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February 16, 2016 01:00 AM

German processors see record sales, but not as high as forecast

David Vink
Plastics News Europe
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    Westerheide

    The 1.3 percent increase in sales for the German plastics processing industry in 2015 was lower than the 2.6 percent growth in 2014, but resulted in a new record level of 59.8 billion euros ($55.8 billion).

    Sales were nearly unchanged at 37.8 billion euros ($42.2 billion) in the domestic market, all growth being provided by 3.6 percent growth in international sales to 22 billion euros ($24.5 billion). Although the industry's GKV trade association met its previous forecast for a record, its growth was half of what it had predicted.

    Despite slightly higher overall sales, the volume of plastics processed was unchanged at 13.6 million metric tons, compared with 3 percent growth in 2014. Although the number of plastics processing member companies declined 0.5 percent to 2,583, the number of employees rose 2.6 percent to 316,000.

    GKV announced the results at its traditional annual Ash Wednesday results briefing on Feb. 10, when president Dirk E. O. Westerheide pointed out sales growth had been weak in early 2015 and had only matched, rather than exceeded, growth in German gross national product (GNP), as usually applies.

    Packaging, represented by the IK association within GKV had strongest growth of 2.7 percent to 14.4 million euros ($16 million) with 2.2 percent volume growth to 4.5 million tonnes, followed by technical parts with 3.5 percent growth to 14.4 million euros and volume up 3.7 percent to 2.8 million tonnes.

    Building industry sales declined 0.9 to 11.6 million euros ($12.9 million), volume by 6 percent to 3 million tonnes. Other areas of household, consumer, medical, sport & leisure achieved 0.6 percent growth to 19.1 million euors ($21.3 million), with volume unchanged at 3.3 million tonnes.

    Despite strong packaging growth, many producers in the packaging sector suffered reduced margins resulting from commodity plastic material shortages with producers applying force majeure clauses, as well as high increases and volatility in raw material prices, Westerheide observed that the situation “has damaged the entire value creation chain.”

    Margins were also restricted by high cost of acquiring materials in short supply from other world regions, due to euro currency weakness. Westerheide said there are hopes of future relief here with a number of EU states supporting marked reduction or elimination of import duties on raw material imports from outside the EU and Turkey “maybe already in the course of this year.”

    Building industry and automotive technical parts businesses were negatively affected by the poor economic situation and embargo effects on Russian business. Looking ahead, Westerheide talked of “impulses” in the building industry and consumption in general arising from the sudden influx of people from war-torn and other regions during 2015.

    With around one third of specialists and a similar share of other staff in the German plastics presently over the age of 50, Westerheide said there will be 100,000 positions needing to be filled in 15 years time, yet maintenance of present training levels can only provide 50,000 replacement staff. Recent new immigrants could therefore find places in the industry with provision of sufficient training, Westerheide suggested.

    Westerheide did not venture to predict results for 2016, bearing in mind restrained growth to be expected in China and continuing business sanctions against Russia. But 57 percent of member companies surveyed said they expected higher turnover in 2016, 34 percent unchanged and just 9 percent expecting lower sales. Similarly, only 17 percent expected lower profits, 45 percent unchanged and 38 percent increased profits. The number of employees in the industry should increase again, with 26 percent planning increased staff levels, 62 percent maintaining at current levels and 12 percent expecting to reduce staff.

    This should all materialize, “if politicians finally present a friendly face to business again and solve outstanding problems,” Westerheide warned in his conclusion.

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