The economic recession has cost the UK’s plastic products manufacturing industry an estimated GBP 1.3 bn (EUR 1.4 bn) in lost profits last year, according to new research from Plimsoll Publishing (Stockton / UK; www.plimsoll.co.uk). A profitability assessment of the top 1,000 companies shows that more than half are making less profit than a year ago with many having had to cut prices because of subdued demand and increased competition.

“Many companies are unable to charge the price they need to make healthy profit margins,” explains Plimsoll senior analyst David Pattison. “In the absence of pricing power, many companies will have to make painful but necessary cutbacks in the next 12 months.”

Some 530 companies have borne the brunt of the downturn, Plimsoll’s research indicates, with profit margins decimated. As a result, there are likely to be additional job losses and plant closures as companies act to get back into the green area. “If they fail to act quickly, they could find themselves running out of cash,” Pattison says.

While more than half the firms analysed were facing financial difficulties, as many as 238 (24%) have maintained or increased their profit margins last year. Some acted early and instituted cutbacks to match their lower sales expectations, while others have managed to spite the recession, growing their business and increasing profit margins. These companies, says Pattison, prove that an efficient business selling the right product to the right market can still succeed in the UK’s plastic product manufacturers industry.

A complementary report from Plimsoll Publishing shows that UK injection moulders have lost GBP 577m (EUR 635m) in profits over the last 12 months. Of the 670 companies analysed, 109 (16%) maintained or increased their profit margins, but some 375 businesses were hit by the downturn.