“Grey skies and blue skies ahead”

During GPS2019, the global summit for the plastics industry held this week, delegates heard how, despite the numerous headwinds affecting the industry, that opportunities have rarely been greater. Leanne Taylor reports.

Slowing global growth, trade war ‘spats’, Brexit and sustainability were the themes that dominated the opening day of the Global Plastics Summit (GPS) 2019.

The event, organised by IHS Markit and the Plastics Industry Association (PLASTICS) and held in Houston, Texas, opened with the sentiments that we are “back in the danger zone”, as Nariman Behravesh, Chief Economist at IHS, outlined the global economic picture.

Behravesh said that the escalating US-China trade war, bans on work with Huawei, the Trump administration’s newly-proposed tariffs on Mexico, and the increasingly unstable political situation in Europe all provide a worrying backdrop as global growth continues to slow.

“Grey skies and blue skies ahead”

Perc Pineda, Chief Economist at the Plastics Industry Association, followed by looking at what these economic headwinds mean for the global plastics industry in the coming year.

“Weaker global economic conditions forecast, continued trade tensions between the US and China affecting plastics global trade, uncertainty with Brexit’s outcome, and rising concerns around single-use plastics and sustainability will impact the demand and supply dynamics of the plastics industry’s value chain,” Pineda told delegates.

“In October last year we said the outlook for plastics in the next 6-12 months was strong – and this was true. However, in our next report in July we report that we cannot expect things to be as strong. There are both grey skies and blue skies ahead.”

Trend report

The slowdown in the global automotive industry was also noted by Pineda as having “a massive impact on the plastics industry.” He noted that the upcoming trends of autonomous, connected, digital and electric vehicles will provide a great opportunity for the industry, however, the huge investment required to implement them has led to some stalling.

He commented that sustainability and the move towards a circular economic model will continue to dominate the plastics industry agenda, not least because of regulatory requirements, new materials development and recycling innovation, but also to fulfil the expectations of consumers demanding change.

Issues relating to workforce recruitment and retention remain at the forefront for the industry, he added, with the effect on longevity and skills succession still challenges that need to be solved. Pineda said automation within the industry was something that needed to be looked at more closely in order to remain competitive.

“I think it makes sense for every business to expect lower growth amidst worsening economic conditions,” Pineda said. “But listen to your clients and your client markets, see what they are asking for, see how you can thrive. Think innovation, innovation, innovation, as that’s what drives our industry,” he concluded.

Sustainable thinking

Dewey Johnson, VP of Base Chemicals and Plastics at IHS Markit, opened his address with the sentiments that “no participant in the chemicals industry will be unaffected by the issue of sustainability,” and that the problem has to be “addressed today, not someday.”

However, Johnson warned that emotive and reactionary measures would not solve the issues at hand, at he pointed to the number of both proposed and enforced bans on various types of plastics globally. “There’s lots of activity – but it’s not all cohesive,” he explained, adding that there is a danger of unintended consequences of quick-fix solutions.

Following, Patty Long, Interim CEO of the Plastics Industry Association (PLASTICS), agreed, stating: “It’s been pretty uncomfortable over the last six months to a year, as we’ve seen the images unfold of the environmental damaged littered plastic is doing around the world.

“However, bad information drives bad decision making. There are people looking for quick-fix solutions, and, if you work in this industry then you realise there is no silver bullet.”

She said despite the challenges, there is some positivity, as the “industry is really stepping up” with its solutions and pledges for change.

Walking the Talk

Providing the examples of the ways in which businesses are stepping up to the challenge, a panel discussion of cross-supply chain representatives saw Burgess Davies of PepsiCo explain how the company is looking at ‘refill’ as just one of its solutions following the acquisition of SodaStream last year.

“This allows consumers to refill with soda at home, so they are buying less of the packaged product. We’re looking at similar offerings relating to food, and we are also part of Terracycle’s ‘Loop’ refill initiative,” she told delegates.

Barnaby Wallace of Mars Petcare said the company believed chemical recycling offers an interesting proposition for film packaging and that although “on the go” represented a challenge, it is also an opportunity for materials capture.

EU setting the sustainability model

Kaushik Mitra, Director of EMEA Polyolefins Market Research at IHS Markit, said that the introduction of recycling and sustainability regulations in Europe “is not a doomsday”, insisting that “yes, there are headwinds, but when you face this kind of adversity you need leadership and to embrace change, and Europe is doing that.”

Mitra said despite the challenges in meeting the new targets, and the concerns expressed by industry, ultimately Europe will “lead the way” and set the blueprint for recycling that will diffuse into other regions globally.

Changing mindsets

The theme of sustainability extended into the second day of the Summit, which kicked off with Terracycle’s Michael Waas charting the rise of disposable plastics from one-time miracle convenience product for the consumer in the 1950s to its current status as public enemy #1.

“The impact of innovation is waste,” he told delegates. “Adverts from the 50s show the advocation of the benefits of disposability, through cutting down on chores and making life more convenient. Since then plastic production has exploded and the problems have surfaced. It’s because we have designed for convenience and not for end-of-life, and that’s where we need to rethink the model.”

Terracycle’s current projects revolve around recycling materials that currently aren’t recycled and to give them both a second life and an economic value. These include trials to recycle crisp packets, contact lenses and turn ocean plastic into shampoo bottles.

However, Waas said that despite the recycling initiatives, “we are unable to recycle our way out of the current waste challenge.” The company has, therefore, also created ‘Loop’, a delivery-use-collection model that enables the use of premium packaging but on the proviso that the contents are refillable, and the containers are reusable over and over again. “This model helps the consumer think of packaging as an asset, not a cog,” he explained.

Millennial engagement

It is the very challenges of sustainability, recycling and the move to a circular economy that Jonathan Quinn of Nova Chemicals, believes is the way to attract millennials to a career in the plastics industry.

“It’s a puzzle that needs solving and millennials offer a whole host of new skills,” Quinn said when moderating a panel session on what the view of the next generation is on the industry and how to encourage them to choose a career in it.

“However, we need to educate with the facts. Millennials are known as a generation that is proud to be green, so we need to get the word out there that by working in the plastics industry you are contributing to making the environment better, not worse,” he added.

Fellow panellists Arpurva Shah of Charter NEX Film and Mariah Brings of M Holland, both millennials working in the industry, agreed with Quinn and said that other ways to attract new talent were to lessen the requirements for experience when posting jobs and look for people quality and the right characteristics.

“We have to be willing as an industry to go outside, to not post jobs that require 10 years’ experience in plastics, which just leads us to stealing employees from one and other. There is plenty of willing people who, if they have drive and passion, we can teach what they need to know,” said Quinn.

Material world

IHS Markit’s Tison Keel gave an overview of the PET market, outlining how the impacts of recycling are providing future uncertainty. For virgin PET there is a buyer’s market on the horizon, with global PET capacity likely to outstrip demand in the next 5-10 years.

For Engineering Plastics, IHS Markit’s Brendan Dooley said that the end of the problems with N66 were in sight, with a huge investment in capacity meaning 2020 marks the “beginning of the end” of the shortages, with prices becoming more normal. “By 2023 expected to be well supplied,” he added.

For N6, there is globally an oversupply that Dooley said will continue "for some time to come" and for polycarbonate the big supply coming on stream will mean prices come down sharply.

Finally, IHS Markit’s Javier Ortiz urged “polystyrene is not dead yet!” when giving his overview of the material. Global demand is flat, he said, but there’s not yet a decline, despite the major challenges in terms of sustainability and bans. China is driving the market thanks to its E&E industry as opposed to Europe where demand has fallen sharply.

GPS will return in 2020.