Plastics 2017: Optimistic In The Face Of Uncertainty

While uncertainty surrounding Brexit negotiations still looms large, the UK plastics industry is adopting a ‘keep calm and carry on’ approach, says Leanne Taylor

 
In a survey of business conditions and outlookundertaken by the industry’s biggest trade association, the British Plastics Federation (BPF), member firms were clearly keen to capitalise on the weakness of the pound through increased exports. Some 68 percent of respondents said they expected an upswing in export sales in 2017, compared with just 28 percent answering the same question a year earlier. In the same survey, a record 78 percent of member firms said they predicted an increase in sales turnover. There were also investment intentions, despite the increased costs of importing plastics processing machinery and equipment from abroad. The Federation’s director general, Philip Law, said the plastic industry’s optimism was to be welcomed in a new era of “fresh challenges and opportunities”, urging the investment to continue or else be in danger of “being left behind” the competition.

Hot Topics

  • Drop in sterling following Brexit vote increases price pressure on UK importers
  • Weak pound, however, also leads to a steep rise in reshoring projects
  • Ecological initiatives, consumer education and image management increasing in importance

Raw deal

The fall in the value of sterling has made imported raw materials significantly more expensive


Where the devaluation of the pound verses other major currencies had residual benefits for exporters, it had a major impact on the price of imported raw materials. Where the UK has a well-established and reliable production base for certain products, including speciality plastics, masterbatch and additives, it relies to an uncomfortable extent on plastics raw materials produced abroad. Although the amount of materials produced in the UK has increased year on year since 2014, so too has the amount imported.
In 2016, the country produced and exported £1.9 billion worth of plastics materials to EU member states, up from £1.8 billion in 2015. However, imports accounted for over double that – with some £4 billion worth of key materials imported from the EU in 2016, up from £3.8 billion in 2015. Where the imports in 2016 represent some 85 percent of total materials consumption, this meant the effect of the fall in value of the pound following the referendum vote and into 2017 made the relative costs for buying material outside of the UK and importing into the local market significantly more expensive.

News in Brief

Lancashire-based manufacturer of plastics storage containers, What More UK, started shipping its products to the Philippines, the 71st country on its list of export destinations across the globe. Managing director, Tony Grimshaw, said “there is no doubt” that the ‘Made in Britain’ tag is of significance to its overseas customers. Pub chain JD Wetherspoons announced it will stop using plastic straws in all its 900 UK outlets from January 2018, replacing them with a biodegradable paper alternative. The move is part of the company’s commitment to reduce the amount of non-recyclable waste it produces, and a wider campaign started in the US known as ‘Refuse the Straw’.  
The OnePlastics Group, believed to be the UK’s largest non-automotive plastics moulder, invested in five new injection moulding machines at its facility in Tamworth to produce plastic pails and paint cans; a new logistics centre; and a seven- figure sum in its Hull and Rotherham sites, which produce wheeled bins, caddies and recycling containers. McLaren Automotive announced plans to build a £50 million carbon- bre chassis plant in Sheffield, which will be operational by 2020. This will relocate McLaren’s chassis manufacture from its current supplier in Austria.
Researchers at Cheshire-based Econic Technologies developed a catalyst to produce polyurethanes – commonly used for plastics such as foams and exibles – using carbon dioxide. Researchers at the company said by allowing for a reduction in the use of oil-based feedstocks, the catalyst could save a typical production unit with an output of 50kte/annum in excess of £36 million per year.

Price pressure

Pentagon Plastics, an injection moulder based in West Sussex, purchases around 5.5 tonnes of thermoplastics each month to meet the production requirements of its customers. Since the fall in the value of the pound, it has experienced price increases of as much as eight percent for engineering plastics grades from its preferred materials suppliers.
“As a UK manufacturing business, these are costs that we have little option other than to accept,” said Pentagon’s business development manager, Gabby Day. “As we hang in the balance with trade deals and with negotiations ongoing, we’re not yet at a point where we can say whether these material increases are permanent or not. So, do we reflect these current increases to our customers now or do we ride the storm and see what we will happen?”
If no deal is reached, a significant increase in the cost of both exports and imports will undermine the competitiveness of the UK’s plastics sector at a crucial time for cementing existing trade links and exploring new opportunities.
Mike BoswellBritish Plastics Federation Brexit Committee
The chairman of the BPF’s Brexit committee, Mike Boswell, said that in order for the UK plastics industry to continue to have access to the materials it needs it is “absolutely essential” that a favourable trade deal is reached with the EU.
“If no deal is reached, a significant increase in the cost of both exports and imports will undermine the competitiveness of the UK’s plastics sector at a crucial time for cementing existing trade links and exploring new opportunities,” he explained.

