An agricultural film and bag maker severely affected by floods in the state of Queensland, Australia, has used the disaster as an opportunity to shift its business focus.
The devastating floods saw three-quarters of Queensland declared a disaster zone. Since the floods began last November, more than 30,000 homes have been destroyed and 35 people are dead.
On Jan. 11, the Brisbane River broke its banks, leading to evacuations in Brisbane's central business district and surrounding suburbs. The river peaked Jan. 13, creating the worst flood the city has endured since 1974.
Nine feet of water covered the Agriplas factory in the riverside Brisbane suburb of Sumner Park. The company, which uses a blend of linear low density polyethylene and metallocene to make three-layer mulch film, shrink wrap for cucumbers, and banana bunch covers, lost about 10 extruders, eight bag makers, five printers and equipment such as folding machines, said owner Doug Trenchard. Unable to operate for six weeks, the factory slowly dried out with the help of electric heaters and industrial fans.
In mid-2010, Agriplas was inundated with mulch film orders from northern Queensland, before the late-year heavy rains caused it to suffer a downturn, he said. “We were producing the product non-stop because it was in such high demand. But then the rains started and suddenly [customers] stopped ordering. We had excess mulch stock piled up in our factory. Then we experienced our own floods in Brisbane so we lost $130,000 of mulch covers,” Trenchard said.
But another natural disaster still to hit Queensland would affect the firm's banana cover market: a Category 5 tropical cyclone named Yasi on Feb. 3, which reached maximum wind speeds of 177 miles an hour.
“After the floods, we were already considering the future of our banana bags. Then we heard what happened to the north Queensland banana plantations and decided we weren't going to manufacture them anymore,” said Trenchard, whose family owns Sumner Park-based extrusion and conversion firm Makropac Pty. Ltd., which is Agriplas' parent.
The flooding caused an estimated US$1.03 billion in insured losses in the area. Uninsured, Agriplas relied on money from Queensland government flood funds and donations from friends.
“Businesses in the plastics industry have a high risk of fire, so [the cost of] insurance is high,” he said. “We found only one insurer that would cover us and we didn't even think of looking at flood cover.”
Trenchard said he is overwhelmed by the generosity of friends and the community. “One friend donated $10,000 to help the business. We can't even comprehend that.”
An army of volunteers helped Agriplas sift through the factory in the days after the floods. “The day after the water had drained, 35 people came to help. The next day, 45 showed up,” he said.
Depending on business size, the Queensland government offers disaster-assistance grants of up to US$50,000, and concessional loans of up to US$650,000, said a spokesman for the Brisbane-based Chamber of Commerce and Industry Queensland.
Trenchard sees the floods as an opportunity to lift Agriplas “out of a rut.” Some of the firm's previous products, such as dry-cleaning bag film and small checkout bags, had faced fierce competition from Chinese exporters.
“Like most small plastic businesses, we were losing momentum,” he said. “We would run at a loss one month, and make a profit the next.”
But post-flood, the firm has shifted its focus to standardized products, eliminating product lines and machinery that were costing it money. “We cleaned out the businesses, got rid of every old piece of equipment and it now looks new again,” he said.
Australia and New Zealand's spate of natural disasters have sent shock waves through industry supply chains.
Leisa Dolan, CEO of the Brisbane-based Association of Rotational Molders Australasia Inc., said members were affected by earthquakes in Christchurch, New Zealand; floods in Queensland and rural New South Wales and Victoria; and Cyclone Yasi.
Major quakes occurred in Christchurch on Sept. 4 and Feb. 22, but aftershocks continue to hit the city and surrounding area.
Dolan predicted not all damaged Christchurch businesses will recover. “Three members' businesses were completely destroyed, and another four substantially damaged. The statistics on post-disaster recovery are disheartening,” she said.
The aftershocks make recovery “very difficult,” Dolan said, with some members unable to rebuild their businesses and some facing health issues. Accident rates and absenteeism have increased. “No one's sleeping well when they don't know if the next aftershock will be another ‘big one,' “ she said.
“Surprisingly few” rotomolding factories were flooded, but the floods affected the supply chain, with many roads impassable for weeks. “The agricultural sector was hit hard and that's a big market for rotational molders' products,” Dolan said.
Some enterprising manufacturers found niche markets to supply water tanks and portable toilets to flood, quake and cyclone- affected regions, but she warned that was a short-term boost.
Lex Edmond, president of the Society of Plastics Engineers Australia-New Zealand, said most of Australia's major resin suppliers and plastics processors are based in Adelaide, South Australia, and Melbourne, Victoria, so the industry has not felt the full brunt of the disasters.
But, he said, the disasters can be viewed as a “good news story” for suppliers to the building, construction and furniture industries. “Flood-affected businesses and homeowners will need to buy new furniture so polyurethane foam suppliers will be in high demand,” he noted.
Unaffected businesses seem happy to help those less fortunate. For example, Sydney-based Australian Plastics Profiles Pty. Ltd., which provides PVC profiles for retail, electrical and building industries, joined forces with several of the Australian electrical industry's leading names to contribute funds for flood victims.
Through employee donations matched by the companies, percentage-of-sale donations and cash sums, about US$1.09 million was donated by the group.
Australian Composite Technology Pty. Ltd. of Melbourne has reduced the cost of its recycled-plastic fence posts for flood victims. ACT manufactures the posts from recycled engineering-grade plastics and they are sold for general fencing and into particularly agriculture, equine, viticulture and aquaculture markets.