PLASTICS MARKETS
“If we comply with this dictated system, there will only be losers in the medium term – because with no market there is no profit” / Letter from a group of plastics processors to their own industry
The entire European plastics processing industry is under enormous pressure: since the beginning of the pandemic, prices for raw materials have risen to dizzying heights, and the Ukraine war is exacerbating this trend. At the same time, sales markets are weakening: the car industry in particular simply cannot get into gear. For plastics processors, their spot in the vice between producers and buyers is increasingly becoming an existential threat. So, what can be done?

Some managers have suggestions. Below is a letter from a group of leading processors from German-speaking countries that calls on companies to work together to break the price spiral. The authors wish to remain anonymous. We are aware of the writers’ identity and connection to the industry.

It has become the new normal that nonchalant letters with bold price increases in the double-digit percentage range are being sent around by plastics producers. The formulations always involve the same boilerplate phrases: “our board of directors has decided…”, “to be able to deliver in the usual quality…”, “to ensure your supply…”.

And the message of these letters is always the same too: if you want to be supplied, you have to pay. Otherwise, you will go empty-handed. Dialogue is in short supply. There is never any mention in these letters of offers to discuss how to seek alternative solutions together, if needed. Why bother? Arguments for price increases are a dime a dozen – especially in times like these.



From the perspective of the commodity companies, this approach is understandable. Someone has to finance their record results. So everyone tries to play along. Through gritted teeth, the processor swallows the price increases, runs them through his calculations, adds a little extra for safety – and then off to the next stage in the value chain.

It is uncomfortable to think about what is at the end of this chain of non-communication: the consumer in front of the shelf. A first look at the price tag, then a critical glance into their wallet – and the goods we produce at high cost are left behind in favour of the cheaper imported product. It might not be the same in terms of quality. But at least it’s affordable.

Things cannot go on like this! Because by mindlessly passing on received costs, we are further fuelling inflation and collectively destroying our sales market.

Of course, there are also profiteers in this vicious cycle. Above all, the CEOs of the commodity companies. They drive share prices to unprecedented heights – securing their bonus payments in the process. Who cares what happens in a year or two?

It is time for us processors to organise ourselves in order to stand united against the overwhelming power of the plastics producers. If we continue to follow their dictated system, there will only be losers in the medium term – because without a market, no one will make a profit anymore.

In our company, we do things like this now: we only accept price increases upon presentation of sound evidence, such as invoices for freight, electricity, raw materials. We have each item explained to us personally on site. The higher prices will only be paid once it has been plausibly proven that every possible measure, however abstract, has been taken to prevent the cost increases.

If the hardship on all sides is really as great as some producers claim, then everyone will go along with this approach. Anyone who doesn’t want that – that’s fine too. Then we have also reached our goal. Only when we processors manage to counter the absurd price demands so massively that plastics producers prefer to go talk to their pre-product suppliers again, will we have broken the price spiral. Only then will we be doing something to counteract galloping inflation. Entirely without the European Central Bank (ECB). Simply by thinking and acting logically.
05.05.2022 Plasteurope.com [250172-0]
Published on 05.05.2022

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Date of print: 02.12.2022 00:53:13   (Ref: 78718275)
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