(Jan. 8, 2006) — Looking forward can be difficult for journalists. We're used to reporting on events and trends, not looking into a crystal ball and trying to predict what's going to happen next.
Still, there's tremendous demand for good information that can help people make decisions about the future — especially where to invest money and other resources. So every year our reporters do a thorough job researching trends in the plastics industry's biggest end markets for our Economic Outlook special report, which runs this week.
We think the effort is quite worthwhile. Even though there's a bit of “past is prologue” to the effort, we make a solid effort to concentrate not on results from the past year, but trends and issues that will affect the coming 12 months.
This year's report feels more dramatic than most.
* We've got an automotive market that remains in major turmoil, with the Big Three continuing to lose market share in North America to transplants, and several of the top suppliers battling through bankruptcy.
* Processors in the packaging sector have their eye on resin prices, but are also watching closely whether their customers — and consumers — continue to embrace bio-based resins like polylactide.
* The medical market still looks like the end-market with the most stable growth. But processors are keeping an eye on inflationary trends that are encouraging customers to send more work to Mexico and China. Also, both packaging and medical specialists are worried about the impact of product bans in San Francisco that might spread to other areas.
* Construction seems ready to rebound, and pipe makers already are investing in new capacity — but the vinyl siding sector continues to battle competition from fiber cement.
* The office furniture market also is rebounding, coming back from a major slump that started with the demise of many dot-com companies in 2001.
* The appliance market is undergoing major changes — transplant companies are assembling more products in North America, and Whirlpool Corp., after its purchase last year of Maytag Corp., is in the process of making major changes to its supply chain, and its own manufacturing operations, in an attempt to stay competitive.
* Electronics still looks like one of the fastest-changing markets, with new products coming out constantly, giving processors in that sector great opportunities — and significant risk. This also is one of the most global end markets, with few players left that have only North American manufacturing operations.
* The housewares market looks a lot different than it did just a year or two ago. We've seen many U.S. plants close in recent months, and a few major players file for Chapter 11 protection from creditors. This sector seems to be just a step behind electronics — it's increasingly global, and success is driven by having the most efficient supply chains and by bringing the best new products to market fastest. But the major difference: Profit margins are so slim that resin price increases can bring brutal results.
It's clear that many of the plastics industry's top end markets are changing fast these days. The processors that serve them are, no doubt, prepared for the challenges, because if they've survived this far they've proven their ability to cope with just about anything.