Doing Well? That’s Not What I Hear

“Ontario’s Plastics Industry: A Dynamic Global Leader”, the March 2003 report that resulted from MPP Doug Galt’s consultations with plastics industry companies, associations and educators, was initially dismissed around here as a piece of feel-good fluff.

I’ve re-read the report, and while I have found some nuggets of relevant information, I think it still gives the impression of being feel-good fluff.

One obvious problem with this report, which is directed to the Ontario Minister of Enterprise, Opportunity and Innovation (and available to the public), is that both the introduction and conclusion gloss over the problems being faced by our industry. Galt begins his report by saying “Members of Ontario’s plastics industry felt that their sector was doing well, and that the provincial government was doing a good job…”

How can any of the later analysis be taken seriously when you start off saying everything’s fine? That opening statement immediately diminishes the validity of the all the threats to the industry that participants took the time to bring to Galt’s attention.

From what I hear, the industry’s in a delicate balance right now, with some companies dissolving into bankruptcy and some growing through acquisition. I hear from executives in various sectors that profits are being consumed by rising insurance costs, by the rapid increase in the value of our dollar versus the U.S. dollar, by pricing pressures from cheap offshore competition, and by wildcard situations like SARS and the Iraq war.

This is hardly a sector that’s “doing well.”

To his credit, Galt does mention some of the challenges facing the industry. He notes that “some traditional customers for plastics processors are relocating.”

The threat of cheap imports of bags and film products from China, and the threat of cheap Asian competition to the mold, tool and die sector are mentioned in passing.

Yet somehow, all of these don’t add up to any sense of urgency in the report, nor do they lead Galt to any helpful, insightful recommendations (with one exception, mentioned later).

His recommendations are broad platitudes: support training, keep the border traffic moving, encourage SMEs to use existing R&D support programs and foster a competitive business environment.

Honestly, is any of that telling the folks in the Minister of Enterprise anything they don’t already know?

The one recommendation that could have a satisfying bottom-line effect for processors and moldmakers is the suggestion that purchases of machinery and equipment should be supported through faster write-offs and capital tax incentives.

As evidence of what a good idea that is, look to our southern neighbors. The U.S. took this very step in May, calling it the Jobs and Growth Tax Relief Reconciliation Act.

As for the suggestion that “the Ontario government should work with the plastics industry to further define its training needs and explore ways to support the industry”, it’s my understanding that this very purpose is already being served by the Canadian Plastics Sector Council.

My recommendation is that readers of Galt’s report ignore the feel-good fluff, and peruse the comments and recommendations from participants for some truth about Ontario’s plastics industry, and some thoughts on what to do about it.

— Cindy Macdonald, associate editor. Michael LeGault will return next month.