Despite the welcome, albeit temporary, respite in the pricing of crude oil and natural gas due to the unfolding global financial crisis and economic slowdown, composite processors in common with all other regional plastics processors have to continue adapting to the new economics of energy. Reliance on fossil fuels, which have powered manufacturing industries for over a century, is fraught with risks of an economic, environmental and geopolitical nature. Peak oil has already been passed in the United States and other developed countries, and much of the control of global oil supply now resides with developing countries marked by unstable governance and ideologies inimical to free markets. Meanwhile a global scientific consensus is forming that, de minimis, energy generation derived from fossil fuels is contributing to global climate change.
Adapting to the new economics of energy takes various forms. At the most basic and immediate level it requires a comprehensive assessment of energy-efficiency within composite processing plant operations. Much of the focus among U.S. plastics processors in recent times has been on labor-efficiency and productivity in order to compete against China and developing countries with their low-labor-cost advantages. The recent surge in global fossil fuel pricing imposes a dual competitive disadvantage on these countries. On the one hand their operations tend to be energy-inefficient. On the other hand increased fuel charges on transoceanic freight serve as a tariff on their exports. North American composite processors need to capitalize on these new competitive advantages, conducting periodic energy audits to ensure that their energy costs are controlled to the maximum extent possible and exploring opportunities for import-substitution.
At the same time research, commercialization of renewable energy sources is accelerating. This includes fuel cells, geothermal energy, solar panels, tidal or wave energy, and wind energy. Each of these renewable energy technologies presents challenges and opportunities to North American composite processors. The challenges are both internal and external to their operations. The new business mantra is sustainability, going Green, and this calls for changing the nature of plastic materials and processing methods employed. This also calls for learning how to process new resins made from renewable materials (e.g., corn and soy) and reducing reliance on ecologically-challenged materials (e.g., styrene). Furthermore it calls for processing innovations that lower the weight of the part without compromising physicals. The whole logistical chain from material supply to material processing to delivering parts to the customer is undergoing complete re-evaluation.
The new economics of energy obviously presents challenges and opportunities in terms of the impact on traditional end-use markets. For example, the trend is clearly to smaller, lighter, more energy-efficient cars and trucks. Moreover, the recent increase in the cost of steel is orders of magnitude greater than those of thermoset resins and fibers. Thus composite processors are well-positioned to supply OEM and after-market automotive parts that are both light-weight and cost-competitive vis-is steel. And the new, renewable energy technologies themselves create market openings for composite materials in fuel cell plates, corrosion-resistant piping in geothermal energy, blades and nacelles in wave and wind turbines, and so on.
The primary data gathered for this research program, undertaken by a leading economist covering the plastics industry, were drawn from a comprehensive survey of regional processors of glass fiber-reinforced thermosets. The insights they offer with respect to the challenges and opportunities of the new economics of energy are required reading for regional composite processors and the companies on their material/machinery supply chain.
ABOUT THE AUTHOR
Dr. Peter J. Mooney is the founder and president of Plastics Custom Research Services. Dr. Mooney holds a Ph.D. in economics from the University of North Carolina, and he has covered the plastics industry as a technical/economic market research analyst and consultant since 1980. He is a member of several plastics industry associations such as the Society of the Plastics Industry, the Society of Plastics Engineers, the Society of Manufacturing Engineers, SAMPE, and the Association of Rotational Molders. He has researched and written over 60 multi-client reports, as well as nearly 100 single-client reports, in the field of plastics and related industries. He has also organized, chaired, and made presentations to numerous conferences on critical issues facing the global plastics industry.