Sharp raw material price increases could jeopardize positive prospects of the industry in Belgium

At its general meeting, Federplast.be, the Belgian Association of Manufacturers of Plastic and Rubber Products, released the results of a survey of its members. The production volume of the plastics and rubber industry in 2010 experienced a growth of 5.7%. For 2011, 70% of general managers expect the sector to stabilize or to grow again. Employment is expected to evolve positively. The sector is concerned, however, that this positive outlook would be threatened by rising prices of plastic and rubber raw materials. Energy savings and control of labor costs are required to maintain the competitiveness of Belgian companies vis-à-vis Germany, where the plastics and rubber industries are growing more rapidly. Federplast.be represents companies that process plastics and rubber affiliated with Agoria, the federation of the technology industry, and essenscia, the Belgian federation for chemistry and life sciences. Producers of plastic and rubber products form a sector dominated by SMEs, with an average size of 45 workers. The production of plastic and rubber raw materials included the plastics and rubber sector within Agoria, essenscia and Federplast.be represents more than 300 companies, 34,000 employees and a total turnover of 16 billion euros. With an export surplus of more than 10 billion euros, the plastic and rubber industry is the primary contributor to the Belgian trade balance. The processors of plastic and rubber recorded in 2010 a growth of +5.7% in volume and +14.9% in turnover. Although employment has continued to decline by -1.1% in the third quarter of 2010, 87% of businesses managers plan for 2011 employment levels stable or rising. "The survey reveals a new optimism among our members" said Stéphane Dalimier, president of Federplast.be. "56% of our CEOs expect growth in their existing markets, while 80% anticipate an increase in new markets. For our dynamic SMEs, the crisis has been a catalyst to seek new opportunities." Half of the entrepreneurs expect to reach before the end of this year their activity level before the crisis, or even do better ."This is a positive signal," says Mr. Dalimier, which adds however, "but it should be emphasized that we are lagging behind compared to the plastics industry in Germany, which profits from labor costs restraints to overcome this year the crisis by 75% of the companies." Besides high labor costs, processors of plastic and rubber fear a continued erosion of margins due to the sharp increase in plastic and rubber prices. Since the trough of the crisis in early 2009, the price of most plastics has indeed risen steadily, from 50 to 100%. But even when compared to their pre-crisis price level in September 2008, most plastics are now higher from 15 to 25%. The forecasts indicate further increases in raw material prices for the coming months, which may affect the cost of packaging, construction products, technical parts and consumer goods using plastic and rubber. At its annual meeting Federplast.be also devoted special attention to the issue of climate. Thus Mr. Aafko Schanssema from PlasticsEurope commented on the results of a study on the contribution of the use of plastics in the control of climate and global warming. "To be replaced systematically by other materials, energy consumption would increase by 57%," said Schanssema. "For Europe, this would mean an increase of the energy consumption by 2400 million GJ / year. The use of plastics reduces emissions of greenhouse gases by a factor of 5 to 9 compared to those that accompany the production of these materials and the processing of their waste" (link: Plastics' contribution to climate protection). Although the industry is already saving significant amounts of energy through its products, the plastics converters intend also to reduce their energy consumption at internal operations and production processes. To this end, the President of Federplast.be, Stéphane Dalimier, has signed a letter of intent to join a European initiative to achieve by 2020 energy savings of 20%.