Originally Published MPMN
Originally Published MPMN July 2003
EDITOR'S PAGEI Just Want to Say One Word to You
Remember that line? In this quote from the 1967 classic movie, The Graduate, a confused young Dustin Hoffman is counseled to pursue the hot new industry of plastics. Unfortunately, he was concerned with other priorities and we never do find out what happened to him or how he made his living after he finally got off that bus. But, as it turns out, that cocktail-party tip wasn't bad career advice.
Plastics are used in everything these days. According to the Society of the Plastics Industry, the U.S. plastics industry employs 1.5 million workers and provides more than $330 billion in annual shipments. Specific to the medical device industry, the organization says that more than 10% of the value of plastics products in final demand goes into medical goods and services.
And the use of plastic materials in the medical field is constantly growing. It is estimated to reach $4 billion in the United States in the next two years, according to plasticsusa.com, a Web site published by Eastpoint Oltean Co. The company cites the need to reduce healthcare costs and the use
of disposable medical supplies as important factors generating a higher demand for medical plastics. Plastics are also indispensable in medical device packaging.
So far all this is good news for both plastics suppliers and the manufacturers that use them. However, this year things have changed a bit. Because of the war in Iraq and the uncertainty about how it would affect the world's oil supply, resins have become more expensive to produce. Suppliers are now faced with higher oil prices and a volatile market.
In fact, since January 2003, prices for resins used for injection molding have gone up by 15%, film-grade resins by 30%, and high-density polyethylenes by 40%. Apparently, the increases are industrywide and all the plastics suppliers have been hit by significant cost increases.
This is not a good scenario for any business. But the plastics suppliers are doing the right thing. In an effort to avoid passing on the costs to OEMs, these companies have put into place a number of plans to save money internally.
"I believe if you monitored the press releases from plastics companies, actually the chemistry industry in general, there was cost-cutting virtually everywhere," says Rick Noller, medical industry manager at Eastman Chemical. "And that was essentially the plastics companies trying to protect their customer base as best they could."
However, despite their best efforts normal cost-cutting measures couldn't fully compensate for the rise in the price of resins. Increases did become necessary, but they were not as much as they could have been. Noller believes that when the case is properly made to his customers, they may not necessarily be happy, but they will at least understand.
The flexibility and concern for their customers that the plastics suppliers are showing now will surely pay off for them in the long run. Almost 40 years has gone by since The Graduate was made, but the career advice to get into plastics has stood the test of time.
Susan Wallace, Managing Editor
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