Europe’s Plastics Machinery Manufacturers Concerned Over the UK’s “Brexit”

By: Tony Deligio 6. July 2016

The United Kingdom is both an important export market for Europe’s plastics suppliers, as well as a location for independent subsidiaries.


In a July 4 press release, Germany’s plastics and rubber machinery association (VDMA), which at 3100 members claims to be the largest industry association in Europe, noted “with regret” the British decision to leave the EU.


The releases subheads summed up the VDMA’s anxieties, stating “Great Britain until now an important market for the industry” and “Uncertainty over future ties with EU cause for concern”.


VDMA President and head of eponymously named extrusion equipment supplier Reifenhäuser, Ulrich Reifenhäuser noted that for two year’s running, the United Kingdom has been the seventh largest export market for Germany machinery, rising 6.6% in 2015 to a value of 152 million euro. In the first quarter of this year, the U.K. actually jumped to the fifth spot, rising 25.9%.


Thorsten Kühmann, the VDMA’s managing director said in the release that many of the group’s members have branches in the UK, adding that “these close ties between our UK partners and the continent will not change.” The release however went on to say:


Plastics and rubber machinery manufacturers do however fear that Brexit will have an impact on investment decisions and hope that the period of uncertainty will be as short as possible.


Many German and Austrian machinery companies have long-standing ties to the UK with Engel UK Ltd. and Arburg Ltd. in Warwick since 1963 and 1992, respectively. Those firms are joined by many other independent subsidiaries including KraussMaffei Group UK in Warrington, Cheshire and Wittmann Battenfeld Group UK, in Wellingborough.


Speaking at his company's Automotive Trend.Scaut event in Livonia, Mich. on June 29, Engel CEO Peter Neumann acknowledged the questions the UK's move poses for companies like his. "With the Brexit complete, we now have a new challenge," Neumann said. "No one really knows what will happen, but the next few years will show what influence this will have to the European economy."


Graeme Herlihy, managing director of Engel's UK subsidiary, which has 34 employees, told Plastics Technology it's too early to gauge any impact. "There's been plenty of talk, but nothing concrete," Herlihy said. "Orders are continuing to come in from projects that were under discussion pre Brexit. I think it will take much longer to establish what the impact will be.


The disruptive vote was held Thursday June, 23, with 71.8% of eligible voters, or more than 30 million people, participating, according to the BBC. By a 52% to 48% margin, “leave” voters pushed through the so-called “Brexit”, in a referendum that saw the highest turnout for a UK-wide vote since the 1992 general election.


The day before the vote on June 22, VDMA’s Chairman Reinhold Festge posted an editorial entitled “Europe Cannot Be Allowed to Die”, pointing out the EU’s deficiencies but also noting its overall positive influence on the region.


The history books might show that my generation was too lenient towards the bureaucracy in Brussels, but I am nonetheless convinced that the only alternative to this EU is a reformed, transparent and effective EU. A return to national egoism would certainly do nothing to help Europe assert itself against the increasing competition of a globalized world.


In its post-Brexit release, the VDMA said the British Plastics Federation should continue to be a member and partner of the European umbrella organization EUROMAP.


In a June 24 release laying out its expectations for 2016, the VDMA actually revised its outlook 2% higher. Whether that holds given the tumult the region is experiencing in the wake of the Brexit vote remains to be seen.


In the release, VDMA notes that 2015 output was up by 4.7% with exports 1.6% higher, before adding that business since then had “picked up markedly, prompting the positive forecast for 2016.” The VDMA cited momentum in sales to EU customers and North America. Specifically, the U.S. topped the sales market rankings, followed by China, Poland and Mexico.


In March, the Italian plastics and rubber machinery supplier association, Assocomaplast, reported its 2015 results, which marked an all-time record for exports of 2.9 billion euro, topping the previous high in 2007 of 2.75 billion. Sales to the EU helped push Assocomaplast members to that record, rising 11%. 


Assocomaplast's Stefania Arioli said the UK was the seventh-largest export market for its members in 2015, accounting for more than 112 million euros in machinery, equipment and molds. Arioli noted that extrusion equipment is a particularly strong market for its members in Britain. Arioli added that Brexit was a hot topic at the association's most recent meeting, held June 28.


"Though operators fear the possible consequences," Arioli told Plastics Technology, "generally speaking, we believe it is better not to let emotions overwhelm us. A real evaluation on its impact could be done in a few months." 


The View From The States
The UK is the U.S.'s ninth largest export market, accounting for more than $1.3 billion in goods in 2015, according to Michael Taylor, VP international affairs and trade for SPI. Taylor said that day-to-day operations of businesses in the U.S., UK and EU might not immediately feel an effect, but added—"All businesses engaged in the transatlantic market should prepare for the changes that are inevitably coming." 


