For most of the North American plastics industry, the past couple of years have been pretty good. The economy has been growing — slowly, for sure, but growing. Some markets, like automotive, have been quite strong.
Think about it. Even in the tooling sector (which has been under competitive pressure internationally for decades), the biggest problem many companies have is how to grow fast enough to meet customers' demand.
If your major concern is hiring enough talented workers to keep up with business, you don't have a lot to complain about.
But there's one sector of the plastics industry that's been through a tough couple of years, and has some pretty legitimate complaints: recycling.
The extent of the problem hasn't really hit home yet, because official plastics recycling rate numbers lag by more than a year. But based on the numbers that I've seen from our upcoming ranking of North American recyclers and brokers (to be published in our May 2 issue), I think there are problems on the horizon.
First, we're starting to see companies going out of business. About 11 companies that were in our 2015 ranking won't show up again this year. (We'll have nine new companies on the list, but they didn't all start business in the last year.)
Some others are still in business, but they're no longer selling material, because they've been purchased by plastics processors. Why? In some cases it's because processors that depend on having a consistent supply of recycled plastic are buying their suppliers, to keep them afloat and in business.
Recyclers' biggest problem is low virgin resin prices, which are mostly the result of historically low oil prices.
Resin prices go up and down, and recyclers need to deal with the changes just like everyone else in the plastics industry. The strongest companies will survive — I have no doubt that plastics recycling remains a sustainable business.
But I wonder if conditions are about to get worse.
It's hard to predict exactly what resin prices are going to do in the next few years, but we know there's a lot of new polyethylene capacity scheduled to start operating in North America.
The experts at the recent Institute of Scrap Recycling Industries Inc. and Plastics Recycling 2016 conferences have been noticing some of the same problems.
Patty Moore, with plastics recycling consulting firm Moore Recycling Associates Inc., is very aware of the challenges, but she remains optimistic.
The decision to use recycled resin is not just about its cost, she said. There are other benefits, including a lower carbon footprint, and helping to reduce litter and marine debris.
“I remain very confident that recycling will continue to play a major role in our waste management and recycling strategies and in our sustainable materials management strategies,” she said.
Joe Pickard, chief economist and director of commodities at ISRI, says 2015 may be one of the worst years for recyclers in a generation.
Even then, Pickard is taking a most positive long-term outlook.
“I think it's important to remember this is a cyclical, evolving industry,” he said at the Plastics Recycling conference. “Even though we are going through a short-term downturn, long-term indicators are extremely positive for your industry. So the challenges we face today also present us with opportunities.”
Plastics have more than its share of critics who complain about the single-use nature of plastic products. Recyclers are a largely untapped resource with a good story to tell in the court of public opinion.
A healthy and growing plastics recycling sector is good for the plastics industry as a whole.
Loepp is editor of Plastics News and author of “The Plastics Blog.” Follow him on Twitter @donloepp.
