Wherever there is tension in the U.S. economy, blow molders seem to be right in the middle of it.
On one side, there is a slowly growing population that is fully employed and is gradually increasing its overall level of spending. On one hand, this means many businesses report difficulties in attracting and retaining qualified personnel, but overall business levels are good. On the other hand, business investment is decelerating — or in some cases, declining — and the manufacturing sector is already well into a phase of consolidation.
Economists, analysts and business leaders continue to struggle with the question of which of these forces, if any, exert greater influence on the economy in 2020. Will the strength of the consumer sector be enough to provide a soft landing for the industrial sector, which will then be followed by stability or even a return to growth in business investment next year? Or will the decline in business investment gain momentum and ultimately pull the consumer sector down with it. To put it more succinctly, will we have an overall economic recession next year or not?
On top of these cyclical macroeconomic forces, many blow molders are confronted by a marketplace that is increasingly disinclined to purchase their products, especially plastic bottles. The market move may stem from declining consumption of the product in the bottle, or it may stem from a reluctance to use a plastic bottle regardless of the contents.
Combining all of these factors, my outlook calls for a gradual decline in the overall production of blow molded products in the coming year. This decline will not be dramatic, and some of the segments and companies in the industry will buck this trend and solid growth next year. But trends in the recent data indicate a continued, downward drift in overall market demand.
Taking a longer-term perspective, I think the macroeconomic data is out of phase now, but it is likely to realign and return to stronger growth sometime in the future. However, the issues pertaining to market acceptance that affect blow molders at the present time represent the greater risk because they may persist, and even worsen, for a while.