The UK Plastics Industry by Numbers

Plastics are in the top 10 of the UK’s most traded goods

0
Companies in the UK plastics industry, including raw materials producers, machinery and equipment suppliers, recyclers and producers of both finished and semi-finished products
0
People employed directly in the sector
0%
of consumption in 2016 was made up of imports of raw materials from the EU, which is the single biggest trading partner for the UK plastics industry
0bn £
Total annual turnover for all the plastics industry sectors combined

Home front

The UK plastics industry is investigating in higher-value machinery and equipment


Despite the challenges of rising production costs, the weak pound played into the attractiveness of the domestic market, stimulating a reshoring of projects fuelled by sectors demanding a shorter, more easily accessible and reliable plastics supply chain. MGS Technical Plastics, a Blackburn-based technical moulder, said it has seen a “steep rise in reshoring” in recent years, driven by accessibility to a wider stock- holding, better product quality and quicker turnaround, as well as lower transport costs. This led it to invest over £1 million in its facilities in 2017.

Positive trend

Colin Tirel, managing director of Arburg Limited, a supplier of injection moulding machinery based in Warwick, said in recent conversations with potential and existing customers reshoring of production was a “regular topic” along with the creation of new start-up operations. This is “an extremely positive thing” for the UK plastics industry.
“Certainly there’s been a trend towards reshoring, with companies looking to set up mould shops and others looking at investing in machines when they haven’t done so before,” he said.
As a result of both the re-shoring trend and a need to compete with European manufacturers, the UK plastics industry is increasingly investing in higher value, more intuitive and automated machinery and equipment.

China is now refusing to accept imports of low-grade plastic waste

‘Marked increase’

Driven by demand in sectors such as automotive and medical, suppliers of all-electric injection moulding machinery have seen a “marked increase” in sales, owing to their high precision, repeatability and efficiency.
There is also demand for more complex processing equipment to capitalise on emerging trends, such as thermoplastic composites for weight reduction and liquid silicone rubber (LSR) for demanding temperature requirements in critical parts.
Kevin Horne, chairman of the Polymer Machinery Manufacturers and Distributors Association (PMMDA), said the latest available figures for sales of injection moulding machinery reflected this trend.
“In 2015 there were 643 moulding machines sold into the UK market, with a value of £77 million, versus 633 units and a value of £92 million in 2016,” he explained. Although fewer units were sold, the indications are that they were larger machines with higher value.

The UK Plastics Industry in 2018

The coming year is likely to bring a more intense focus on the advent of ‘Industry 4.0’ and the use of automation in the UK plastics industry, with a push for firms to embrace the advantages of the technological revolution to increase productivity and efficiency. The provision of skills and the move towards in-house, industry-led training and upskilling is likely to continue, owing to the success of recently-established schemes, as well as the push to encourage younger people into the industry through educational programmes and events. Anti-littering and consumer-focused recycling initiatives will continue and positive promotion of plastics’ role in society, based on sound science, will likely increase in reaction to misconceptions in the media.

Image management

Consumer education related to recycling remains a challenge


For plastics recyclers in the UK there were fresh concerns in 2017 when China announced that it would no longer accept imports of low grade waste plastics. This presented new challenges, with many European systems currently unable to process these materials.
WRAP’s CEO, Marcus Gover, said the ban presented a “complex” picture for plastics and what it could mean for future materials use and appropriate end markets.
Changing consumer behaviour brought about through education and engagement, as well as understanding of why and how plastics should be recycled, is still a big challenge for the industry, as is protecting its reputation and image against an increasing media and public backlash.
The industry responded to calls for ‘plastics free aisles’ in supermarkets and a ‘plastics free July’ by stressing the “numerous technical and environ- mental advantages of plastic packaging” as well as the importance of recycling.
Where the issue of marine litter and plastics pollution has grown to its most prominent in 2017, the UK plastics industry has reiterated its support for behaviour change campaigns, and school-based anti-litter challenges. In addition, it is launching a fact-based website over the course of the year.

