Plastics industry reeling from oil, gas hikes
National Post
Can't pass on costs
Duncan Mavin
Financial Post
September 16, 2005
Surging oil and natural gas prices are putting the squeeze on the Canadian plastics industry and could lead to job losses in the long-term, industry insiders said yesterday.
"Anyone who's in the plastics industry is going to be feeling it," said Paul Cohen, vice-president of marketing at W. Ralston (Canada) Inc., a Montreal-based manufacturer of garbage bags, adhesive tape and plastic film, which employs 400 staff.
Mr. Cohen was reacting to news that Newell Rubbermaid Inc., a U.S.-based manufacturer of plastic storage containers, is to close a third of it's plants and cut 5,000 jobs. Rubbermaid blamed the closures on oil price increases.
The soaring cost of natural gas, a raw material in plastics production, as well as record oil prices impacting transport and machinery costs, are putting the industry here under similar pressure, said Mr. Cohen.
"Will there be job losses? If buyers say we've got to go out and shop around, who knows where it will end."
"It could end up in China for all I know," he said.
The difficulties facing manufacturers were reflected in 108,000 factory jobs lost in Canada in the past twelve months, according to data released by Statistics Canada on Wednesday.
The Canadian plastics industry currently employs approximately 105,000 workers, and is worth about $20-billion, said John Margeson, a plastics specialist with Industry Canada.
He said he expects some "rationalization" of the industry in North America in the next five to ten years.
"We're already seeing signs. Almost all the new investments in producing resins, the plastics precursors, are happening in the Middle East and Asia," he said.
He said there are two segments that will likely suffer most: consumer products and the automotive industry.
"Companies like Rubbermaid, in consumer products, have limited ability to pass on the price increases to their big customers like Wal-Mart or Canadian Tire who have a motto of low prices," said Mr. Margeson. Big automakers, with their own sales and cost problems, are also reluctant to accept price increases from suppliers, he added.
Can't pass on costs
Duncan Mavin
Financial Post
September 16, 2005
Surging oil and natural gas prices are putting the squeeze on the Canadian plastics industry and could lead to job losses in the long-term, industry insiders said yesterday.
"Anyone who's in the plastics industry is going to be feeling it," said Paul Cohen, vice-president of marketing at W. Ralston (Canada) Inc., a Montreal-based manufacturer of garbage bags, adhesive tape and plastic film, which employs 400 staff.
Mr. Cohen was reacting to news that Newell Rubbermaid Inc., a U.S.-based manufacturer of plastic storage containers, is to close a third of it's plants and cut 5,000 jobs. Rubbermaid blamed the closures on oil price increases.
The soaring cost of natural gas, a raw material in plastics production, as well as record oil prices impacting transport and machinery costs, are putting the industry here under similar pressure, said Mr. Cohen.
"Will there be job losses? If buyers say we've got to go out and shop around, who knows where it will end."
"It could end up in China for all I know," he said.
The difficulties facing manufacturers were reflected in 108,000 factory jobs lost in Canada in the past twelve months, according to data released by Statistics Canada on Wednesday.
The Canadian plastics industry currently employs approximately 105,000 workers, and is worth about $20-billion, said John Margeson, a plastics specialist with Industry Canada.
He said he expects some "rationalization" of the industry in North America in the next five to ten years.
"We're already seeing signs. Almost all the new investments in producing resins, the plastics precursors, are happening in the Middle East and Asia," he said.
He said there are two segments that will likely suffer most: consumer products and the automotive industry.
"Companies like Rubbermaid, in consumer products, have limited ability to pass on the price increases to their big customers like Wal-Mart or Canadian Tire who have a motto of low prices," said Mr. Margeson. Big automakers, with their own sales and cost problems, are also reluctant to accept price increases from suppliers, he added.
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