Thursday, June 30th, 2016

How Will the Brexit Impact the U.S. Plastics Industry?

Brexit concept jigsaw puzzleBy Michael Taylor, Vice President, International Affairs and Trade, SPI: The Plastics Industry Trade Association

The vote by 52 percent of the United Kingdom to leave the European Union—the so-called British exit (Brexit)—has sent shockwaves across global financial markets and ushered in a period of uncertainty for manufacturers on both sides of the Atlantic. The vote could further undermine growth within Europe and potentially around the globe. Given the size of the U.S. economic relationship with Europe, the U.K. decision may have significant ramifications for the American plastics industry.

The U.S. commercial relationship with the U.K. and EU combined is the U.S.’ largest in the world, representing about 40 percent of the global economy. Trade of U.S.–EU manufactured goods reached $836 billion in 2015, and cross-border investment equaled more than $5 trillion. Many U.S. companies with EU operations have headquarters in London, and about 17 percent of U.S.-manufactured exports to the EU are destined for the U.K.

The U.K. is the 9th largest export market for the U.S. plastics industry representing more than $1.3 billion dollars in goods in 2015, and our 8th largest import market with more than $249 million dollars in goods in 2015. While the day-to-day operations of businesses in the United Kingdom, European Union or the United States may not be directly impacted by the Brexit immediately, all businesses engaged in the transatlantic market should prepare for the changes that are inevitably coming.

It’s expected that what the Brexit means for manufacturers in the United States and their partners in Europe won’t be fully known for years. Soon the United Kingdom will begin negotiations with the EU under Article 50 of the Treaty of the European Union to set the terms of its withdrawal, a negotiation which some expect may take two years or more. Until the U.K. officially withdraws from the EU, it should be treated as an EU member state in trade for purposes of tariffs and other technical matters. Eventually, however, our trading relationship with the UK will experience increased costs and red tape after they have completely withdrawn from the EU. For U.K. manufacturers exporting into the EU, EU standards and regulations are expected to continue to apply for those goods to be eligible for sale, but much as they would normally apply to U.S. exports, rather than to exports from EU member companies.

Big Ben and Union Jack flag in England

Regarding the Transatlantic Trade and Investment Partnership (TTIP), a major trade treaty currently being negotiated, it is clear that the Brexit vote will be a drag on the progress of the deliberations. Prior to the vote, it was apparent that the differences separating the United States and EU in the TTIP talks were larger than the areas of shared objectives and perspectives. With the U.K. and EU now preparing to enter into a multi-year withdrawal negotiation, there are serious questions as to whether the TTIP talks can result in a truly meaningful and comprehensive agreement or even any deal at all. In addition, the loss of the UK voice within the EU will likely make it even more difficult for a deal to be struck. On a positive note, there is the possibility of a U.S.-U.K. free trade agreement, but this opportunity would still be years away at this point, and only be a fraction of the size of an ideal TTIP agreement with the entire EU.

All this said, although it is a significant event with notable economic consequences, the Brexit vote is unlikely to usher in a recession. It is very clear that all of the key players stand ready to intervene in the financial markets vigorously to buoy their economies as required. Specifically, in the U.S., the Federal Reserve will likely cut interest rates as opposed to raising them, counterbalancing any negative investment consequences the Brexit might have in the near-term for U.S. stakeholders.

But the causal relationship between political and economic uncertainty and negative market and trade consequences is well established. The Brexit will most likely have impacts akin to past Eurozone crises, at least in the short term. It will shake financial markets and consumer confidence, cause a majority of business decision-makers to hedge and serve as an unwelcome drag on economic growth and demand.

Friday, June 17th, 2016

On Father’s Day, Get to Know Some of SPI’s Family-Owned Member Companies

Just like families themselves, no two family-owned businesses are the same. The plastics industry is home to many of these companies and in honor of Father’s Day, SPI highlights some family-owned members. Working with family to operate a business can be challenging and rewarding at the same time, but these companies illustrate that the rewards of passing down best practices from generation to generation, and the pride that comes from carrying on family traditions, is a big part of what makes working at these companies so worthwhile.

1. Arburg

The Hehl family, and two generations of Arburg ownership via Plastics News.

The Hehl family, and two generations of Arburg ownership via Plastics News.

In 1923, Arthur Hehl founded Feingeräte-Fabrik Hehl in Lossburg, Germany where he produced precision instruments for medical applications. In 1943, Arthur’s son Karl renamed the company Arburg and expanded into injection molding. In 2005, Karl and Eugen Hehl passed management of the company on to its third generation, which included Michael Hehl, Arburg’s managing partner. Michael told Plastics News “The achievements of my father and uncle can’t really be put into words…To transform a little workshop into a global company within an industry is exceptional. As the third entrepreneurial generation, we also feel committed to this path.”

2. Shuman Plastics

From left: Dan, Charles and Ken Shuman via Plastics News.

