James Pozzi profiles the UK’s plastics sector, fittingly among the UK’s most flexible, as it searches to increase its manufacturing competitiveness and sustainability in an environment of intense global competition.
The UK’s star manufacturing performers roll off the tongue with a relaxed ease. Automotive, aerospace, food & drink and its defence industries have all garnered the lion’s share of attention in 2014.
But an industry integral to providing components that contribute to the success of these industries is the UK plastics sector. It has the distinction of being both one of the country’s traditional industries but also among its most innovative. Its heritage in the UK is significant, with the country credited as being the birthplace of the commercial plastics industry in the 19th Century and also for discovering polythene, the world’s most used plastic.
In an industry serving everything from packaging for consumer products across the food & drink sectors to components for cars, its global reach is all-encompassing. Challenges have faced the market in recent years. Like most industries, it was susceptible to the economic downturn, and has seen increased competition from a Far East with reduced labour costs.
Last year, plastic demand was recorded at 3.47m tonnes, down 3.7% on the previous year. This was attributed to design minimisation – with plastics becoming lighter by the year – and an increased recycling and added value focus from UK manufacturers.
But despite the fall, the plastics sector remains an integral economic contributor. With an annual sales turnover in excess of £19bn, it is an industry employing 180,000 people throughout the UK and sees engagement with around 7,500 firms. It also plays a valuable role as an exporter, with the British Plastics Federation (BPF) – its leading trade body – stating the UK exports £6.7bn of plastic and plastics products overseas, some 35% of what it produces.
A time to invest?
In an increasingly global market dominated by big name firms throughout the USA and Europe, other countries from across the world have started to play catch up. While the UK has been a beneficiary of inward investment in the sector resulting in strength in areas such as injection moulding processes, the likes of China have offset this through their considerably lower labour costs.
Barkley Plastics, a Birmingham manufacturer offering services including manufacturing and moulding solutions for products ranging from the automotive sector to IT and retail applications, has experience of Far East competition.
The company, founded in the second city in 1965, has seen first-hand the mixed industrial fortunes of the UK over the decades. While the evolution of UK manufacturing saw a multitude of challenges across the decades, Barkley Plastics owner Maurice Cassidy believes the threat of the Asian manufacturing base has become increasingly challenging for the plastics industry of late.
To combat this situation, the company said it invested heavily in both its tool room and its mould shop. In the tool room, it has bought equipment that enables faster tool production, while investment in the mould shop, machinery and robotics have seen the firm secure growth in the area of plastic components. This is especially relevant to the automotive sector where the demand for ‘light guides’ has seen sales increase in that area alone by around £830,000.
Mr Cassidy says that working on investing in the equipment and working towards greater sustainability is something Barkley Plastics has increased its focus on, following something of an industry consensus. “This gives sustainability to manufacturing as our customers see the ongoing investment every time they visit and take comfort in the fact they are working with a company that is committed to world class standards,” he says.
To remain competitive in the industry, Cassidy says the two Is – investment and innovation – are crucial. “Investment is crucial to the survival and longevity of any manufacturing business in this modern climate. We also see innovation in new moulding processes as being important to retaining our competitive advantage.”
UK plastics: the state of play
Ever since the BPF outlined its vision for the industry in its 2012 report, The UK Plastics Industry: A Strategic Manufacturing Sector, increased scrutiny has been placed on progressing the industry.
A follow up review conducted this July painted a mixed picture. In a survey undertaken by 89 UK firms, it showed industry optimism had slowed somewhat.
“The overall message is that the level of business confidence remains high but has reached a plateau, at least momentarily,” said Philip Law, the BPF’s director general.
The 72% of firms questioned predicted turnover would increase, a drop of 1% since January. Furthermore, 46% said they expected profitability to increase over the next year, down from 49%.
And yet, the export market continued to show its promise, with 56% predicted sales would remain stable, compared to 50% questioned in January.
Shedding light on the investment intentions of UK companies, significant investments were planned by 42% of companies this year, a rise of 6% from this year’s survey and an 11% increase on January 2013.
Skills were also under the spotlight, with company hiring intentions highlighting the industry’s ongoing struggle to find skilled members of the workforce.
