The economic downturn will have a significant impact on
the supply of engineering plastics.
One of the industry leaders, Sabic Innovative
Plastics, based in Pittsfield,
MA said it will "reduce
production across its engineering thermoplastics portfolio by up to 20 percent,
effective immediately." The announcement was made in Belgium Nov. 5.
The announcement continued: "Sabic Innovative Plastics will
communicate further details as appropriate with suppliers and customers to
optimize the supply chain and to minimize any disruption."
Sabic IP, formerly known as GE Plastics, is a major producer
of polycarbonate, polycarbonate/ABS blends, modified polyphenylene oxide and
other engineering materials. The company, which employs more than 10,500 in 25 countries,
is a major supplier to North American automotive and building industries, which
are both significantly affected by the weak economy.
Product Development
Slowdown?
It's not likely that design engineers will have trouble
finding adequate supplies of engineering plastics, but there may be a reduction
in new product development efforts, one of the hallmarks of the company from
its GE days. GE Plastics, for example, was one of the primary developers of
injection-molded instrument panels for cars. The company played a big role in
the success of the Chevy Volt concept car, although some of the big ideas, such
as a hood injection-molded from recycled soda bottles, will not make it to the
production model.
In 2007 Saudi Basic Industries of Riyadh, Saudi Arabia,
acquired GE Plastics, which had posted sales of almost $7 billion in 2006.
Another major producer of engineering plastics issued a
cautious financial statement
on Oct. 29. Materials sales dropped 8.9 percent in the July-through-August period
at Bayer MaterialScience. Sales of polycarbonates fell by 2.8 percent after
adjusting for currency and portfolio effects. The thermoplastic polyurethanes
business unit saw business expand by an adjusted 2.9 percent.
Compared to the prior-year period, earnings were "greatly
hampered" by raw material and energy price increases. "Selling price increases
and cost savings from our restructuring program only partly offset these
effects," said Management Board Chairman Werner Wenning.
On Oct. 21, DuPont reported
a third quarter operating loss for performance materials due to a special
hurricane charge. Excluding this charge, pre-tax operating income declined 36
percent to $125 million due to weak markets, weather-related business
interruptions and rising raw material costs that were not fully offset by
higher prices.
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