North American Auto Sales Will Tap On the Brakes in 2017

By: Tony Deligio 6. July 2016

After spiking thanks to pent-up demand following the Great Recession of 2009, automotive sales will slow in coming years.


That’s the outlook from Haig Stoddard, an industry analyst for WardsAutomotive who has covered the market 30 years. Stoddard spoke at injection molding and automation supplier Engel’s first ever U.S.-hosted Automotive Trend.Scaut event on June 29 in Livonia, Mich.


Stoddard expected light vehicle sales of 21 million in North America (consisting of the U.S. Canada and Mexico) for 2016, in line with the record set in 2015. The U.S. accounts for about 85% of North America’s total volume, and Stoddard sees this year as the peak, as pent-up demand lingering from the 2009 recession has mostly been satiated.


In the U.S., forecast sales for 2016 are 17.6 million, up from 17.4 million in 2015, although when he spoke, Stoddard said the market was running at a 17.4 million rate. Stoddard still believed it would move higher since during a normal cyclical downturn, the “industry doesn’t want to let go,” and it allows production to more greatly outstrip demand.


On the plus side, Stoddard said there are still a lot of old vehicles on road, including many that are not WiFi enabled, which could push consumers into newer models. He also believes interest rates will stay lower, easing financing, and said there will be more drivers, including more young adults moving out of their parents’ homes, who will need vehicles. In fact, Stoddard said the U.S. adds 2 to 3 million licensed drivers per year.


On the potentially negative side, Stoddard noted that the market has seen record lease volume, including accounting for more than 30% sales in first quarter, meaning there will be 3 to 4 million vehicles coming off lease this year and the next three years. This could flood the used car market, pushing shoppers to buy there. He also noted that there is uncertainly in business community, with the November presidential election and Brexit only adding to that sense of anxiety.


Elsewhere in North America, Stoddard said Canada can expect another record year in 2016, topping 1.9 million units, with a slowdown to come in 2017. Mexico will also see a record volume of 1.5 million units in 2016.


A Look Forward
In terms of a production forecast, Stoddard forecast a volume of 17.8 million light vehicles to be manufactured in North America in 2016, with a dip down to 17.1 million in 2017 and 2018, before rising back up to 17.5 million in 2019.


Part of that increase is the result of new plants and expansions, including new facilities in Mexico for VW, Daimler, Nissan, Ford, BMW and Toyota, plus Volvo’s planned site in Ridgeville, S.C.  


40 Years On, TSCA Reformed Marking First Major Update to Environmental Law in 20 Years

By: Tony Deligio 22. June 2016


Plastics industry representatives and environmentalists hailed the passage of TSCA reform, a reboot four decades in the making.


The fact that representatives of both sides of the issue offered praise and criticism of the Frank R. Lautenberg Chemical Safety for the 21st Century Act indicates the law, which amends the Toxic Substance Control Act of 1976, represents some amount of compromise on the issue, a rare commodity in Washington DC these days.


TSCA reform was one of six measures signed on June 22, and it enjoyed bipartisan support in both the House and the Senate. Apart from naming post offices, there’s not much the both parties and the president can agree on these days. Per the White House, improvements to TSCA included in the reforms include:


  • Mandatory requirement for EPA to evaluate existing chemicals with clear and enforceable deadlines;
  • New risk-based safety standard;
  • Increased public transparency for chemical information;
  • Consistent source of funding for EPA to carry out the responsibilities under the new law


In a blog post, Environmental Protection Agency (EPA) head Gina McCarthy described the law as the first major update to an environmental statute in 20 years (emphasis McCarthy’s).


“TSCA was intended to be one of our nation’s foundational environmental laws. In terms of its potential for positive impact, it should have ranked right alongside the Clean Water Act and the Clean Air Act, which, since the 70’s, have dramatically improved water quality and helped clean up 70 percent of our nation’s air pollution. But it hasn’t….Forty years after TSCA was enacted, there are still tens of thousands of chemicals on the market that have never been evaluated for safety, because TSCA didn’t require it.”


The original Toxic Substances Control Act, signed by President Gerald Ford in October 1976, was intended to provide the EPA:


Authority to require reporting, record-keeping and testing requirements, and restrictions relating to chemical substances and/or mixtures. Certain substances are generally excluded from TSCA, including, among others, food, drugs, cosmetics and pesticides.


Prior to its passage, the EPA’s deputy administrator, John R. Quarles testified in 1975 specifically about the risks perceived in chemicals including vinyl chloride, fluorocarbon, bischloromethylether (BCME), polybrominated biphenyls (PBBs), and polychlorinated biphenyls (PCBs), saying these chemicals “point to the inadequacy of our present approach to controlling toxic substances.” At the time, Quarles said that every year about 600 new chemical compounds were introduced in the United States for commercial use.


