The plastics processors that are going to come out of the economic downturn on top are those who have adequately laid the groundwork for the coming growth cycle - including potential plans for mergers, acquisitions or joint ventures, as well as succession planning within family-owned firms.
So say 153 top plastics industry executives interviewed and surveyed for a newly released white paper by consulting firm Principia Partners and New York-based investment bank Akin Bay Co. LLC, titled ``Prospering in Today's Plastics Industry.''
Rising costs, shrinking margins and an increasing number of foreign imports is putting the squeeze on North American plastics manufacturers.
About half of global plastics demand in 2007 came from Asia, at more than 250 billion pounds, the paper said.
``Growth in Asia plastics demand is forecast to continue at a rate of nearly 7 percent per year. Demand in Japan, Europe and North America will grow only slightly, at 2 percent per year or less,'' the paper said.
Exton, Pa.-based Principia Partners projects Asia's plastics demand to grow to about 375 billion pounds in 2012.
Plastics - the third-largest manufacturing segment in the United States - accounts for more than $370 billion across the entire industry, including resin suppliers, compounding, machinery and end markets.
There has been a 22 percent increase in plastics shipments since 2002, which has been accompanied by a 20 percent workforce reduction, reflecting significant productivity growth, the paper said.
About 60 percent of those surveyed said their companies were considering some sort of transaction over the next five years.
Principia and Akin's findings show about 20 percent of company executives expect a change in ownership during that period, which is the same number that has turned over in the recent past, being about one in five.
Struggling firms could be looking for an exit strategy, while those who find their stride may be looking to grow, Principia officials said.
``The plastics industry's output is up even though employment is down,'' said Ken Jacobson, a Principia principal, and head of its plastics practice, in a June 5 telephone interview. ``Though lean manufacturing and a more streamlined process, manufacturers have gotten more efficient.
``These companies are in a great position to acquire companies who haven't been as smart, or as lucky.''
Currency exchange rates could motivate European and Asian companies to more heavily invest in North America companies, Jacobson said.
The white paper can be downloaded for free at www.principia consulting.com.