You didn’t have to be a genius to see that the U.S. housing market was heading for a hard fall. You also need not be one to know it will bounce back.
Trust me, you didn’t; we called it, on this page, in March 2006. But nor do you have to be an expert on the U.S. to know that its citizens’ dreams almost always include owning their own home. Such dreams won’t be deferred for long.
We dared last month to search for some bright spots in the North American automotive industry for plastics processors, and now we’re taking it one further and eyeing the promise of the building and construction market.
When everyone else is frowning on a market, with well-documented reason, you’d have to be a fool to look there for opportunity, right? Well … if you, too, have a bit of a contrarian bent, then check out our lead Web Exclusive article this month, written by Senior Editor Clare Goldsberry upon her return from the International Builders’ Show in Las Vegas in January. Clare came back talking not about doom and gloom, which we’d certainly expected, nor about slot machines, which we’d feared, but rather about aisles chock full of attendees. Despite what can fairly be described as a terrible market right now, plastics processors at that show, and their customers, still see plenty of opportunity, she reports. Wood plastic composites, for example, are hardly new, but the WPC siding shown at the IBC show was just better than what some have come to expect from these materials. Clare also was quite taken with the injection molded shingles; if your large-tonnage press has capacity, then this may be something for you.
Second, consider India’s promise
I’m typing this while attending Plastindia in New Delhi, where local experts predict per capita plastics consumption will double in the space of just three years. The current per capita usage is not much more than 5 kg. For comparison, China’s is about 30 kg and it exceeds 100 kg in the U.S.
But the salient point is that when India’s 1.15 billion citizens double their demand for anything, it is a huge deal. When they double it for plastics, plastics processors should take notice. The packaging market accounts for about 50% of Indian plastics demand, but every major end-use market here is on a growth curve. More than 11,000 TVs and refrigerators are sold daily. More than 500,000 cell phones are sold daily. Daily! The country’s bureaucracy, long accused of hindering more than helping businesses, remains difficult but is improving, according to those who should know. The government also is tempering its protectionist attitude towards SMEs and enabling larger, more cost-efficient processors to start the M&A that the domestic market needs to reach better economies of scale.
It is not China, a low-cost manufacturing base from which to export goods back to countries where a processor already is active. The Indian opportunity of domestic demand will require more local knowledge, likely via an alliance or JV. This passed through my mind as I spent a few hours today in Hall 11, where more than 100 Indian processors exhibited. The aisles were jammed, more so by far than at any other hall at the show. I counted four other foreigners there, three processors and one employee of a European molding machine company. I doubt that I missed many.
My cost to attend, with visa, flight, overpriced hotel, meals, and incidentals (actually, hiring a safe driver was hardly incidental—thanks again, Harish!) for the week, was substantial, but less than $3500. The opportunity cost of not talking with those processors in Hall 11? You make the call. But if 1.15 billion people doubling their use of plastics sounds enticing, then you’re in luck, as the Plastindia Foundation already announced it will bring a large contingent of processors to the NPE trade show this June in Chicago.
B&C, India … it is difficult to think outside the box when its walls are caving in on you. But trying to do so, while also repairing those walls, seems prudent.
Editor in Chief