William Carteaux, president and CEO of SPI: The Plastics Industry Trade Association, thanked President Obama for signing the bill into law.


The U.S. plastics industry thanks President Barack Obama for signing this vital piece of legislation. H.R. 2576 delivers a much-needed update to the nation’s chemical regulatory infrastructure and ensures that businesses in the plastics industry can continue to meet the needs of consumers by manufacturing the safest, strongest and most technologically advanced products and materials in the world.


Andy Igrejas, the director of Safer Chemicals, Healthy Families—a coalition of health, environmental, labor and business organizations—noted the importance of the bill’s passage but also noted its perceived limitations.


President Obama’s signature on this bill marks both the end of a long process, and the beginning of a new chapter as the EPA puts its new authority to work. The chemical backlog is enormous. It's vital that EPA starts strong and extracts the maximum public health benefits possible from the new law. Because of the limitations in this bill, however, it will also be crucial that the growing demand for safer chemicals continue across society, from state and local governments, retailers, manufacturers and informed consumers.


Cal Dooley, president and CEO of the American Chemistry Council, praised the bill’s passage, noting the ACC’s long-running interest in the reform.


The reform is a historic bipartisan achievement at a time when such achievements are increasingly rare. It is the first major environmental law passed since 1990. Under it, chemical evaluation and regulation will meet new 21st century standards, which will improve the lives of American families, support American manufacturing and bolster U.S. economic growth. Reforming TSCA has been ACC’s top priority since 2008. For the past three years, ACC and our coalition partners, the American Alliance for Innovation (AAI), have worked together to support bipartisan efforts to modernize TSCA in a way that ensures smart, effective chemical regulation.


The reform was named after former New Jersey Democratic Senator Frank Lautenberg, who along with Louisiana Senator David Vitter initially introduced TSCA reform in 2013. Lautenberg passed away three years ago on June 3, 2013 at 89, not living long enough to see the law that even the Environmental Defense Fund called a “really big deal.”


Cautious Optimism for Europe’s Plastics Industry Ahead of K

By: Tony Deligio 21. June 2016

As host to the world’s largest plastics show, Germany and Europe’s economic conditions, and specifically plastics demand, come under greater scrutiny in K years.


That demand is down, according to an article from show organizer Messe Düsseldorf, citing data from industry consultant Applied Market Information (AMI), which noted that polymer consumption in 2014 is 10% below 2007 levels. AMI expects nominal growth to return, forecasting that polymer demand is expected rise an average just over 1% per year until 2019.


From 2002 to 2014, plastics production in Europe grew every year except 2009, rising 52% over that time period from 204 million tonnes in 2003 to 311 million tonnes in 2014, according to Plastics Europe. In its most recent report for 2015, which looks back at 2014 data, the trade association reported that the European plastic industry employed 1.45 million people at 62,000 companies generating more than Euro 350 billion in revenue.


That same report found that in 2014, 24.9% of total plastics demand in Europe—47.8 million tonnes—came from Germany, followed by Italy (14.3%), France (9.6%), the U.K. (7.7%) and Spain (7.4%).


Resin Suppliers Are Upbeat
Across the Atlantic, much has been made of the burgeoning production advantages enjoyed by North American resin makers thanks to the natural gas boom, which has lowered key feedstock costs. But more recently, the drop in oil prices has given a boost to Europe’s resin manufacturers who are more reliant on petroleum-derived naphtha.


The article noted that Borealis enjoyed record profits in 2015, quoting CEO Mark Garrett as saying that integrated polyolefin industry margins reached historic highs for the year.


“Despite lower feedstock costs, polyolefin prices did not retreat to the same extent, driven by a tight market as a result of solid demand combined with a supply shortfall, in particular resulting from unplanned production stops. In addition, imports of polyolefins into Europe have been uncompetitive following the weakening of the Euro. We expect this situation to ease in 2016, but we believe the integrated polyolefin industry margin will be solid.”


Messe Düsseldorf also sought the opinion of Melanie Maas-Brunner, Senior Vice President for Performance Materials Europe at BASF, who was also bullish.


“Overall, we look positively at the current state of the European plastics industry. We have seen good business growth in all our segments in 2015 and we are optimistic that those who have the right technologies, people and facilities globally will stay successful. We expect more demand from industries such as medical, transportation as well as from consumer industries such as footwear, sports and leisure. The main trends driving those needs are resource efficiency, light weighting, comfort and energy efficiency.”


