Resilience across the board

Trade shows are just a moment in time, and thank goodness for that as we’d all be in sad shape if we tried to live on three hours of sleep per night. The recent NPE was an interesting moment in time for a number of reasons, but principally because the show happened to be held in the midst of an extreme market downturn. Most exhibitors were upbeat or at least satisfied with the event, and I can only recall one who quite openly said he was disappointed with traffic to his stand (he had a pretty good location, too).

So I boarded the plane home hoping that times were getting better or at least more stable, but then read a well-researched article on ‘the second wave’ of the recession that, the author predicts, is now crashing down and will continue doing so over the next months. The first wave was caused by banks’ and other financial institutions’ irrational exuberance; this second wave is due to lending institutions that either are not lending or are only doing so at scurrilous rates, and then only to the most solid customers, thereby starving plenty of companies of monies they may need either to invest or to help tide them over until the recession ends. This aversion to lending is especially painful to privately owned, small-to-mid sized enterprises, which account for about 90% of plastics processors and their machinery and molding/tooling suppliers.

I don’t think this second wave is news to any of us; this article struck me only because it was particularly well researched. But in talks in the past months, and most definitely in Chicago at NPE, people repeatedly spoke of fighting to be ‘the last man standing’ so that their companies can benefit when the good times start to roll again. And in fact, though there have been some closures and M&A action, so far it has been at a much slower pace than most assumed. During a webinar earlier this year, one of the sharper observers of our industry, Jeff Mengel of Plante & Moran, predicted about 13% of North America’s circa 7800 processors and moldmakers would be out of business by year’s end, victims of the automotive slowdown and other painful economic forces.  I spoke with Jeff during NPE and he agreed that the resilience of processors and moldmakers has been nothing short of amazing. The year is more than half-over but the pace of closures has been, thankfully, much slower than anticipated.

So, this is a rather long way of saying, here's to all of you, fighting the good fight. You are in very good company.