Heather Kinzel
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Recent years have brought a fair share of challenges to global manufacturing and commerce. Massive supply chain disruptions found many U.S. manufacturers leveraging the benefits of reshoring to mitigate risk.
On the whole, reshoring is a solid strategy. Bringing production “closer to home” suggests a more comfortable level of control from a logistical standpoint. However, having production occur somewhere in the United States doesn’t necessarily mean a manufacturer’s domestic supply chain is less vulnerable than its global counterpart.
That’s where regionalization proves valuable.
In a perfect world, supply chain management is cost effective and seamless. Materials, inventories, services, production, and distribution flow as anticipated with minimal difficulty.
It’s been a far from perfect world since 2020.
Global supply chain disruptions have altered the course of business in all industries. Plastics is certainly no exception. The resin shortage continues to dictate aspects of injection molding supply and demand. Manufacturers are left to deal with the aftermath of force majeure, raw materials unavailability, prolonged lead times, and escalating costs.
With steady, predictable 3.9% growth projected for the next decade, there is some talk that the global plastics market is stabilizing after a long period of turbulence.1 The conclusion is logical, based on the numbers — but is it really signaling positive change for those relying on plastics?
The impact of several ongoing plastics industry trends may influence the current and/or future status of the market. As we reach the mid-point of 2022, it’s prudent to perform a reality check for manufacturers and suppliers.
In February, 2021, the plastics industry was devastated by a freak winter storm that laid waste to Texas power grids and 80% of U.S. resin production.1 As though the widespread after effects of the natural disaster weren’t enough for the plastics industry to handle, substantial polypropylene (PP) and polyethylene (PE) price hikes and a 30% diminishment of production capacity added to the burden.1
In the year since, prices remained volatile and sluggish supply chain logistics kept materials from timely distribution; yet, there seemed to be an undercurrent of optimism in the industry. PP and PE production capacity was on the upswing despite shipping woes. Resin prices were leveling off, if not slightly receding.2 The global resin shortage was presumably reaching a tipping point.
Unfortunately, the optimism was short-lived. Russia invaded Ukraine on February 24, 2022. Its impact waylaid the market’s potential recovery and further complicated ongoing industry challenges.
Supply chains are vital in any industry, yet they can be vulnerable to devastating disruption. The current supply chain upheaval drives the point home, but it should also give you pause.
Are you working with suppliers that can accurately pinpoint sources for every material, process, and shipment related to your orders and getting products to market? In turn, can you use this information to confidently manage your projects, vendors, and business? These questions — and answers — are crucial in understanding if you’re leveraging the benefits of supply chain mapping.
Viewing 2021 through the lens of the resin shortage, the year went out much like it came in.
Q4 found commodity resins polypropylene (PP) and polyethylene (PE) available in greater quantities at lower prices.1 However, for many manufacturers, custom injection molding partners, and other supply chain vendors, the late-year good news was overshadowed by resin shortage challenges that will likely continue to pervade the plastics industry in 2022.
As Hurricane Ida unleashed its Category 4 fury on the state of Louisiana, plastics industry professionals kept a wary eye on the storm’s path. The repercussions of Hurricane Laura and Winter Storm Uri upended the resins market, which is still struggling. As the fifth strongest hurricane to ever make landfall in the continental United States1, Ida could have easily wiped out any progress made toward market restoration.
But, for the most part, Ida spared the plastics industry from further devastation. The hurricane veered away from the hub of resin production facilities in western Louisiana and eastern Texas, some of which were just coming back online.
Medical device performance is inextricably linked to the characteristics of the plastics used. Enhanced properties such as strength, flexibility, transparency, biocompatibility, and temperature and chemical resistance ensure patient safety. They are also mandated by the stringent regulations and classifications of the Food and Drug Administration (FDA) and The U.S. Pharmacopeial Convention (USP).
A supply chain is a staple for any manufacturer, and the suppliers within it largely dictate production processes, costs, and profitability of the end product. This may explain why OEMs put a lot of time and effort into managing their supply chains — but is managing supplier relationships enough to remain competitive?
