There was one glaring omission in the Frank Esposito article regarding mergers and acquisitions [“M&A upside: private equity, packaging & medical deals,” Jan. 25, Page 1], which is the role of the Chinese and how they will affect the future of the North American plastics industry.
Manufacturing numbers took a large hit due to the economic crisis, and the lack of flowing credit essentially stalled any movement in mergers and acquisitions. However, the role of China and its impact upon manufacturing will undoubtedly have a profound impact on the future of this industry as much as any other factor.
This is by no means a stirring revelation to the manufacturing community, yet the significance is largely overlooked and ignored. We tend to examine our most pressing concerns and fail to think about the long-term implications about our industry. Nick Chini had the right frame of thought when he referenced the looming inflation the U.S. may face. However, I would add to his comment, “If you need to sell, sell now” ... and also sell if you are not prepared to face the challenges that will occur in the future.
The economic crisis swallowed many once-profitable and -mighty companies and we have been shown that everyone is vulnerable. The economy will rebound, to some degree, but we are still left with the entire issue of Chinese manufacturing. There is no economic recovery that could possibly counteract the threat that China poses.
Those who failed to understand the long-term trends in our industry have vanished and there is no amount of economic recovery that can undo this. I would urge any business considering selling to take a long, hard, sobering look at your company and analyze your standing in plastics manufacturing for the long-term.