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Processors' concerns? Expensive resin and inexpensive German labor

Article-Processors' concerns? Expensive resin and inexpensive German labor

The rising cost of plastics and cheap German labor—yes, you read that correctly—have Belgium’s plastics industry concerned. In a survey of its plastics processing members, the country’s plastics trade association found them generally optimistic about recovery but worried about their ability to competitive.

Evolution of plastics prices: February 2011 compared to …


February 2010

February 2009

September 2008


+ 28 %

+ 85 %

+ 26 %


+ 17 %

+ 69 %

+ 13 %


+ 28 %

+ 76 %

+ 8 %


+ 27 %

+ 94 %

+ 16 %


+ 17 %

+ 48 %

+ 6 %


+ 35 %

+ 64 %

+ 18 %, the Belgian Association of Manufacturers of Plastic and Rubber Products, released the results of a survey of its members at its general meeting early this month. The country’s cumulative production volume in the plastics and rubber industry in 2010 grew by 5.7% and, for this year, fully 70% of those senior managers surveyed expect the sector to stabilize or to grow again.

So far, so good. But like processors everywhere, the Belgium contingent has resin prices on its mind, as well as concerns about low-cost labor in its large western neighbor, Germany. “Cheap” and “German labor” are not words often seen together but, of course, a cost always depends on that to which it is being compared. Also, the last decade has brought tremendous change within Germany’s employment laws so that trade unions have become generally more collaborative in their negotiations with employers.

Not so in Belgium, according to Geert Scheys, secretary general of Federplast, in response to questions from PlasticsToday. He explains that in Belgium, labour costs are by law automatically indexed (based on the cost of living and factors) to increase, with trade unions negotiating for an additional wage increase every two years. These salary negotiations began this month. “The consequence of this system is that over the past 10 to 15 years we have built in Belgium a 15% wage handicap compared to the neighboring countries, of which Germany is the most important economic partner. If this handicap increases further we will lose our competitiveness,” added Scheys. Federplast is urging the trade unions to consider this in negotiations and aim for moderate wage increases not higher than the consumer price index.

With an export surplus of more than €10 billion, the plastic and rubber industry is a primary contributor to the Belgian trade balance. Processors of plastics and rubber recorded in 2010 a growth of 5.7% in volume and 14.9% in turnover, and those processors surveyed said they likely would add to their payrolls in 2011. “The survey reveals a new optimism among our members,” said Stéphane Dalimier, president of “56% of our CEOs expect growth in their existing markets, while 80% anticipate an increase in new markets.” Dalimier is an executive at foamed plastics processor NMC group.

Besides high labor costs, processors of plastic and rubber fear a continued erosion of margins due to the sharp increase in plastic and rubber prices. Since the low of the crisis in early 2009, the price of most plastics has risen steadily, from 50-100%. Even when compared to their pre-crisis price level in September 2008, most plastics are now priced 15-25% higher.

In other news from the trade association’s annual meeting, Dalimier signed a letter of intent to join a European initiative to achieve energy savings of 20% by 2020. Called EuPlastVoltage, the two-year energy management project is financed by the European Commission and has as its objective to prepare and launch a voluntary long-term agreement on energy efficiency for the European plastics processing industry. —Matt Defosse

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