VOLUME 13 ISSUE 6

Many in local plastics industry do well over challenging period

2015 has come and gone and for many of us it wasn’t the best of years, although most of us are still here and, well, enjoying things in Africa.

It may come as a healthy surprise then that many companies in the local plastics, composites and rubber sectors have done well in this challenging period. And it may be salient to observe why these enterprises are succeeding.

Market conditions have been tough: who, for example, would at this time last year have anticipated that commodity prices would collapse, demand from China would reduce considerably and that the rand exchange rate would plunge? It seems that purchases of equipment from China by South African convertors have also slowed considerably.

These developments, together with virtually no government assistance for convertors, have placed a lot of pressure on all convertors.

At the end of 2014 we asked the CEOs of some of the industry-leading companies how they foresaw conditions in 2015, and some sage comments were made:

Jeremy Mackintosh of Polyoak said: “It’s important that we place more emphasis on the triple bottom line (profits, people and planet). Unless we pay significant attention to the latter two, then profits will not be sustainable.”

Loutjie de Jongh of Mpact Plastic Containers said: “I do not think we have a labour problem. We have a management and attitude problem. The cost of labour is an issue, but this will be resolved through increased automation and use of higher skilled persons.”

Ian Victor of MCG said: “There will be severe pressure on the current competitors and, as we have seen in the past couple of years, many manufacturers in the packaging industry will find themselves in difficult times. It will become survival of the strategist.”

Fast forward to the current situation and these remarks have, in varying degrees, all had relevance, and their strategic forecasts have had validity.

There has been tonnage growth in the local plastics market, but that has mostly been with recycled materials (pages 6-7), but that is mainly in new applications and thus virtually a new market.

Our observation is that the main reason for the success of some of the convertors is that contracts from convertors who have got into a squeeze have simply been transferred to operators with good momentum. There has been an attrition rate in the process, and in some cases it’s taken Herculean efforts by the management of companies to keep going.

One of the hallmarks of the successful businesses is that their CEOs or top brass have time - which means they have put good structures in place with incentivised management teams. Another strategy they pursue is that of building a cohesive workforce where employees are encouraged to show initiative and act responsibly.

The other feature for success is to have extremely sound financial controls. No matter how much money a business is bringing in, it’s going to be in trouble if financial management is not very good.

Design matters 

The commercial value and application of design is becoming more and more valued as a strategic business activity. As Mike Wythe, industrial designer and lecturer points out those companies who embrace design as an integral part of their product development go on to become profitable players in an increasingly competitive market. We take a look at some of the world-class design talent locally as evident at the 2015 Gold Pack Awards and the PISA Student Design Awards 2015, as well as internationally with the 10th Bioplastics Awards.

Best wishes for 2016! 

Our best wishes to all our readers for a safe and happy festive season.

Martin Wells, Publisher