Processors, Machinery Makers Optimistic
On the processing side, the report noted that Germany’s converting sector posted moderate growth in 2015, after a record 2014, while in Italy, where consumption has been flat, equipment association Assocomaplast reported a strong upward trend in orders.


Further on the machinery front, Euromap members most recent reports covering 2014 noted that the continent accounted for 40% of the global total of plastics and rubber core machinery sold—euro 13 billion out of euro 32.5 billion. Down slightly from 2013’s share of 41.5%, while China’s grew over the same time period from 30% to 33.5%.


Euromap members continue to export around four times as much core equipment as Chinese companies, in terms of value, with deliveries to Europe and the US on the rise, while shipments to BRIC countries slip. Around 43% of Euromap member exports are within Europe.


Force Majeure’s Take a Toll
A significant challenge to European plastics processors in 2015 was difficulties obtaining raw materials, with more than 40 declarations of force majeure during a period of just four months at one stage in 2015, as major polyolefin plants in Europe stood still for extended periods, “putting significant strains on relationships between suppliers and processors,” per the report, which noted that some processors “had to shut down production lines.”


Could there be relief on the way from the U.S.? The Messe Düsseldorf report noted that Ineos chartered eight ships to bring ethane from Pennsylvania’s Marcellus shale field across the Atlantic, with the first delivery arriving in Norway in late March. Shipments to the company’s refinery at Grangemouth, Scotland, were scheduled to start later this year, with Europe’s first shale-based polyethylene expected tocome onto the market soon after.


Ineos Chairman Jim Ratcliffe noted that U.S. shale could complement the declining supplies of gas from the North Sea, according to the report, with imports of shale-derived ethane acting as a stop-gap measure while his company investigates shale-gas deposites in the U.K. The company is set to drill numerous test cores in 2016, although it does not plan any fracking this year. 

Pictured: Ineos' new ethane storage tank, completed in July 2015 and said to be the largest in Europe.

Snuffed Out: De Facto Death for Halogenated Flame Retardants

By: Tony Deligio 16. June 2016

Market forces and self-policing are pushing the market for flame-retardant (FR) additives in a different direction.


Jesse Dulek started his presentation with a question; How many in the audience liked to burn things growing up? As a product development engineer focused on FR technologies at custom compounder RTP Company, Winona, Minn., Dulek joked that his current job entailed him getting paid for trying to light things on fire, or more accurately, seeing which compounds can keep from igniting, melting or giving off smoke. In addition to running various materials through his own crucible, Dulek’s job also lets him gauge where technology is headed based on the latest promotions from the additive manufacturers he works with.   


“I don't have any suppliers pushing new bromine-free products on me,” Dulek said, “it’s always halogen free. It’s really just a matter of time before halogen free takes over.” Speaking in Denver this May at RTP’s Engineered Plastics Workshop, Dulek and his RTP colleagues walked the attendees through various changes in an array of areas including filled plastics, coloring and, for his portion, flame retardants.


Dulek noted that the 2006 European Union passage of the RoHS (restriction of hazardous substances) directive, despite not directly dictating that FRs be halogen free, has had the effect of pushing halogenated products off the market. “The halogen free world is more complicated,” Dulek said. “We are see an evolution of economics and more and more halogen-free products coming out.”


Generally speaking, halogenated FRs work by inhibiting the chemical reaction in the gas or vapor phase as either an additive or a polymeric product. Non-halogen technologies include phosphorous, hydrated minerals or melamine cyanurate, with benefits and challenges to each.


While halogenated products in general offer lower costs, better processing, greater efficiency and higher physical properties, Dulek said halogen-free alternative have their own perks. Halogen-free products are improving in terms of ease of processing and reduced costs, with more developments on the horizon as new FR standards call for low smoke, low toxicity, less corrosiveness and a lower specific gravity—attributes that further promote halogen free.  


Dulek said RoHS mostly impacted pigments, with a lessened effect on FR, specifically eliminating heavy metals like lead, mercury, cadmium, and hexavalent chromium from colorants, as well as polybrominated biphenyls and polybrominated diphenyl ethers from FRs.


“There are still no global bans on use of halogens,” Dulek said, noting that RTP sees more self-policing. “If somebody doesn’t want them in there, we’re not in a position to deny them,” Dulek said. “All we can do is lay out the options. The biggest thing we need are new FR standards. In building or transportation, the standards are built around smoke, heat release, and toxicity, which drives towards halogen free.”


Despite no explicit bans, OEMs like HP, Dell and IBM have foresworn halogenated FRs, while labels like Blue Angel, White Swan, and Ecolabel specifically call out their elimination.


Pyromaniacs everywhere, take note (image courtesy King Plastic Corp.)

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