From left: Dan, Charles and Ken Shuman via Plastics News.

In 1947, Phillip Shuman founded Shuman Plastics Corporation as a scrap business where he was later joined by his sons Charlie and Hy. In 1994, Charlie took full ownership of the company, which is now a leader in recycling and the distribution of thermoplastic resin and compounds. After Charlie retired in 2008, he sold the company to his two sons Ken and Dan. Ken told Plastics News “I’d worked with him for 23 years and with my brother Dan for about a dozen years at that point. Our dad was such a strong personality and accomplished business person that I honestly questioned if I could ever fill his shoes. It occurred to me that I could never do so, but I could still lead and run this business.”

3. Superior Die Set Corp.

From left: Frank Janiszewski, the current president of Superior Die Set, Casimir H. Janiszewski, former CEO and current CEO Casimir S. Janiszewski via Plastics News

From left: Frank Janiszewski, the current president of Superior Die Set, Casimir H. Janiszewski, former CEO and current CEO Casimir S. Janiszewski via Plastics News.

Superior Die Set was founded by Kasimir Janiszewski in 1923. The company manufactures die sets, mold bases and three platen presses, among other products. Under the leadership of the third generation, Casimir S. Janiszewski and Frank Janiszewski, the company now has multiple manufacturing facilities, warehouses and distribution centers. Nick Janiszewski, fourth generation employee, stressed the importance of family lessons when he told Plastics News “The balance of the education about how things work here at Superior Die Set happens by putting in the hours—doing the hard work, getting the years of experience, and listening to and learning from the ‘history lessons’ taught to the younger generations by their elders.”

 

4. Teknor Apex

Jonathan Fain, left, and Michael Roberts of Teknor Apex Co via Plastics News.

Jonathan Fain, left, and Michael Roberts of Teknor Apex Co via Plastics News.

Alfred Fain founded Teknor Apex in 1924 and the company started as a tire recapper. During World War II, the company expanded into plastics due to a shortage of rubber, and today Alfred’s grandson, Jonathan Fain, is chairman and CEO of the company, overseeing more than 2,000 employees worldwide and annual revenue of more than $600 million. Of maintaining a family firm, Jonathan noted in Plastics News that “You need to work at it…That’s a real part of my job. One is to run the company and another is to keep family members informed. They’re kind of like shareholders.”

 

5. Wittmann Battenfeld

Michael Wittmann at Fakuma via Plastics News.

Michael Wittmann at Fakuma via Plastics News.

In 1976, Dr. Werner Wittmann founded Wittmann to make water flow regulators. In 2008, Wittmann took over Battenfeld and expanded into injection molding and opened new production facilities in 7 countries. Today, Werner’s sons Michael and Thomas Wittmann hold leadership roles. Michael wants to keep the family legacy and has recently hired his son to work at the factory. According to Plastics News, Sonny Morneault, Wittmann’s vice president of sales at the company’s operation in Torrington, Conn., noted there are benefits to being a family-owned business: “There are many advantages but I think the most important is the ability to be nimble…We’re nimble and quick on our feet. That’s an invaluable benefit, for sure.”

 

 

Thursday, May 26th, 2016

Bridging the Gap between Policymakers and Business Owners

Every year, members of the plastics industry have the opportunity to fly to Washington, D.C. to meet directly with members of Congress and voice their opinions on policies that directly affect their line of business. The Plastics Industry Fly-In is a way to bridge the gap between policymakers and business owners. Members of Congress and their staffs deal with a number of issues and when they are able to put a face and story to a policy, it helps them make better informed decisions. Below are comments on the importance of the Fly-In from some industry members who have participated in past Fly-Ins:

TedFisher_headshot

Ted Fisher, Sales Director, ALAC International, Inc.: “I attended my first Fly-In in 2010, and haven’t missed one since.

The initial exposure to the inner, inside-office and inner workings on Capitol Hill was significant. I went from a deer in the headlights to being fairly comfortable very quickly, but you have to take that first step. Going up there with your colleagues and having things laid out for you, like they are at the Fly-In, certainly gets you up to speed pretty quickly.

When you’re face-to-face with the staffers, senators and the congressmen themselves, that’s your opportunity to convey what’s important to your organization, and you can’t do that remotely. You’ve got to be in front of them to make an impact.”

 

Wylie Royce

Wylie Royce, Partner, Royce Associates: “Too many people in our industry think that because they may not come from a large company, going to D.C. is a waste of time. There is also an assumption that the big company lobbyists will take care of the industry issues for them, and that is simply not the case. Lobbyists take care of what they are paid to take care of, and if it coincides with your interests that’s good; if it doesn’t, then you are letting someone who has no interest in your future make your business decisions for you.

