New era dawns with POLYCO A NEW ERA dawns for the industry in April when POLYCO, the Polyolefins Company, starts out on its journey. Although it constitutes by far the largest percentage of material converted, the polyolefins sector has been the last to mobilize.    PETCO, for the PET sector, was the first of the material sector associations to be established in 2005.   It’s been followed by the Polystyrene Packaging Council (PSPC) and SA Vinyls Association (SAVA) for the PVC sector.   These bodies are funded by either a levy on material sales or other mechanisms. It’s possible that the establishment of POLYCO was delayed simply because of the magnitude of the undertaking.    The polyethyelene and polypropylene converting business is diverse and widespread.    It accounts for more than half the total tonnage of material converted in South Africa annually, estimated at between 600,000 and 700,000 tons p/a. What is of immediate importance to converters is that POLYCO will be funded by a levy of R100 per ton of material purchased.    The levy, which will at first be voluntary, comes into effect on 1 April.   We understand that the major converting groups have in principal agreed to participate, so the accrued fund should growing within the first few months.    Should everyone pay, a substantial fund will obviously be established. POLYCO will focus on improving waste management and recycling of post-consumer polyolefin products in terms of the industry’s Extended Producer Responsibility (EPR) commitment, and hopefully pave the way for an environmentally sustainable future. Self-regulation is certainly preferable to state intervention, an aspect that the bag-making sector remains very aware of.    The plastic bag legislation of 2002 led to a complete overhaul of the bag business, and worse was to come: virtually none of the capital generated from the plastic bag levy came back to the industry.    The entity set up to run the process, Buyisa-e-Bag, has been shut and consumers are still paying the bag levy into the government coffers.    So the whole process has effectively not assisted the industry at all. But memory of the experience may be useful:   POLYCO will after all be managed by representatives of the polyolefin industry, and they should be mindful to avoid the previous disaster!    One suitable initial goal may be to retrieve the lost millions and possibly access the funds from the bag levy going forward? PETCO encountered difficulty with some PET converters in its early stages, but organisation and action slowly won businesses over and the PET levy is at present being paid by virtually the entire sector. Businessmen around the country will be watching the process with interest and caution, and we suspect many will adopt a wait and see approach.    R100 a ton will on average be about a 1-2% of their overall material costs, but adding a single percent onto total production costs will not be taken lightly, such is the competitive nature of the market presently.    It’s also not certain that the industry’s customers will be enthusiastic about a 1% increase in prices.   Experience suggests they won’t, and the fact of the matter is that non-payers of the levy will, in theory at least, immediately achieve a 1% cost advantage over levy payers.   This has indeed happened before.    We, however, suspect that the better organised businesses will pay the levy and, almost invariably, such well managed operations tend to succeed before others. Observation of the benefits of membership will surely be the main catalyst for joining, so the next few months and years will be very important for the new organisation.    It needs to build confidence and realize improvements for the industry in terms of building market share, improving our environmental image, standards, training and – in short – everything that a healthy industry involves. We hope POLYCO gets off to a flying start! Martin Wells Publisher