Canadian OEM survey indicates growth opportunities for plastics

Canadian original equipment manufactures (OEMs) are increasingly turning to moldmakers and plastics processors for information about plastics, plastic packaging and components.

This was just one of the findings when Canadian Plastics’ surveyed OEMs about their purchasing patterns of plastic packaging and components.

During September 2005, over 1,000 questionnaires were sent to manufacturing companies known to use plastic components and packaging. In total, 60 completed questionnaires were returned yielding a response rate of 5.8 per cent.

The majority of respondents held key purchasing or decision-making positions in their respective companies. Thirty-nine per cent described themselves as senior management, followed by 23 per cent who indicated engineering as their job title, followed by purchasing at 16 per cent, and sales and marketing at 13 per cent.

Most intriguing of the findings was how OEMs get information about plastics. Of the 29 respondents who answered this question, 69 per cent cited industry trade magazines as their first choice for critical information, but some 48 per cent indicated plastics processors as a primary source of information. Another 45 per cent cited resin suppliers as their first choice, followed by 38 per cent who looked to moldmakers.

As a result, Canadian plastics processors, moldmakers and materials suppliers have a real opportunity to help grow the Canadian plastics industry by helping OEMs understand how to best take advantage of plastics in components and packaging.

According to the 28 people who responded to the question about their level of knowledge of plastic materials, only four per cent said they were experts. About 43 per cent said they did not know a lot, while 54 per cent indicated they had some familiarity with plastics but wanted to know more.

This is another indication of the opportunity for plastics processors, moldmakers and resin suppliers to grow in a variety of not immediately obvious, but burgeoning markets where OEMs are increasingly playing a role.

Of the 31 respondents who indicated the sector they worked in, 16 per cent were involved in the machinery industry, 13 per cent in the transportation equipment industry, and 10 per cent in the chemical and chemical product industries.

Yet 45 per cent of the respondents said their firms did not fit into those major market segments. Instead, these companies manufactured gazebos, above ground pools and manufactured products for the mining and forestry industry. Others manufactured hydraulic systems, produced toys and furniture for children, solutions for the medical device industry, industrial turbines, and windows and doors.

The diversity of these markets suggests that plastic components and packaging will continue to be a necessary and increasingly important part of new and developing markets.

Forestry and mining are key sectors in the Canadian economy, and the demand for medical devices, such as hearing aids, will likely grow as the Canadian population ages. The expertise, as well as the industrial and manufacturing knowledge of plastics processors, moldmakers and resin suppliers will be critical for the continued growth of OEMs in emerging industries.

However, the majority of respondents — 73 per cent — estimated spending below $50,000 on packaging overall in 2005.

Ten per cent anticipated spending between $50,000-$100,000 and seven per cent between $1 million and $10 million.

And 57 per cent said less than 10 per cent of packaging purchased would be made of plastic. Twenty per cent estimated between 10 and 20 per cent, while 10 per cent estimated between 21 and 30 per cent.

In terms of dollar value of components purchased in 2005, 40 per cent said under $50,000, 17 per cent between $50,000 and $100,000 and 13 per cent over $10 million. When asked what percentage of those awould be plastic, 43 per cent said less than 10 per cent, 10 per cent between 10 and 20 per cent and 17 per cent between 21 and 30 per cent.

Another encouraging finding for the plastics industry was the number of OEMs planning to replace a traditional material with plastic over the next 12 months for either packaging or components.

Of the 28 respondents 11 per cent indicated they would be converting to plastic for some components. These same companies made products for the transportation equipment, medical device and machinery industries. On the other hand, of the 29 respondents who responded to the question about packaging 10 per cent indicated they were planning to switch to plastic packaging. These firms were involved in the chemicals and chemical products, food and beverage, and transportation equipment industries.

Additionally, the survey discovered that most Canadian OEMs were not sourcing plastic components and/or packaging from abroad in great numbers. Of the 28 OEMs who responded, 61 per cent sourced their components or packaging solely from Canadian suppliers.

Of the 39 per cent that went outside of Canada, only 11 specified the other countries they purchased from. Forty-five per cent bought from China, while 36 per cent went south of the border to the U.S.

Canadian Plastics would like to thank all readers who participated in this survey. We plan to make the Canadian Plastics OEM Survey an annual event, so please stay tuned for our 2nd annual OEM survey in September 2006.

The winner of the draw for the $100 prize is Andre Paquet with Mecanicad in Rouyn-Noranda, Que.