Positive reports and optimistic expectations currently predominate the European plastics industry. Three-quarters of companies in Europe rate their business performance in the second half of 2021 as better or stable versus the first six months, and about 90% of the firms said they expect an upswing or stability in the upcoming months.

These are the key results from Plasteurope.com’s 7th Readers Survey. The questionnaire was open to Plasteurope.com subscribers and other industry players, and more than 420 participants from across Europe responded.

The bad news: material, energy and shipping costs, and availability continue to weigh heavily on the outlook, even though the direct impacts of Covid-19 no longer seem to play a central role. For most survey respondents, diversification among suppliers and the use of alternative materials seems to be a viable solution.

As for the hot topic of circular economy, legislative and end-user pressure is mostly being turned into motivation, as almost 20% of the respondents reported having the drive to adopt resource-efficiency measures. Politics plays a major role here too.

A majority of the industry is looking at H2 2022 with the hope of reductions in supply bottlenecks and costs. Here, the plastics machinery industry had the most optimism, followed by resin makers. However, every fifth company in the plastics industry said a resolution of the complicated situation with supply bottlenecks and cost explosions is not yet foreseeable.

A big chunk of the industry also reported that it can resolve these issues by either changing suppliers or diversifying supply chains, while a whopping 43% said it is ready to switch to alternative materials to ensure a smooth supply flow, with brand owners being the most enthusiastic about the change.

Higher plastics recyclate use would be an alternative option for a third of European processors. German-speaking Europe also seems rather convinced with the idea of alternative materials, as opposed to Southeast Europe.

Across Europe, just under half of respondents reported better business (domestic and export) in the second half of 2021 than in the first half, with just less than a quarter reporting a deterioration in business. However, expectations for the second half of 2021 were more optimistic in the summer: at the time, 88% of survey participants said they expected better or unchanged business – in January 2022, this fell to less than 76% of companies.

While more than half of the participants from German-speaking Europe, Italy, and the UK & Ireland stated improved company performance in the second half of the year, the assessment in Central & Eastern Europe was worse: only a third described the business trend in H2 as better compared to the previous half. By sector, plastics recyclers by far reported the best results, both domestically and for export, followed by raw material producers and plastics machinery manufacturers.

Markets in the EU27+CH, NO, UK rated significantly worse in H2 2021 than domestic and export together: here only about a third indicate better performance. Business activities in the rest of the world apparently fared even worse, be it pandemic-related or due to supply bottlenecks.

Nearly 89% of companies said they plan to invest at least as much or more in 2022 than they did in 2021. The only areas where fewer than half of firms said they would raise outlays this year were in the Nordic region, Southeast Europe, the British Isles, and the Iberian Peninsula. Brand owners were out front with plans for increased investments at 64.1%, with plastic products traders lagging behind at 41.2%.

Half of those surveyed said they would use capital investments this year to expand operations, with over a third planning to spend their money for streamlining and minimising costs; 12.1% said they were focused on replacing equipment. More than 65% of Italian companies reported that they want to invest in expansion, followed by 60% in German-speaking Europe. Over half of Southeast European firms said they were focused on streamlining and cost reduction, with only some 27% expressing a readiness to invest in growing their operations.

Not unsurprisingly, employee strength at a majority of companies in Europe remained the same in H2 2021 as in the previous six months. In fact, the scales tipped more towards an increase in staffing than a decrease. Almost 48% of survey participants reported no change in the number of employees in H2, and the highest percentage of them were from Spain & Portugal, and Central & Eastern Europe.

The highest jump was reported in Italy and the UK & Ireland, which could be attributed to the return of employees who lost jobs during the peak of the pandemic. The highest decrease in employee numbers was reported in Southeast Europe. In terms of sectors, brand owners led hiring at around 71%, followed closely by the plastics machinery sector at nearly 67%.

For the first half of 2022, most companies said they expect few differences in employment levels, with nearly 58% forecasting payrolls to hold at the same mark as in H2 2021. In the UK & Ireland, however, 45% of respondents said further staff growth is expected. The case is largely the same for brand owners, as some 57% said they expect to hire more staff in the first half. More than 62% of plastics recyclers and 60% of plastics products traders predicted no changes to staffing over the next five months.

Only a good third of all European plastics processors announced plans to hire in the upcoming months. Processors in Central & Eastern Europe and Spain & Portugal revealed plans to increase their staff.

At this point, it’s a given that the coronavirus has shaped the concerns of the European plastics industry over the past two years. In 2021, the second year in which the world economy was slogging through the pandemic, companies in the plastics industry cited the cost of materials and feedstock availability as the top two concerns, with energy prices in the third position.

As reported by Plasteurope.com in July 2021 (see Plasteurope.com of 30.07.2021), in the first half of last year, the biggest concerns were exactly the same and seem to be competing for the top spot. Other major issues quoted by several companies were logistics costs and shipping woes driven by the pandemic.

In Italy, nearly 98% respondents said both material costs and feedstock availability were their biggest concerns, followed closely by Spain & Portugal at some 90% for material costs, and France at 95.2% for feedstock availability. It is hardly surprising that 100% of respondents from the plastics machinery industry reported material prices as their main issue. About 93% of the brand owners, on the other hand, said feedstock supply remained their biggest worry in 2021. In the first half of 2021, nearly all plastics producers, compounders, distributors, and product traders had complained about the lack of availability for feedstocks.

To underline the obvious, these problems also remain the top two concerns for 2022, with all plastics machinery firms surveyed anticipating a continuation of unruly cost hikes, and nearly 86% of brand owners bracing for raw material shortages.

Rising energy costs also reared their ugly head in the expectant worries for 2022, with the most concern coming from the plastics recycling industry and brand owners. Climate action programmes, in contrast, failed to rank among the highest challenges for the industry this year, but logistical issues continue to be a major concern.

Despite all the other concerns about the supply chain and energy costs, circular economy remains a big issue for Europe’s plastics industry – one with multiple challenges and just as many opportunities. The 7th Plasteurope.com Readers Survey asked companies what they see as the main drivers of their climate action and resource efficiency measures.

A good third of the respondents said customers, suppliers, and competitors are the leading impetus behind their environmental activities. Only every fifth company reported being self-driven enough to be acting out on its own. Marginally more managers said they see themselves spurred forward by politics or regulators.

Only in Central & Eastern Europe did most companies say climate actions are mainly driven by politics. For many, their own commitment to recycling has limits – 36.8%, the largest group of respondents, categorically rejected a mandatory recyclate-use quota.

A quarter said a quota of 25% recyclate is acceptable; 9.3% even agreed with a target of 50%. The rejection was highest in Scandinavia and the UK & Ireland; British and Irish converters almost universally waved it off. In France, on the other hand, companies said they have no problems with the shift: 61.9% welcomed a mandatory recyclate quota for their products.

Exclusive for Plasteurope.com survey participants: Access to the interactive database of evaluation

All participants in the 7th Plasteurope.com Readers Survey have exclusive access to the executive summary. Plasteurope.com will also provide a link to the online survey database, where respondents can view the poll’s details and carry out individual cross-analyses – according to region, plastics industry sectors, target markets, company size, and export quotas. If you wish to access this treasure trove of data, you can take part in our summer 2022 Plasteurope.com Readers Survey. We look forward to seeing you there!