Even before Thailand's military coup last week, the country's plastic trade associations were predicting slower growth for their export-driven industry, as it absorbs challenges ranging from trade restrictions on plastic bags, high resin prices, shifts in manufacturing and a slowdown of the country's domestic economy.
The export sector, which typically has grown more than 10 percent a year, will see that fall off, and could be closer to 5 percent growth typically seen by Thailand's domestic plastics market, said Somsak Borrisuttanakul, chairman of the Plastic Industry Club of the Federation of Thai Industries.
It's still solid growth for the country, which is the largest plastics producer in the 10-member Association of Southeast Asian Nations trading block, but not as much as fast-growing neighbors like China, India and Vietnam.
Speaking during interviews at the Thai International Plastics and Rubber Exhibition, held Sept. 14-17 in Bangkok, industry officials said the country needs to take steps to remain competitive, and pointed to initiatives such as government-funded research on bioplastics.
Economists still seem to be digesting the business impact of the Sept. 19 coup, but several suggested it will weaken growth only slightly if a new government is set up quickly. Consulting firm IMA Asia, for example, projects gross domestic product growth will slow to 3.8 percent this year.
``The short-term impact on business is likely to be mild,'' IMA said. ``The medium-term outlook is less clear, particularly for foreign businesses. The last year has seen a rise in anti-foreign sentiment.''
While some foreign automakers briefly suspended production in Thailand in the wake of the coup, plastics industry officials predict processors supplying the country's large automotive industry - nicknamed the ``Detroit of Asia'' - will do very well.
PIC officials said growth there could be 20 percent and predict the resin industry, Thailand's sixth-largest exporter, probably will post 10 percent growth.
But other markets, such as toys, will continue to see job losses to places like China and Vietnam, where labor is less than half the cost of the $250 monthly wage for Thailand, said Prasit Chansitthichole, a former president of Bangkok-based PIC.
``This year should be a tough year for the converters,'' said Pongsak Kantiratanawong, vice president, law and legal aspects, for the Bangkok-based Thai Plastic Industries Association.
About 40 percent of the industry's plastics firms are in packaging, and industry officials said one of the larger segments, plastic bag makers, is losing business because of anti-dumping duties imposed by the U.S. and Europe.
As well, Somsak said 30,000 of the 200,000 workers in the Thai plastics industry could lose their jobs or see diminished prospects if the U.S. government moves ahead with plans to eliminate tariff preferences for Thai goods.
Packagers also face increasing environmental pressure.
Somsak said Thai government threats to impose taxes on packaging prompted the plastics industry to be part of a coalition with other materials industries and consumer product firms and spend 50 million baht ($1.3 million) a year to promote recycling.
The group set up a private organization tasked with the ambitious goal of reducing packaging from 31 percent of the waste stream to 19 percent by 2011.
Environmental pressures aside, industry officials said the country needs to find competitive economic advantages in areas like multilayer films, and Somsak said he urges firms to reduce scrap and waste to be more efficient.
To develop one such technological niche, the Thai government launched a 1 billion Thai baht ($27 million) bioplastics research project in May, to turn local plants like cassava root into inexpensive polymers.
Some sectors, like automotive, attract technology investment: Honda late last year said it was building a high-speed injection molding plant in Thailand, only its fourth in the world, and was setting up a research and development center in the country.
Still, industry officials said Thailand plastic firms have a strong need for technology.
Somsak said the country has to import many high-value molds, and TPIA said the country still imports more plastic products than it exports: It sent out 70.9 billion baht ($1.9 billion) worth of plastic goods last year, but imported 86.2 billion baht ($2.3 billion).
Surachai Ratitong, managing director of Thai masterbatch maker Best Plastics Technology Co. Ltd., said the country lacks a large base of domestic equipment manufacturers doing their own development: ``Thailand does not have much of its own technology.''
Thai industry officials had said the country's domestic political turmoil was slowing growth, with some ranking it as one of the two major challenges facing the country's plastics industry, along with the rise of cheaper competitors like Vietnam and China.
For some Europeans who ply the Thai market, though, even slow growth in Thailand can be better than some markets.
``It is not dramatically good, but it is better than Western Europe,'' said Michael Schmiedgunst, general manager of HMG Extrusions GmbH, an Austrian-Malaysian joint venture equipment maker.