COVID-19’s Long Shadow

For a data geek like myself, there are a lot of features of Plastics Technology’s annual Top Shops Benchmarking Report — featured in this month’s issue — to enjoy. Chiefly: Direct insight into plastics processors and the chance to pick the brains of leading molders.

In visiting with companies or even just trading e-mails with people in the industry, you can get an anecdotal impression of plastics processing’s current mood and outlook. When you dig into the numbers provided by the Top Shop’s survey, however, you get more than a vague impression, you get hard data. That hard data enables PT to ask direct, informed questions of our Top Shops honorees, and their answers can provide real insights into the state of the plastics industry.

For several surveys, inflationary pressure has been noted, impacting resin prices in particular. In the 2024 report, multiple respondents noted that while overall costs had receded, they still outstripped prepandemic levels. For resin, 55% of Top Shops reported higher prices for material in 2023. That’s down from 65% the year prior but still marks a majority paying more for what is typically a plastics processor’s largest expense.  

It seems COVID’s impact on the economy, much like its physical toll on some of those it has infected, is long reaching, but I’m confident that our industry will continue to ‘grind it out.’

Philip Katen, president and general manager of custom injection molder and 2024 Top Shop honoree Plastikos, Erie, Pennsylvania, said his company remains busy and profitable, but starting in late ’23 and going into this year, it has experienced softer demand from customers across the board. Some of which, Plastikos has been told, relates to its customers drawing down excess inventory and additional safety stock they built up at the end of the pandemic through the COVID-19 fueled supply chain challenges of 2021-2022.

To produce that safety stock, many plastics processors added equipment during that same time frame, and those investments to support demand that has since subsided are in turn depressing the market for new machinery. When the Plastics Industry Association’s Committee on Equipment statistics reported that plastics machinery shipments in North America were down in the second quarter of this year, it marked the sixth contraction in the last nine quarters, going back to the second quarter of 2022.

I didn’t count on continuing to have to think about the pandemic at this stage of 2024. When the first lockdowns were issued in March 2020, my oldest daughter was winding down middle school. In August, as new cases once again began to spike, albeit at much lower levels, and I heard from Top Shops respondents that the pandemic hangover still lingered, my wife and I were moving her into college.

Katen says Plastikos’s overall business is good, but he notes that he’s often described the last 12-18 months as a “grind-it-out” period. It seems COVID-19’s impact on the economy, much like its physical toll on some of those it has infected, is long reaching, but I’m confident that our industry will continue to grind it out.