Recent events like Winter Storm Uri have made more of a wave than many have realized. Whether these obstacles have directly impacted your business or you’ve avoided taking a hit, companies in every industry need to be aware. The sanitation industry relies on resin, plastics, and other materials. Changes in pricing and material shortages have directly impacted production and sales. Read on to learn more about how industries across the United States have been affected by recent economic and environmental changes.
What is Resin?
There are many kinds of plastic available on the market today, and resin is one of them. Many believe that resin is another word for your average plastic, but that’s not the case. It’s a composite blend of varying plastic types. Resin is the main base for all plastics but is put through a cracking process to transform the material to meet specific needs. The cracking process places resin in a highly heated environment where the hydrocarbons are broken down and cracked. Once the cracking stage is complete, varying compounds are developed to create plastics with varying characteristics like the ones described below:
- Polyethylene terephthalate (PET): This semi-rigid to rigid plastic is used in beverage, food, and other liquid containers. PET acts as an excellent barrier to alcohol and other solvents and is strong and impact resistant. PET is also naturally colorless and transparent.
- High-density polyethylene (HDPE): This hard plastic is used in milk jugs, grocery bags, antifreeze, and more. HDPE is made from petroleum, opaque in color, and is designed to withstand somewhat higher temperatures.
- Polyvinyl chloride (PVC): This plastic is biologically and chemically resistant and requires less petroleum than other plastics. PVC is used for waterbeds, pipes, chemical spray bottles, and more. PVC is designed to withstand various environmental demands and is durable for extended periods.
- Low-density polyethylene (LDPE): This rigid plastic is made from oil, can withstand high temperatures and is opaque in color. LDPE is used for food produce bags, food storage containers, and more. LDPE is designed to be flexible and virtually unbreakable.
- Polypropylene (PP): This plastic tends to be stiffer than other plastics and is primarily used for food packaging. PP is also used for drinking straws, battery cases, and more. PP is reasonably economical and durable to regular wear and tear.
- Polystyrene (PS): This hard plastic is made from petroleum and can have limited flexibility. PS is used for hot beverage cups, clear carryout containers, vitamin bottles, and more. PS can either be clear or take on your choice of color.
Manufacturers in the sanitation industry rely on resin materials to create products and component offerings for consumers. However, the recent pandemic and harsh weather conditions have caused resin prices to rise higher than they ever have before, making it difficult for companies to stay afloat amid already trying times.
At the beginning of March 2021, a leading manufacturer and distributor of polymer products and the service vehicle industry, Myers Industries, Inc., announced an 8% price increase across most of its products.
Unfortunately, the price increase was directly related to rapidly rising raw material costs to include resin.
The Root of the Problem
By this point, you’ve likely heard of and seen the aftermath of Winter Storm Uri, which struck Texas in mid-February of 2021. Residents across the Lonestar state were left without power and clean water for a week! There were also a high number of casualties. From crop losses and power bills to burst pipes, damaged infrastructure, and commercial facility closures, Winter Storm Uri is reported to have caused $150 billion worth of damages statewide. While this may only seem like another natural disaster to add to the history books, many are unaware that Texas is one of the largest exporters of plastics and other petrochemical products. Thus, Winter Storm Uri impacted the material handling and processing for businesses in varying industries to include Confer Plastics Inc.
Bob Confer said his company followed the lead of resin suppliers and declared force majeure for its products. Force majeure is a term used when the occurrence of an event outside the reasonable control of a party prevents the party from fulfilling its obligations under a contract.
According to the Ohio River Corridor, Confer spoke regarding the impact recent events have had on his company, “Never in our 48 years of business have we done that, and we’ve seen the 1970s oil embargoes, the blizzard of ’77, the Great Recession, hurricanes hitting suppliers, the COVID pandemic, and so much more,” he said. “That speaks to how unusual and how destructive this Texas cold spell has been and will be.”Ohio River Corridor News
Unfortunately, Confer Plastics Inc. isn’t the only business that has been impacted by Winter Storm Uri, as companies around the United States are encountering obstacles directly affecting their regular supply and demand chain. For example, if Texas plastics providers cannot supply resin for manufacturers worldwide, the production processes are halted due to a lack of materials. If there is a lack of materials and minimal production, these companies need to cut employee costs due to decreased workload, order fulfillment, and more.
Persevere and Overcome
Plastics and other petrochemicals aren’t the only material shortages occurring because of the recent pandemic and Winter Storm Uri. A semiconductor shortage is also happening, which places a significant constraint on the supply chain for truck orders. Semiconductors are critical components in many parts and systems of commercial trucks. As cities and states have started opening again across the United States, the truck demand is beginning to exceed the supply, which is lacking because vehicle assembly has slowed substantially.
While these events are pivotal for businesses in every industry, it’s recommended that we remain resilient in this time of change. As the economy repairs itself and Texas recovers from the environmental impact caused by Winter Storm Uri, the world as we know it will slowly shift back to normal. For businesses to continue to be successful during this time, company owners must take proper steps to preserve what they can, whether through raising prices, inventory cuts, or decreased production.
Where Do We Go from Here?
It’s a given. The world as we knew it has changed due to the COVID-19 pandemic and unexpected environmental change. While sanitation businesses are being impacted immensely because of rising resin prices and material shortages, it’s vital that business owners implement creative thinking and strategizing to remain successful as the economy repairs itself.