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Thinking Ahead And Preparing For The Plastic Resin Shortage In North America

Advantage Engineering Thinking Ahead And Preparing For The Plastic Resion Shortage In North AmericaFirms in the US and Canada are seeing a shortage in supply of plastic resins. The raw material is used for a number of products – in everyday consumer goods such as wrappers for milk, bread, and toilet paper, as well as commercial processes such as injection molding, urethane casting to yield parts for a number of industries.

The shortage is a result of several factors but primarily, two issues continue to challenge buyers of plastic resins in this part of the world.

The first is a congested logistics corridor which has impacted ocean freight significantly, particularly between North and East Asia and North America, raising costs and delivery times for anyone sourcing materials from overseas.

The second is a temporary shutdown of suppliers of raw materials to producers of plastic resins. This could be a result of them struggling to stay afloat through the pandemic, postponing maintenance activities as a result of the pandemic, or even shutting down as a result of the severe weather events along the US Gulf Coast.

Whatever the reason may be, the Chemistry Industry Association of Canada, which represents the plastics industry acknowledges that the conditions are very, very challenging and that prices are at an all-time high.

The shortage has forced retail chain Canadian Tire to highlight the issue in a recent earnings call, drawing attention to the fact that the shortage of plastic resin is a first for the market here in North America, has never been experienced before, and is a challenge to overcome.

Another company particularly impacted by the shortage of plastic resin is Spin Master. A leading toymaker with a significant production/entertainment arm known for TV series such as Paw Patrol, Abby Hatcher, and more, Spin Master threw the spotlight on a wider issue around the plastic resin shortage.

“We continue to see increases in input costs, primarily from plastic resin, paper and cardboard packaging and more recently from electronic chips and particularly ocean freight,” Mark Segal, Spin Master EVP Finance & CFO told analysts recently.

The commentary from market leaders as well as evidence that almost everybody in the industry trying to source plastic resins in the past six months would have seen firsthand make it abundantly clear – there’s a shortage in the market and that shortage is unlikely to go away in the short- to mid-term.

 

The problem is clear, and so is the solution

From a manufacturing perspective, the impact of the issue can be minimized. There’s no doubt about that.

Advantage Engineering works with a number of companies that are keen to craft bridge tools, develop parts for rapid prototyping, or need a solution for low-volume production. For clients in these spaces, plastic resins are of critical importance.

However, the reality is that plastic resins come in a variety of grades. Of course, each has its own set of material properties and technical specifications – but in the face of a shortage, companies need to choose whether they’re able to adjust for higher costs and a delay in deliveries or choose to use a substitute that suits their use case.

At Advantage Engineering, our experience helps us direct customers towards alternative materials they can use to build their products, with little to no real impact on their costs, timelines, and use case.

“At the end of the day, if one material is in short supply, we share data sheets of alternative materials with our customers so they can make an informed decision,” Advantage Engineering VP of Operations Mark Rauth.

“For some companies, the decision to go with a substitute is easy because a pre-approved list of materials is available based on PPAP documentation. For others, it takes a bit of effort to review the data sheets to make a choice. Ultimately, it’s the customer’s choice to make – but we’re here to provide all the support they need.”

Truthfully, in Advantage Engineering’s line of work, substituting materials might be a tad easier since the focus is on the production-quality parts in medium-sized batches which are often used earlier in the early stages of the product’s innovation cycle. Any changes in materials, therefore, once carefully chosen, could become part of the finalized specifications.

With no end to the shortage of plastic resins in sight, customers might need to be prepared to find substitutes. A partner like Advantage Engineering can be of great value in such situations, given our breadth of experience with processes & different materials, as well as, in producing a multitude of parts for many different industries.