or more on capital improvements than a year ago.
The 1.3 billion-man march that is China continues to cause headaches for some North American manufacturers.
Inexpensive labor overseas continues to plague Western manufacturers that have been slow to invest in automation or to take advantage of Asian growth opportunities. In response, some companies are embracing the Asian markets and looking to expand their businesses. Others, still, are weary of Chinese economic prosperity at the expense of American jobs.
Comments in the PN poll related to issues affecting the 2006 outlook reflect the mixed feelings on China. Some call it ``China's slave labor.'' One said simply: ``We're putting the USA out of a job.''
Others are choosing to grow with China.
``We have expanded manufacturing in Asia,'' said Phil Miller, operations manager at Reno, Nev.-based Polycore Optical USA.
Elkhart, Ind.-based thermoformer Elkhart Cases Inc. has gone from doing no business overseas to purchasing as much as 60 percent of its materials from foreign sources.
In all of this, hope and optimism remain.
Economists said 2006 will continue to bring steady growth. The Bureau of Economic Analysis estimated the gross domestic product rose by 4.3 percent in the 2005 third quarter - the fastest rate since early 2004.
Companies will continue to invest in new employees, new products and new technologies.
Said David Little, president of Rotational Molding of Utah in Brigham City: ``We're getting larger and working hard on new technologies.
``I'm just about ready to retire and things are looking good.''
PN faxed the unscientific poll to 1,386 North American processors, and received responses from 113, or 8 percent. Processors were chosen from PN's rankings of injection and blow molders; film and sheet manufacturers; pipe, profile and tubing extruders; thermoformers; and rotational molders.