Sectoral report by Bank Austria Creditanstalt Economics: Plastics processing closes 2006 with double-digit rise in sales
Rubber and plastics manufacture, or plastics processing for short, increased its output in Austria by 16 percent and sales by 14 percent in 2006. Total sales in the last year stood at EUR 5.1 billion. 2006 was consequently an exceptional year, including for plastics processing, which is one of the fastest growing sectors in Austria. These are the findings of the latest sectoral report by Bank Austria Creditanstalt (BA-CA) Economics. In the last ten years, the sector’s nominal value added has risen by 4.4 percent a year, compared to the average of 3.5 percent a year for all sectors.
The broad-based demand for plastics processing allows sufficient room for specialised niche providers. This is one of the reasons why plastics processing companies are able to compete in the international arena despite the fact that they are small and medium-sized businesses, as the continual growth in the trade surplus for plastic goods demonstrates. There was a surplus on exports of technical and consumer-related plastics of EUR 465 million in 2006. “As a result of the relatively small domestic market, exports are ultimately essential for growth in the sector. In total, more than two thirds of domestic output is exported,” explained BA-CA sector analyst Günter Wolf. In 2006, this related to rubber and plastic products worth EUR 3.5 billion.
“However, the disadvantages of the SME company structure also came to the fore in 2006 when the clear increase in raw material costs could not be passed on in the prices,” added Wolf. In line with the rising cost of oil, raw plastic costs were also noticeably more expensive. The price rises have impacted the entire range of raw materials used in plastics processing, as shown by the 20 percent rise in wholesale costs for synthetic resins and raw plastic. Even though the increased costs were largely offset by productivity increases, earnings at plastics processing companies have come under pressure despite record unit sales.
Nevertheless, the companies remained optimistic with a strengthening of this trend at the start of 2007. Most of these companies are even expecting sharp rises in output, as suggested by the relatively high growth in employment in recent months. The number of jobs in the plastics processing sector has risen by more than 3 percent since November 2006 and is therefore significantly outperforming the industry average (plus 2 percent).
“The upswing in demand for plastics in Austria will probably continue in 2008, driven by the buoyant construction industry and increased investment in plant and equipment,” commented BA-CA economist Günter Wolf. Growth stimuli are coming from most of Europe, but particularly Eastern Europe. The fast-growing economy in this region is generating lively demand for packaging materials, building materials and automotive components. Moreover, the level of saturation in the plastics markets in Eastern Europe is comparatively low. This is one of the reasons why PlasticsEurope – Association of Plastics Manufacturers Europe is expecting annual growth in per capita consumption of plastic materials in Eastern Europe of around 7 percent in the next few years. In Western Europe, where the markets for mass produced plastic products especially are largely saturated, growth in demand for plastic goods will come in at around 4 percent in the medium term.
Bank Austria Creditanstalt Press Office Austria
Tiemon Kiesenhofer, Tel. +43 (0)5 05 05 ext.52819;