A figure of 46% expected to increase staff numbers over the next year – the highest level seen in four years – but 48% found difficulty in recruitment, a significant rise from January’s 36%.
The innovation factor
Stories of companies across every facet of the plastics industry finding new ways to remain competitive in the face of increasing demands around quality and recycling are becoming more commonplace. Manchester’s Duo UK, a family-run polythene plastics manufacturer, has made a series of investments over the past few years as it looks to increase its manufacturing capabilities bit.ly/DuoUKInvest.
Operating with turnover of just under £25m, the company is illustrative of the e-commerce boom giving both the plastics and packaging industries a shot in the arm. Supplying packaging for the likes of the ASOS clothing mail order website, and most recently ChicBaby.com, Duo invested further in its R&D proficiencies this summer by opening a dedicated quality control lab at its facility.
The lab consolidates some of Duo’s current methods for testing its polythene products as well as introducing further testing capabilities, allowing a thorough analysis of new products’ capabilities. Dale Brimelow, operational director at the firm, says the new investment is crucial to a company in an industry constantly developing products to meet specific industry needs.
“What the QC lab allows us to do is thoroughly test these new blends and develop a precise technical understanding of each product’s properties and characteristics,” he explains. “This in turn helps us to improve a product’s performance, offer alternative products as well as identify potential cost savings for clients.”
Recycling the future
A key issue across the global plastics industry is the disposal of waste, and it is in this area where the UK appears to be falling behind. As one of seven European countries accounting for 77% of plastic waste in the continent, the UK has seen itself fall behind its continental counterparts at consumer level.
A July 2014 report published by Digital House in association with plastics fabricator GPX Group, analysed the plastic recycling habits by country, and showed that, despite European plastic production now being at 58m tonnes, plastics waste at post-consumer level has increased steadily.
Europe’s disposal rate lies at 38.1%, with the UK’s recycling rate at 24.2%, compared to the continental average of 34.7%. This is concerning to the UK as targets rise as a result of increased consumption. In 2017, the UK government set a target of 57% for waste recycling, a sharp rise in contrast to Europe, which will aim for 42%.
Concern was expressed by the industry at the plans of the Department for Environment, Food & Rural Affairs, which it believes could contribute towards companies paying an extra £70m over a five year period as a result of the proposals.
With attention on recycling a priority for the majority of plastics companies, one firm working towards achieving this is Preston Plastics. Based in Lancashire, the firm announced in July it had become the first company in the UK to invest in a new Intarema plastic recycling and extrusion machine. The purpose of this? To recycle hard to-process materials including heavily printed packaging waste, resulting in improvements to quality, efficiency and overall consistency.
Managing director Edgar Wallace said at the time of its delivery that the £1.2m machine will help the company nearly triple capacity at its manufacturing facility. “It means we can continue to meet the increased demand we are seeing from the plastics industry, both in terms of volume and the types of plastic being recycled, diverting thousands of tonnes of waste from landfill and incineration.”
A positive prognosis?
For any industry to succeed, the right infrastructure and support must be in place fro both government, trade organisations and associated stakeholders. Given the prominence of the UK’s chemical sector, an area as intrinsically linked to plastics, the industry remains well placed as a global innovator.
Initiatives such the Knowledge Transfer Network (KTN) is actively encouraging collaboration as the focus on exploiting new ideas across the plastics and packaging industries increases. The input of such associations and academic bodies in the collaboration process will only continue to gather pace.
Given the increasingly advanced nature of plastics manufacturing, the concept o remanufacturing is expected to play a key role in the industry’s future. One enterprise doing this is the Centre for ALternative MAterials and REmanufacturing (CALMARE) technologies based at the University of Exeter. The centre will provide SMEs access to academic research, material testing and analysis facilities and knowledge of new, sustainable materials.
In May this year, data from the Office of National Statistics (ONS) showed plastic products rose by 7.3%, contributing 0.6 percentage points to manufacturing’s growth between the final quarter of last year and the first of 2014. Growth is expected to continue in the packaging sector, with UK consumption increasing year-on-year.
Despite suggestions that the last decade has been one of struggle for the industry and with obvious challenges in terms of waste reduction, the landscape for plastics packaging nevertheless remains one of opportunity.