Extrusion International 2-2024

10 Extrusion International 2/2024 INDUSTRY NEWS European Plastics Industry It’s been nearly four years since uncertainty took root in the European plastics industry. First, the pandemic and lockdowns, then Russia’s invasion of Ukraine and the resulting energy crises. More re- cently, the rabid inflation and cost-of-living crisis, and the chaos caused by the Houthi militia on the Red Sea – each of these unfortunate events took a toll on all companies along the plastics value chain. The question is, can the European plastics industry hope for things to gradually start getting back to nor- mal? To find the answer, Plastics Information Europe conducted its 11th market survey, in which over 330 respondents from across Europe took part. Performance generally trended lower in H2 2023 – more than half the respondents admitted that the results of their commercial activity were worse in H2 2023 compared to H1; a roughly equal share found it either better or unchanged. The regional split shows that business was primar- ily depressed in Benelux, where 100% of the respon- dents said their operations had deteriorated. The picture also seems grim in Central, Eastern, South- eastern, and German-speaking Europe, Italy, and the UK and Ireland. Among the industry sectors, business was particularly challenging for plastics recyclers and only slightly better for the responding companies en- gaged in polymer and chemical production. Although another half-year shattered the Europe- an plastics industry’s hopes for recovery, the general mood is far from its lowest ebb. Over a third of the respondents believe H1 2024 will bring their business much-anticipated improvements, which would be tangibly higher than in H2 2023. Only 16.7% of those surveyed expect new lows. The closer to home ground, the more confident the respondents feel. On the domestic market, upturn is a likely scenario for 30.4% of those surveyed. When it comes to exports to other European countries, this figure is slightly lower, at 29.2%; only 26.5% of com- panies believe in the positive dynamics of their ex- ports to non-European countries. Optimism persists in German-speaking Europe and Italy, where half of the respondents look forward to positive developments in the first quarter of the new year. Since change is the only constant, a shift in invest- ment activity could bode well for the European plas- tics industry. The share of companies willing to in- vest seems to be looking up, reaching almost a third, against only 19.7% in H2 2023. This appetite for spending is the strongest since H1 2021. The dynamics are also encouraging on the other end of the gauge, with only 23.9% of companies ad- mitting plans to downsize investment programmes. While lower than in H2 2023, this is a far cry from the dismal 8% in H1 2021. The share of companies will- ing to spend more money in H1 2024 is the highest in Spain and Portugal, the UK and Ireland, and Central and Eastern Europe. Considering the soaring costs along the value chain, it is not surprising that most respondents said their in- vestment plans are primarily focused on cost-cutting solutions, as reported by almost 57% of the partici- pants. Slightly over a quarter of those surveyed ex- pressed readiness to jump into capacity expansion projects – a good result, given that business perfor- mance in the past couple of years left a lot to be de- sired. The prevalent hiring trend continues – more com- panies are still letting go of employees than those hiring them. Nearly 30.3% of the respondents admit- ted to layoffs in H2 2023, against 26.2% in H1 2023. Only 18.2% reported growth in staff, compared with 19.3% in H1 2023. Slightly more than half of the re- spondents reported no change in employee strength. There seems to be light at the end of the tunnel: More companies along the plastics value chain plan hiring than the ones eyeing layoffs in H1 2024. Em- ployee retention remains the dominant trend, with 65.6% of the respondents expecting no major chang- es in workforce. Only 21.3% plan to increase hiring and 13.1% is looking to downsize. Sales volumes were chosen as the key concern by 63.9% of the respondents, reflecting fears that with not enough demand, businesses might be forced to downsize operations. Selling prices – a factor tightly linked to the general market health – were a concern for 48.8% of the surveyed companies. Energy costs continue to bother at least 56.1% of the market players, while the cost of materials wor- ries 44.2%; at least 40% of the companies are still marred by labour and salary costs. Though not as high as at the beginning of 2023, inflation is still cause for concern for 44.2% of the respondents. Overall, busi- nesses managed to make ends meet, as the state of liquidity concerns only 10.9% of the surveyed compa- nies. Artificial intelligence has been around for a while, but it was in 2023 that it went mainstream and started causing chaos on the markets due to the fear of job losses. Apps like ChatGPT sparked discussions about the tectonic shifts such technologies could cause in virtually all segments. But the European plastics industry is yet to feel the impact of AI and automation. Only 9.8% of the respondents believe their operations are already af- fected. A slight impact is recognised by 20.2%, while almost half asserted that AI is yet to unravel its po- tential. Among the areas where managers expect the most help from digital assistants are cost reduction, increased production efficiency, and better manage- ment performance. PIE - Plastics Information Europe www.pieweb.com