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May 07, 2020 10:21 AM

Long-term outlook for industry in COVID not so clear

Steve Toloken
Assistant Managing Editor
Plastics News Staff
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    If your job is like mine and we're both fortunate to be working as the coronavirus pandemic sends unemployment shooting up, the work pace has quickened, the long-term outlook is foggier and there's a lot to adjust to.

    In the short term, the last few days have seen clear signs of the economic impact in plastics, like Dow Inc.'s April 30 announcement that it's idling five resin plants in the Americas for at least a month.

    Others are chiming in, too. Publicly traded molding equipment supplier Barnes Industrial Group, which makes hot runners, mold systems and controllers, projected sales in its industrial businesses will drop more than 20 percent in the second quarter.

    We'll probably get a clearer picture May 7, when industrial conglomerate Hillenbrand Inc. reports its earnings.

    Hillenbrand owns big names in plastics equipment like Coperion, Milacron and Mold-Masters, and the broad economic reach of those companies across the industry should give us a better sense.

    But even as we all grapple with the day to day, some are looking longer term and wondering what the impact of the crisis will be when we can finally get beyond it, even if that takes a year or more to really do that.

    Along those lines, I got an email this morning from an industry consultant wondering what I thought the long-term impact of the crisis would be on the push for a more sustainable plastics industry.

    That's one of the areas I see people grappling with to determine a long-term impact. The other is around reshoring.

    And I admit when it comes to both of those, I don't have a clear idea. Maybe no one does.

    On sustainability, including plastic bans and new laws aimed at improving the poor state of plastics recycling, I think the pandemic will be a pause. There won't be any big rethink on the part of the public, but more of a holding pattern.

    So far that's the consensus from both industry types, like Dow CEO Jim Fitterling in a recent address to an online industry conference, and environmental groups and lawmakers on that side.

    By this logic, it's more likely to be a pause because the problems with packaging that drive the concerns will remain.

    Plastics recycling rates will remain low. There's very little recycled content used in plastics packaging that could create an economic push for more circular plastics. Those challenges will still be there.

    Of course, what we don't know is whether COVID-19 will lessen what has been a lot of public concerns around environmental waste and plastics.

    Right now, though, plastics companies are like many others, focused on stepping up to tackle the immediate public health crisis.

    The public is seeing that. There's a lot of coverage about efforts to retool factories to make medical equipment for front-line workers or masks for the public or testing equipment.

    U.S. manufacturing is being celebrated. Some are pointing to rapid pivots by U.S. factories, and problems depending on overseas supply chains in a crisis, as a reason to manufacture more in the United States.

    Along those lines, media reports say there's a debate in the White House about an executive order requiring more purchasing of medical goods and drugs within the U.S.

    But on the other hand, we got pushback on a story we wrote recently quoting executives and supply chain experts that the pandemic could result in more reshoring. A Midwest plastics firm wrote us to say they weren't seeing it and that cost — and sourcing in China — was still king.

    So, I'm back to saying I don't know what these long-term impacts will be. I do know that like all of us, I'll be watching the economic data this week.

    Toloken is a Plastics News assistant managing editor. Follow him on Twitter @Steve_Toloken.

    Plastics News editorial cartoon by Rich Williams. Cartoons are available for purchase at www.plasticsnews.com/data-lists/cartoons

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