After one or two visits to D.C. to attend the Fly-In you may think, ‘Why should I bother? Nothing seems to be getting done.’ What’s getting done is you are building a relationship with the legislators who can directly affect your business, and this relationship isn’t built overnight. Instead, it requires several visits and follow-up calls. By building this relationship, you are becoming a credible source of information to your legislators and their staff, and you will have a voice in decisions that they make. In some cases, that could mean the difference between continuing and dropping a complete line of products.”

Greg Leighton with Rep. Tony Cárdenas (D-CA) at C&G Mercury Plastics.

Greg Leighton with Rep. Tony Cárdenas (D-CA) at C&G Mercury Plastics.

Greg Leighton, Owner, C&G Mercury Plastics: “The benefits of the Fly-In are that I get to see my legislators personally. When I talk to them on the phone they recognize me. I When I invite them for a plant tour, they come.

I went to Congressman Tony Cardenas’ office at a Fly-In a couple of years ago. A few years after, we invited him to visit our plant, and he came. He brought his chief of staff, toured the plant and was impressed by what we were doing.

The Fly-In also shows the next generation that you don’t have to be nervous to do this. There’s all this angst out there for the next generation: ‘What’s the future going to look like?’ You need to show that you can participate in that future.”

Participating in the Fly-In is a key step in creating long-term relationships with legislators and policymakers that can benefit your company for years to come. This year, the Fly-In will be held June 21-22 on Capitol Hill. To register, click here.

Wednesday, May 25th, 2016

The U.S. Plastics Industry’s Top Five Export Markets

Of the U.S. plastics industry’s $427 billion in annual sales, slightly more than 20 percent of that comes from exports, according to SPI’s 2015 Global Trends Report. The lion’s share of that goes to these top five export markets for the U.S. plastics industry as of 2015.

Sunday´s bikers in Paseo de la Reforma, Mexico

1) Mexico

No surprise that the first entry on this list is America’s closest neighbor and strongest trading partner.  The U.S. exported $15.8 billion in goods to Mexico in 2014. Mexico’s plastics industry relies greatly on its U.S. partners, particularly when it comes to resin, where the U.S. has a $6.7 billion surplus with Mexico.

Toronto skyline

2) Canada

The U.S. plastics industry exported $13.2 billion worth of products to its northern neighbor in 2014. The North American Free Trade Agreement (NAFTA) drives a great deal of America’s beneficial trade relationships with both Canada and Mexico, but this relationship goes both ways. Most U.S. polyethylene imports come from Canada, a country with rich hydrocarbon resources that can be converted into chemicals and resins.

Beijing, China CBD Cityscape

3) China

The world’s largest resin consumer is America’s third-largest export market, where U.S. companies had a $2.8 billion surplus in 2014 (as opposed to a $9.2 billion deficit for the industry as a whole).

Rio

4) Brazil

Brazil relies heavily on U.S. products from throughout the plastics supply chain, with the U.S. running trade surpluses with the country in all four plastics categories (resin, plastic products, molds and plastics machinery).

Yokohama

5) Japan

Japan could overtake Brazil to become the fourth-largest export market for U.S. companies (if it hasn’t already since the time of this writing) but regardless, it remains an important trade partner for the U.S. and ships a great deal of machinery put to use at U.S. companies.

Thursday, May 19th, 2016

Plastic Packaging and the Ability to Feed People

FoodPackaging_StockPhotoOne of the simplest reasons packaging is poised to become a nearly $1 trillion industry in the next decade is because it contains, protects and preserves food and water. With as much food and water as we consume, the prevalence of food waste, and packaging’s role in eliminating it, was a prominent theme at this year’s Flexible Film & Bag Conference, which wrapped up in Houston, Texas last week.

The plastic films and flexible plastic packaging that covers meat, poultry, cheese, vegetables and other edible goods prolong the life of the products they contain by shielding them from bacteria, heat, cold and moisture, among other things. Attendees representing the companies that manufacture some of these items discussed ways to make their products more efficient and effective in combating lost and wasted food, a global issue that’s reached critical levels in environmental, economic and humanitarian terms.

Chopin at the 2016 Flexible Film & Bag Conference

Chopin at the 2016 Flexible Film & Bag Conference

“Food waste is an incredible problem,” said presenter Lamy Chopin of Dow Chemical. “If you consider the ripple effect of losing valuable food, the farmers that have invested in the land…any of that product that doesn’t get consumed has a significant greenhouse footprint.” The financial impact of food waste, according to Chopin, is up to $300 billion lost annually.

Environmentally, the impact of food waste is at least ten times larger than the environmental impact of packaging, and part of what makes that the case is plastic’s unique material and manufacturing properties. “One of the reasons why plastics are winning in the space of packaging in particular is they’re incredibly efficient,” Chopin noted. “They win out in terms of energy use and impact” when compared to other packaging materials, he added.

The epidemic of food waste and the ramifications it has for society are a huge priority for agencies, NGOs and governments around the globe. Plastic materials, particularly plastic films, will have an important role to play in combating these issues, and doing so as sustainably and efficiently as possible.