Clorox Co., a major consumer products maker, is battling high resin prices on a number of fronts.
``Price has become a more critical downstream business driver,'' senior procurement manager David Lowrance said at Chemical Market Associates Inc.'s World Petrochemical Conference, March 26-27 in Houston. ``If high prices are sustained, it can be disruptive to the industry. Companies will have to choose between cost reduction and innovation, and that impacts business growth.''
Clorox has a lot at stake in the resin game. The Oakland, Calif.-based firm is a major buyer of polyethylene and polypropylene used in its Glad trash bags, bottles for Clorox bleach and other products. Glad and Clorox brands are U.S. market share leaders in their fields.
Overall, Clorox employs 7,600 worldwide and posted $4.8 billion in 2007 sales, with about 80 percent of that business coming from the U.S.
``Resin is our major raw material component, so it affects our downstream business,'' Lowrance said. ``We have to look for ways to mitigate price volatility and price increases and we have to consider if substitute materials like paper or bio-based materials are more economically viable.''
In this direction, Clorox has seen results in its ForceFlex line of Glad trash bags. The bags, introduced in 2004, use patented film technology to enhance performance while using less polyethylene.
And earlier this year, Clorox launched a line of Glad trash bags made of 100 percent compostable corn-based resin supplied by Novamont SpA, an Italian bioresin maker. The new bags are available in the Canadian market.
The looming availability of lower-price PE and PP from the Middle East has Clorox taking a look at that region. The firm also is considering importing lower-priced finished goods such as PE film, Lowrance said.
Clorox would consider buying Middle Eastern resin even if it's shipped in supersacks instead of in rail cars, as is common in North America.
``Logistics is a potential barrier, but it's very manageable,'' Lowrance said.
Clorox also recently introduced Green Works, a line of cleaning products made from natural ingredients, and is working with Nalgene - a line of high-end plastic bottles made by Thermo Fisher Scientific Inc. - to promote use of Brita-brand water filters, another Clorox product.
``Using filtered water in reusable containers would reduce the number of water bottles being produced,'' Lowrance explained.
Redesigning some of its product containers, possibly by using a more high-priced resin in a design that uses less resin overall, also could benefit Clorox.
But in the short-term, Clorox will remain a big player in the commodity resin wars.
``Resin is critical to our function, quality and product supply,'' Lowrance said. ``Our sourcing strategy is to build our buying power through sourcing flexibility and by managing our spending globally.''