Stung by several economic realities, the Society of the Plastics Industry Inc. is cutting staff, folding its business units into its three industry councils and retrenching to focus on public policy issues, communications and marketing.
The group's priorities will be to promote and protect plastics, network to share information, and market plastics through trade shows and conferences.
“SPI will come out of this a more vital, more vibrant organization,” President and CEO Bill Carteaux said in an interview July 10 at SPI headquarters in Washington. “This was pushed along by the economic conditions and the $3.2 million cost [to SPI] of the economic stimulus plan for NPE2009,” he said. “But this move was an inevitable part of SPI's evolution. We need to focus on the bigger issues and not work on as many parochial issues that only affect a handful of members.
“Without the changes, we would have run out of cash in October 2010,” he said, because of the large subsidy that was made to NPE2009 and a reduction in members and dues, since dues are based on sales revenues from the previous year.
Carteaux said the association's core budget for 2010 will be roughly 15 percent lower than in 2009, and that the 2009 core budget was about 9 percent lower than in 2008 — largely because the 2008 core budget included $400,000 for research into its new consumer education campaign aimed at the millennial generation.
In addition, he said the association spends roughly $3 million to $4 million annually on self-funded research initiatives — that is, activities funded through separate assessments on members in specific segments to deal with issues germaine to those members.
SPI membership, which had grown from 900 to 1,050 in the past four years, has dropped back to roughly 900 again in the wake of the economic recession, Carteaux said. He said SPI had 85-90 material suppliers, with the rest of its membership equally split between machinery companies and processors. However, revenues from dues are equally divided between the three groups, Carteaux said.
“We have been fine-tuning the governance of SPI since I arrived,” he said. “This is the next step in that evolution. This is the deepest recession the industry has ever been in. The industry is recalibrating and repositioning itself and we have to do the same.”
The SPI executive board approved the changes July 7. SPI staff was informed of the changes on the afternoon of July 9, and a letter outlining the changes was sent to members after that. SPI plans to hold a series of webinars, starting either late in the week of July 12 or early in the week of July 19, to outline the changes to its members.
Carteaux said that with the cutbacks, SPI now has a staff of 38. He did not disclose the extent of the cutbacks, but several others estimated the previous staff of the SPI staff at close to 50. In addition, SPI said regional office space would be eliminated as leases expire.
“We had budgeted for the impact from the reduction in dues,” said Carteaux. “We had frozen salaries at 2008 levels and cut some wages as much as 15 percent. The stimulus package for NPE2009 is what pushed and hastened these changes.”
It is not a move that he or the board regrets. “Because of the unprecedented economic hardship, the stimulus plan for NPE was the right thing to do and extremely necessary to jump-start the industry and to give the industry a positive outlook” going forward, Carteaux said.
Under SPI's flattened organization structure, there will be three core groups — public policy, communications, and marketing and trade shows. The three industry councils will report to those groups, but have budget authority and work directly with the board on priorities for spending. In addition to chairman and vice chairman, they will also now have treasurers and conference chairs.
With the changes, members will no longer be able to allocate a portion of their dues to the now defunct business groups. Instead, their dues will go directly to either the equipment, material suppliers or processors council. Carteaux said there were no changes in the dues structure planned.
As part of the restructuring, the number of SPI conferences will be reduced to six, with all conference planning done by the trade show group, not the individual councils.
In addition to the spring and fall board meetings, SPI will hold a machinery conference, a vinyl products meeting, an annual processor conference, a fluoropolymer conference and two food, drug and cosmetic packaging conferences. That group will also hold a biennial global conference.
“The changes allow for cross-sharing of information and eliminates a number of redundancies,” he said. “It creates a much more nimble organization. We want and need more involvement from members and we believe we are creating a structure to do that.
“This is not a tactical cost-cutting measure,” said Carteaux. “We sat down and said that if we were starting with a clean sheet of paper, how would we organize ourselves to do what we need to do for members and for SPI.”