PN survey shows optimism for blow molders in North America

Business conditions for North American blow molders improved substantially in the third quarter of this year, and the prospects for the coming months appear bright. This is according to a survey of blow molders recently conducted by Plastics News Research. The survey is part of a new research initiative by PN that will capture and analyze activity in the major sectors of the plastics industry on a regular basis and then identify and report on the pertinent trends in this data.

From my perspective, one of the new and exciting aspects of this research effort, which we are calling the Plastics News Business Monitor, is that we will use this data to create a series of indices that measure levels of business activity for plastics processors and other suppliers to the plastics industry. We will capture information on the most important business activities on a regularly-scheduled basis, and we will track the changes in these metrics over time. The plastics industry is divided into an array of diverse market segments, and these indices will give market participants a more in-depth look at these various segments than ever before.

In the third quarter, our Blow Molding Business Index was 119.6. This index is based on 100, and a value above 100 indicates that business levels increased when compared with the previous quarter, and a value below 100 indicates that business levels declined. Since this is our very first quarter of conducting the survey and calculating the index, it is difficult to put this number in a historical context, but my experience tells me that a value of 119.6 is pretty strong.

If we take a closer look at the sub-indices that comprise the total index, the levels for new orders, production, employees and export orders were all steady-to-higher for the vast majority of respondents. Therefore, it is not surprising that the future expectations component was strongly optimistic, and that this high level of optimism was reflected in the robust level for capital spending plans.

There were two components of the index that were negative: backlogs and prices received for products. This indicates that despite the rising level of demand for blow molded products, the buyers of these products still possess a considerable amount of leverage in the market. A steady upward trend will ultimately lead to longer backlogs, and it will also put upward pressure on prices received for blow molded products.

These comparisons between the trends in new orders and backlogs or new orders and prices received are just a small subset of the types of analyses that can be performed on these data, and our analyses will only get richer as we start to develop historical trend lines. Understanding the relationships amongst all of these activities, and how changes in one or two of these activities can result in changes in the others are crucial to the successful management of companies engaged in manufacturing plastics products.

Along with the questions on business activity levels, we also asked blow molders questions about their concerns for the future and any changes in their business operations they were planning. These questions provide an interesting snapshot into how they are dealing with the current business environment, and I expect it will be interesting to note how their concerns and plans change over time.

To our question about future business concerns, the problem receiving the highest number of responses was attracting or recruiting new employees. Interestingly, the second most often mentioned concern was the rising cost of health care. It is truly an odd sign of our times, when the biggest concerns of plastics processors by a fairly wide margin are not materials prices or foreign competition or keeping up with technological advances but rather getting enough workers and then providing them with health care benefits.

As for the changes that blow molders are planning for, by far the response given most often was to add employees. The second most popular response was an expansion to their operation, and green initiatives came in third. These are optimistic responses, so it is clear that most of the people who answered our survey expect that business conditions will be good not just in the near term, but also for the foreseeable future.

If you own or work for a blow molding operation, and if the responsibilities for business planning and forecasting fall anywhere in your job description, then there is a lot of useful information that can be gleaned from this data. You probably do not need me to tell you that there is a real shortage of timely market information for suppliers of blow molded products. To keep this flow of information going, all you need to do is respond to the short survey when you receive it and return it to us. We will take care of the rest.

In the coming months we have plans to roll out surveys and calculate indices for other segments of the plastics industry such as injection molding, film and sheet, construction materials, thermoformed products, and even plastics molds. Over the last 25 years we have constructed a comprehensive database comprised of the largest manufacturers in each of these segments, and with their cooperation, we hope to supply them with powerful data that will enable them to conduct business more profitably.

Of course, market conditions are dynamic and there is always an element of uncertainty. But therein lies the inherent value of an ongoing and timely dialogue with participants in the marketplace. And that is what we hope to provide with our new Plastics News Business Monitor Indices.