Letter from Ed - Where Do Plastics Stand?
PE publisher looks athe plastic pallet and container industry and evaluates its impact on the wood pallet industry.
By Dr. Ed Brindley
Date Posted: 6/1/1999
It is reasonable for wooden pallet people to be concerned about the attempted invasion of plastic pallets and containers into wood’s arena. Having recently returned from the Reusable Plastic Container and Pallet Association’s (RPCPA) spring product section meeting in Charlotte, N.C., plastics are again in my mind.
In the past decade we have witnessed the growing acceptance of plastic reusable automotive containers. The wood industry has lost some significant business in automotive.
More recently, plastic pallets have made major inroads into the grocery industry for delivery downstream from distribution centers to the stores. Again we are feeling the impact of plastics, particularly on the availability of used pallet cores.
At the same time, a Cahner’s survey of pallet users suggested that the percentage of plastic pallets being sold has declined in the last several years. Everything that I know about the industry suggests that this particular survey result is misleading. This can happen when a number is reported positively by a small percentage of those who participate in the survey (as is the case in plastic pallets as a percentage of total pallets purchased).
This year’s RPCPA meeting drew less than two dozen people, a number that is consistent with past meetings. Since it is a major gathering of the plastic pallet and container leaders, one would conclude that they are small in number and relatively unorganized. However, the people involved represent a competent core of individuals on which to build the future.
The discussions at RPCPA meetings suggest that plastic folks are similar to wood people in many ways. While the core membership has some good people, they are small in number. Each of them is so deeply involved in his own company responsibilities that few have sufficient time to really provide leadership after the meeting.
While the number of participants is relatively small and the number of established plastic pallet companies is limited, as a group they have staying power and some momentum in their favor.
At this year’s ProMat show, Jeff McBee, market analyst for the Pallet Profile Weekly, manned our booth and talked to attendees. He made an observation by the end of the first day that stood up for the rest of the show: just about all of the people he talked to who make pallet-related decisions view wooden pallets as throw-aways and plastic pallets and containers as reusable for long life. This perception creates an important advantage for plastic, especially in the case of decision-makers who are looking at closing loops and eliminating waste.
Wood people tend to think that plastic people have money. While some of their companies are larger, as shown by their individual marketing thrusts, the plastic pallet and container industry as a group does not — at this point — have a big enough war chest to build overall product acceptance.
Plastic pallets and containers have to fight some familiar battles. Many manufacturers are not involved cooperatively in the industry. Some make substandard products. Money to accomplish significant industry gains is very limited. Sounds like wood!
The bottom line is that plastics are here to stay and will grow in acceptance. The question is how fast and how far. Do not look for any short-term invasion or much of an intermediate-term impact.
The biggest competitive threat the wooden pallet has is the wooden pallet. The competitive, entrepreneurial nature of our people keeps profits squeezed and encourages those who are prone to downgrade specifications. By far, pallet recycling has had a bigger impact on pallet manufacturing than have alternative materials. This is not likely to change any time soon.
But you can probably put money in the bank that plastics will continue to take nibbles out of the wooden pallet markets. Lets just hope that they stay nibbles and do not develop at some point into big bites.
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