FocusGM shutdowns deal another blow to US plastics makers

23 April 2009 21:26  [Source: ICIS news]

GM woes another blow to US plasticsHOUSTON (ICIS news)--General Motors’ (GM) shutdown of 13 US and Mexican plants for up to 10 weeks is the latest blow to a plastics industry that should already be accustomed to the economic downturn, a university research scientist said on Thursday.

“The plastics makers should have already planned for a very slow 2009, so they shouldn’t be surprised at this point,” said Bruce Belzowski, assistant research scientist for the University of Michigan Transportation Research Institute.

“If they are surprised, they are not planning properly,” he added.

GM said in a statement that the shutdowns will help control high dealer inventories and bring production in line with sales. The company said it will cut production by 190,000 vehicles this year.

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 (€2,079) worth of chemical products or chemical processing value.

During the shutdowns, auto parts suppliers would not be able to ship parts to GM, losing revenue in the process.

In addition, due to overall economic weakness, the suppliers will likely have a hard time finding outside demand to compensate for the losses from GM.

“Since sales are low for the entire industry, it is unlikely the other automakers have any need for extra plastics above and beyond what they are already contracted to receive from their current suppliers,” Belzowski said.

While the entire industry is dealing with the recession's effects, this era has the potential to benefit the plastics industry long-term because of an emphasis on energy efficiency, according to Rob Krebs, ACC communications director.

“Because of this crisis, longer, harder looks are being made at plastic composites because of their lightweight, energy absorbing and high-strength characteristics,” Krebs said. “In the meantime, we are all struggling.”

($1 = €0.77)

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By: Ben DuBose
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