Sustainable Investment in the Plastics Pipes Industry [PVC, PE]

# 2004 Milan

The key reason for investment in technology should be obvious – it is for business growth. The main volume products - PE and PVC are at a similar stage in the business cycle, where formerly rapid growth has decelerated and is in the doldrums with declining prices – the classic signs of a mature market. Meanwhile there has been considerable consolidation amongst polymer producers and converters, though pipe remains mainly a local product, owing to cost of transportation, except for specialities. The challenge for investment is the need to stimulate growth and develop commercial success. Two potential ways of doing this are to either use technology to earn higher margins, or to expand the market (relative to traditional materials). The potential for higher prices seems limited but customers continue to accept innovation, provided it is connected with methods of reducing their cost base. However these have to be clearly and demonstrably visible. One problem we have generated ourselves is that in the fairly recent past we have been investing to increase capacity to gain short term advantage over our plastics competitors. Although confidence building and valid in its own right, we should not shrink from also targeting traditional materials, which in many sectors still supply the major part of the market, and offer the greatest opportunity for future growth. Our customers needs, as always, are critically important to us, but they too are consolidating and gaining in strength. All that we offer as an industry must be a part of an overall plastics solution or integrated system that is technologically sound, fit for purpose and cost competitive against other materials. We need not be pessimistic in this pursuit, plastics pipe systems are still relatively young compared to other materials, and unlike them we have not yet become moribund. The demand is also there – there is still an urgent need for superior, or even just adequate, water and energy supply systems in much of the world. We must not regard or allow what we make to be considered as a commodity. There is clearly a perception gap that must be filled - we have highly engineered solutions to real problems and the demand for our products is continuing. In every area of gas, fluid, waste transportation and so many other areas, we have superior solutions to traditional materials which provide an opportunity for growth. This growth can only be sustained through wise investment strategies and technological solutions that provide customers real tangible benefits. Our future depends on it.

Please note that the whole article content is available on PPCA website onlySource : 2004 Milan


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