Leanne Taylor is head of content, Plastics, at the Rapid News Communications Group. As part of that role, she is a regular blogger and edits the prestigious British Plastics and Rubber magazine, one of the industry’s leading technical publications

  1. Business Conditions Survey January/February 2017 – British Plastics Federation
  2. The UK Plastics Industry: A Strategic Vision for Growth – British Plastics Federation 2016
  3. Understanding Plastics Trade – Plastics Materials Imports and Exports UK to ROW (2016) – British Plastics Federation
  4. UK Materials Producers – Polyglobe
  5. Sales of Injection Moulding Machines and Ancillary Equipment for PMMDA Members in 2015 – Polymer Machinery Manufacturers and Distributors Association (PMMDA)
  6. Total Plastics Imports & Exports UK to RoW (2016) – incl. materials, equipment, waste and products – BPF/UN Comtrade, BPF/VDMA/National statistical offices
  7. Securing The Future: Priorities for the UK plastics industry in a new UK-EU relationship (2016) – British Plastics Federation
  8. Plastics Country Survey: Great Britain (October 2016) Reed Business Information (ICIS), International Monetary Fund (IMF), VDMA Fachverband Kunststo – und Gummimaschinen

 


 

NEWS IN BRIEF

‘EXPORTING TO THE UNKNOWN’

By Gill Jakes, managing director, Bosworth Plastics
“Bosworth Plastics is an innovative design & manufacturer of plastic injection moulded products based in Leicestershire. In 2015, we decised to broaden our client-base and explore opportunities in the less-traditional global export markets.
After extensive research, South America was identified as the unsaturated emerging market that would most benefit from our expertise.Investments were made, local alliances formed and, at the beginning of 2017, our efforts were rewarded with two major contract wins in Ecuador and Argentina supplying segment accessories for precast tunnel linings via our sister company TTC. “Brexit has certainly created much economic and political uncertainty and we in the UK’s SME manufacturing community are having to contend with even more variables than usual. Hopefully our example shows that with the right ambition, strategy and execution, ‘exporting to the unknown’ whilst initially quite daunting, can and will accelerate the growth of your business internationally.”
 
 
 

PLASTIC PROLIFERATION AND CHINESE BAN DEMANDS NEW THINKING ON PLASTIC RECYCLING

 
Two stories about plastic broke late in 2017 that fuelled growing public interest in plastic and recycling. The Guardian on 26 December reported that huge, mainly US investments in new polymer manufacturing facilities would increase further in the next 10-years posing a rising threat to oceans, habitats and food chains It said that oil and gas companies were among others who have invested more than $180bn since 2010 into new “cracking” facilities that will produce the raw material for everyday plastics including packaging, trays and bottles. Corporations including the biggest oil companies will help fuel a 40% rise in plastic production in the next decade, according to experts at the US Center for International Environmental Law which conducted the study. A graph sourced from Statista and PlasticsEurope showed that global annual plastic production has risen to about 300 million tonnes in 2015, or (the newspaper claims) roughly the same as the entire weight of humanity. In July 2017 The Guardian also reported a study led by the University of California and Santa Barbara had shown that humans have produced 8.3 billion tonnes of plastic since the 1950s with the majority ending up in landfi ll or polluting the world’s continents and oceans.
Then late in December the UK’s recycling industry received an unwelcome Christmas present. The BBC reported on January 1 the industry was struggling to cope with China’s recent ban on imports of plastic waste. (www.bbc.co.uk/news/business-42455378)
Britain has shipped up to 500,000 tonnes of plastic to China every year, for recycling into reusable material, but the Chinese government has stopped this after banning imports of foreign waste. Simon Ellin of the UK recycling association told the BBC he had no idea how to solve the problem in the short term. “It’s a huge blow for us… a gamechanger for our industry,” he said. “We’ve relied on China so long for our waste… 55% of paper, 25% plus of plastics.” Markets do not exist in the UK or even Europe for processing this volume of plastic waste.
The British Plastic Federation is working on a project to provide part of the answer. The Plastics Industry Recycling Action Plan or PIRAP is a plan to increase the recycling of plastics and is a whole value chain approach including initiatives to increase collection, improve sorting and develop end markets for recycled plastics. PIRAP was set up in June 2015 to help meet the 57% plastic packaging recycling target by 2017. This target has been extended to 2020. Overall plastic packaging collected for recycling has increased from 464,433 tonnes in 2013 to 499,625 tonnes in 2015/16.
More information at: www.bpf.co.uk/topics/pirap.aspx#PIRAP’s vision