After what many saw as a hopeful start to the year, current low consumption is weighing on the morale of German manufacturers of plastic packaging and films. More than half rate demand as “poor” or “very poor”, with only 5% describing it as good, according to a survey by domestic sector association Industrievereinigung Kunststoffverpackungen (IK, Bad Homburg; www.kunststoffverpackungen.de).

According to the poll of the industry group’s more than 250 member companies, one in five has cut production significantly as a result of weak demand, and a further 38% are reacting with mid-size production cutbacks and the implementation of short-time work. Only 19% of the companies surveyed said they are producing without restrictions.

For sales in the months ahead, 42% of respondents said revenue will decline, an improvement from 49% in the previous quarter. Almost half predicted sideways movement, and only just under 10% forecast a plus.

The interplay of weak demand and the predicted decline in sales prices is also keeping earnings expectations in the basement: 60% of those polled said results will decline in the next months, 38% reported no changes were expected, with only 2% anticipating growth.

Related: 10th Plasteurope.com Market Survey: Inflation, uncertainty weigh heavily on industry

Expected German economic weakness has increased the number of companies that reported the likelihood of staff cuts. For the third quarter, 34% of the respondents said they expect lower employment figures versus 27% for the previous three months, and 65% projected the figures to remain the same.

With many plastics recyclers have been complaining about a massive drop in sales for weeks, IK asked its members what influence the crisis currently has on the use of recyclates in plastic packaging. “For individual companies, the use of recyclates is stable on average: on a scale from 1 – strongly decreased – to 100 – strongly increased – the use of recyclates reached an average of 48 points," IK managing director Martin Engelmann said. Companies that use fewer recyclates than before blame this mainly on weak demand for plastic packaging.

The difficult general conditions for production in Germany are also affecting the plastic packaging industry: Engelmann said that as many as 11% of the companies surveyed are actively considering moving abroad, and 5% are already in the process of relocating parts of their production or the entire company. He added that, on the other hand, the fact that almost every second plastics packaging manufacturer is planning investments in Germany offers a sign for hope.