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Plastics Industry Thrives Despite Automotive, Appliance Troubles

With its ability to cater to different sectors, the outlook for plastics is bright despite storm clouds over automotives and other industries.

June/July 10
(page 3 of 3)
The automotive industry may be down, but it's not out. Volkswagen is building a production facility in Chattanooga, Tennessee where it will produce a car designed specifically for North American consumers. The company will invest $1 million, and provide 2,000 new jobs to initially produce 150,000 vehicles. The plant will open early in 2011.

With OEM consolidation and new partnerships, new opportunities will be created for some suppliers, according to SupplierBusiness, an IHS Global Insight Group. However, it will leave others out in the cold. "Cost-saving linkages among vehicle manufacturers will no doubt reduce the size of the supply base, just as they did during the merger frenzy of the 1990s," stated a release from SupplierBusiness. "The changes also will require a strategic response among parts makers - a potentially dangerous one." The last time OEMs went through a period of consolidation, several Tier 1 suppliers sought to mirror their customers, striving to generate size through acquisitions that would allow them to maintain counterbalancing power. That strategy sometimes led to disastrous consequences. The difference this time is that consolidation among suppliers should be more logical, synergistic, and better planned.

With the push toward electric and hybrid vehicles, plastics will play an important role in the light-weighting of vehicles. Suppliers of plastics components and integrated systems - such as interiors, fuel, and under-hood parts - should connect with business opportunities. "Suppliers and carmakers are joining forces to meet the demand for electric vehicles," said SupplierBusiness. "Indeed, co-operation on electric and hybrid vehicles is critical all through the supply chain: between OEMs, between suppliers, and between suppliers and OEMs."

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