US plastics industry could take hit from automotive downturn

06 April 2009 23:19  [Source: ICIS news]

HOUSTON (ICIS news)--Economic struggles within the US automotive industry may force US plastics suppliers to lower costs or improve technology in order to maintain profits, a university research scientist said on Monday.

Delphi, a major US auto parts supplier, met with its creditors as well as President Obama’s auto task force and Delphi's former owner, General Motors, on Monday in Washington as it struggles to emerge from bankruptcy protection.

Should Delphi be unsuccessful in securing financing, the company could be forced to sell off several of its divisions to foreign rivals, according to Bruce Belzowski, assistant research scientist for the University of Michigan Transportation Research Institute.

That, in turn, would complicate matters for downstream plastics companies with established relationships with US auto parts suppliers such as Delphi.

“I think there would be some [initial] opportunities for the current plastics suppliers to Delphi to continue to supply the company that purchases one of the Delphi divisions because Delphi’s customers would expect an uninterrupted supply of parts and components,” Belzowski said.

“But in the long-term, I think plastics suppliers would need to prove their value to the new company through cost advantages and/or new innovation in order to keep the business,” he added.

Each US-made automobile uses 331 lb (150 kg) of plastics, according to Kevin Swift, chief economist of the American Chemistry Council (ACC).

Moreover, the ACC estimates that each vehicle contains nearly $2,700 (€1,998) worth of chemical products or chemical processing value.

($1 = €0.74)

Paul Hodges studies key influencers affecting the industry in his Chemicals and the Economy blog
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By: Ben DuBose
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