How the Coronavirus Crisis Will Change Plastics Processing
I’ll admit, I’m a bit befuddled about the seemingly conflicting accounts I’ve been getting lately about what’s going on in plastics processing. On the one hand, I’m regularly hearing stories and getting press releases about processors ramping up quickly to turn lines that had been running conventional plastics products into very specific personal protection equipment in the fight against the coronavirus pandemic. I’m hearing stories of molders calling their machine builders and even moldmakers to run parts for them due to their own capacity restraints. I’m reading about states like California, New York and others reversing bans on plastic grocery sacks. I’m being told of processors pre-buying resin to meet an expected surge in demand for their products. I’m hearing about processors buying new lines to meet demand. Good stuff, I’m thinking. Plastics processors are really busy.
Then during grocery shopping I’ll make mental notes about what I see and don’t see on the shelves and what it might mean for processors. Bread? Going fast … lots of bags used there. Juice? Dairy products? The shelves are not bare, but not fully stocked either. People are buying these necessities, so it stands to reason there must be demand for lots of bottles, caps, labels. Hand sanitizer? Seems like lots of the “green” products remain, but everything else is moving. Lots of bottles, pumps, gaskets have to be in the pipeline. Toilet paper? Good luck. But it’s being made—lots of it—and the multi-roll packs are all wrapped in plastic. Fresh fruit and veggies going fast; lots of produce bags are likely being churned out. Done shopping, I loop around the store and see five trucks waiting to be unloaded. Lots of pallets. Lots of stretch film. Good stuff, I’m thinking, again. Plastics processors are really busy.
But then I’m also seeing results of our own research (our monthly query of processor subscribers that is the basis of our Plastics Processing Business Index column) and forecasts by plastics industry economists and other pundits that paint a different picture—generally, that business conditions for processors will be down by 10% this year but experience a double-digit boost in 2021.
My first impulse to reconcile these two seemingly contradictory messages? Well, I tell myself, maybe I should have paid closer attention in Economics 101. But giving it more thought, it seems clear that business is strong in medical and packaging, and soft in other segments. Clearly these are not robust times for anyone supplying the automotive or housing markets.
So while the very near-term situation is nerve-wracking, I’m more optimistic about the future of plastics processing in North America than I’ve ever been in my 33-year career in plastics journalism. As grueling as it’s been, I think North American manufacturing of all types will emerge stronger, more nimble and in a better position to capitalize on opportunities as a result of the COVID-19 pandemic.
But lessons must be learned first. Processors of all shapes and sizes will need to think more strategically about their supply chain. They will need to build in redundancies. They will need to put in place crisis-management initiatives that have not only a Plan B, but a Plan C and D. They will need to rethink about materials and spare-parts inventories. They will need to reconsider technologies that are more common in plastics-processing operations in other parts of the world, such as automation, lights-out manufacturing, and Industry 4.0 tools such as remote accessibility to processing machinery and predictive maintenance.
And then processors need to be ready for when OEMs and other customers make the inevitable, long-overdue decision to reverse their complex and tenuous supply chains and bring more manufacturing back to the U.S. In fact, as I was writing this, I received by email a press release that touched on this very subject from Sussex IM, a Wisconsin-based molder that was featured on our May 2020 cover. In the release, Sussex IM’s CEO Keith Everson said, “The rebound will come, in time, and when it does, the supply-chain-related lessons of the recent past will remain a key part of the equation. Competition is more challenging than ever, and customers must evaluate other factors against the downside of failing to fulfill orders. That frequently means the selection of suppliers in closer proximity, rather than across the sea. Reshoring is simply smart business.”
Pay more attention to the COVID-19 lesson than I did in Economics 101.