Plastics SA expects local growth to continue

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Speaking at Plastics SA's annual general meeting, chairman Philip de Weerdt said the industry had achieved consistent year-on-year growth since 2008.

Last year, the South African plastics industry grew 5.4%, despite SA's gross domestic product achieving only 0.9% growth the same year, De Weerdt said.

Plastics manufacturing contributed about 1.6% to SA's gross domestic product and 14.2% to the manufacturing sector this year.

The combined turnover of the industry was about R50bn a year and consumption was about 1.37-million tonnes a year, De Weerdt said.

This marginal year-on-year improvement is expected to continue next year because of investments made by plastic manufacturers and recyclers. "It may be very gradual, but all the signs are there that this growth will continue during the coming year," De Weerdt said.

In terms of markets, Europe continued to be the largest export market for plastic products this year, although a growing demand for plastic packaging was also noticed from other African countries.

"Africa has seen major investments and expansions in its infrastructure, energy, telecommunications and manufacturing activities," De Weerdt said. "These growth areas have had a direct impact on the economies, resulting in the demand for plastic packaging in Africa growing by approximately 8% this past year."

This was higher than the current demand for plastic packaging in Western Europe and Plastics SA was preparing to see growing competition from other African countries to meet this demand as international companies were becoming aware of the lucrative new market, De Weerdt said.

SA's plastics industry did not expect a drop in the demand for plastics in the coming year as plastics had proven to be a vital element of modern life, he said.

"However, we are expecting that local manufacturing costs will continue to be negatively impacted by escalating electricity costs, increased labour costs versus reduced worker productivity, higher transportation costs and the continued threats of cheaper imports and dumping of inferior plastic products," he said.

South African packaging company Nampak has seen strong successes in Africa.

In its financial results for the year to December, Nampak's trading income from Africa rose 60% to R506m on revenue growth of 32%.

CEO Andrew Marshall said investing in Africa had proved the right strategy and Nampak was excited by the many opportunities.

Source: Business Day