For plastics suppliers to the auto industry, this should be the best of times not the worst of times.
The best of times because consumers are finally demanding lighter, more fuel-efficient cars. Applications for plastics and composites that automakers have been slow to adopt should be shifting to high gear front-end systems, body panels anything and everything that can offer more MPG and cost savings.
But instead they're seeing the worst of times. Fewer people in North America are buying cars, and there's overcapacity in the entire supply chain. On top of that, some suppliers aren't in the best fiscal health. (Perhaps that's an understatement.) The entire automotive plastics sector has suffered as companies have been forced to compete with firms that have been surviving on life support.
For the healthy few, opportunities eventually will be plentiful.
All of the U.S. auto industry's stubborn resistance to higher federal fuel consumption standards has melted away. Suddenly, the Big Three are falling over themselves to tout their vehicles that get 20, 30 or more miles per gallon. Horsepower isn't cool anymore hybrids are cool.
Soon, plug-ins will be even cooler.
At the recent Management Briefing Seminars in Traverse City, Mich., supplier and auto company executives were told that consumer demand for smaller, lighter and more fuel-efficient cars is outpacing any standards the federal government has proposed.
The Toyota Prius hybrid outsold every sport utility vehicle model in the United States last year. Think about that all of the capacity for SUVs and crossover vehicles that carmakers have built in the United States in the past decade was apparently nothing more than a bet on the wrong horse.
Further proof of the sea-change in the auto industry: Honda, a brand known for small, fuel-efficient cars, is the only Japanese or U.S.-based automaker to see its sales rise in the U.S. during the first six months of 2008.
The future of the auto industry looks like it is made of plastic.
Automakers are going to be shaving weight like never before.
``Incremental change is not what's needed here,'' George Racine, a member of the automotive work group of the American Chemistry Council's plastics division, told the Traverse City group. They need to jump into the polymer pool with both feet.
They need to realize that composites will no longer just be something to show off in concept cars and low-volume sports models.
Plastic and composite component suppliers need to boost volumes, bring costs down and show they can compete with the metal-benders.
Materials and machinery suppliers are going to have to help automakers and suppliers with technical support otherwise, new applications will never get off the ground.
The timing is lousy. But, despite all the darkness and gloom, some pretty smart financial minds have made bets on automotive plastics in the past few years. It looks now like their strategies were not too far ahead of their time.