Australia's economy may have weathered the global financial crisis better than many other nations, but the plastics industry, especially rotomolders and auto parts suppliers, have suffered considerably during the past four years.
Australia's federal treasurer, Wayne Swan, said the country's economy continues to be one of the best-performing in the developed world, with enviable growth and employment forecasts.
The international Organisation for Economic Co-operation and Development has said the global economy's recovery has become more fragile, with many developed economies grappling with sluggish growth and stubbornly high numbers of unemployment.
Australia, against the backdrop of a patchy global recovery, is “well ahead of the pack” and “better-placed” to weather economic challenges, according to Swan.
But many in the plastics industry have felt the brunt of the global financial crisis, despite Swan's rosy forecasts.
Leisa Dolan, CEO of the Brisbane-based Association of Rotational Molders Australasia Inc., said the group has seen membership decline as a result of company closures and buyouts. In Australia and New Zealand, 16 molders closed shop in 2010; four more have followed suit so far in 2011. And she predicts still more.
“Rotational molders have just had their lowest quarter in a decade for material usage. We may not have seen such sharp declines as other parts of the world, but recovery is not as rapid,” Dolan said. She blames the “double whammy” of natural disasters closely following the financial crisis.
Some sectors are doing better than others, she said. Suppliers to Australia's booming minerals and petroleum sector are faring well. But makers of agricultural and consumer parts and products, especially water tanks, boats, toys and furniture, are “suffering.”
ARMA is investing in programs to help members switch from commodity to custom molding. That includes employee training and emphasizing the role of design in tackling high-end pieces.
“Those who survive will move to a different suite of products and different skill sets,” she said.
ARMA also is spearheading the establishment of an online mold register through which rotomolders can license or sell designs or molds.
Lex Edmond, president of the Society of Plastics Engineers Australia-New Zealand, said plastic product firms supplying the auto industry felt the brunt of the global financial crisis because the part volume has decreased drastically. “The volume isn't there anymore,” Edmond said.
Cheaper parts are being sourced offshore, forcing suppliers to shift away from automotive.
There are still positive stories, however. In June 2009, Trident Plastics (SA) Pty. Ltd., an automotive molder in Woodville, Australia, went into voluntary administration after a major customer failed to make a payment.
The business was put up for sale and nine potential buyers were lined up, but creditors returned control to Trident directors in August 2009 after the firm showed positive cash flow during the 10 weeks it was under administration, according to owner and CEO Steen Saurbrey.
Others were not so lucky. Two other Adelaide-based Trident companies — Pacific Tool Co. Pty. Ltd. and Trident Tooling Pty. Ltd. — closed in June 2009.
Saurbrey said Trident, and Australia's plastics industry in general, was hit hard by the global auto industry downturn. Today, the situation is only slightly better.
Australia's battered car sales are still recovering. Australian automaker GM Holden Ltd. was producing roughly 800 cars a day before the global crisis knocked that daily output down to about 280 cars. Even now production is only about 400 cars a day.
“There's still a long way to go,” Saurbrey said.
John Petschel, managing director of plastic product designer and manufacturer APS Innovations Pty. Ltd. of Ferntree Gully, sees growth opportunities in plastics, but domestic manufacturers are not always taking advantage of them. “Companies are going offshore more than they need to,” he said.
He said too many firms inhibit growth by not putting capital back into their businesses to make them globally competitive. “They are effectively slowly dying because they are losing touch with what's required to get new, or maintain existing, clients,” he said.
Petschel said he knows of only a few Australian businesses starting to follow Europe's lead of creating “lights out” facilities, for example. Those firms' products are in high demand, he said.
Kevin Thomson, director of Eco Products Agency in Sydney and former SPE ANZ president, said many firms are feeling the pressure of rising electric rates.
“Older companies that still use old, non-energy-efficient equipment find their electrical costs are almost unmanageable. And they are in no position to buy new machinery,” Thomson said.
For plastics companies to grow and increase efficiency during the next few years, they need to improve their technical processes, become more automated, and make niche products that fit the Australian market's needs.
But it's not all bad news.
SPE ANZ's Edmond said food packaging has seen “incredible growth,” because it is mainly produced onshore and does not face much international competition. The Australian mining industry also is showing growth for plastic-lined tanks and pipes. “It's an area that often flies under the radar, but is certainly an area in which plastic product manufacturers should be reaping rewards,” he said.
One project with potential to boost domestic plastics production, Edmond said, is a proposed National Broadband Network — a US$35 billion Australian government initiative for delivering high-speed broadband to nearly all Australians.
Work involves laying a vast network of fiber-optic cable.
“There is a lot of plastic-encased cabling and piping to be put around the country so there is plenty of manufacturing to go around,” Edmond said.