People notice bad news. Stories about plant closures, layoffs and bankruptcies tend to stick in your head. Maybe that’s because the headlines seem so urgent. Or perhaps people are more likely to read stories about somebody else’s misfortune.

Don’t feel guilty: It’s human nature. Drivers tend to slow down and look at the car that’s stuck in a ditch, or in the middle of being pulled over by a state trooper.

The plastics industry has had more than its share of bad news during the past few months. But we’ve had good news, too.

Last week, we had stories about expansions at packaging giant Berry Plastics Corp. and at flooring company Allied Cos. LLC. The week before, we had similar stories about injection molder Steinwall Inc. and blow molder Cortland Plastics International LLC.

Clearly we’re writing stories about processors that are investing in new equipment. Sure, there’s less spending than nine or 10 years ago. But many of our readers are still doing pretty well.

I’m not writing this to apologize for publishing bad news. Company managers need to know what’s happening to their competitors, suppliers and customers. They also need to know what strategies others are using to get through the recession.

So I encourage you to notice the positive stories. There’s often something that others can learn from successful firms. Don’t miss it.

Jim Cramer, host of CNBC’s “Mad Money” program, on Jan. 27 put Chairman and Chief Executive Officer Andrew Liveris of Dow Chemical Co. on the show’s Wall of Shame. Cramer said Liveris “may be the single-worst CEO to ever run a major company — and where did he run it? Into the ground!”

This strikes me as unfair. Cramer makes a good living yelling at his TV audience, which helps him stand out from the typical financial news program. I can’t say I’m a big fan, but Cramer is entertaining. Liveris has been a somewhat regular guest on CNBC, and Cramer basically used the Dow CEO’s words against him.

Cramer noted that Liveris offered too much for Philadelphia-based Rohm and Haas Co. He added that Liveris also pledged publicly to complete the deal, even if Dow’s joint venture deal with Petrochemical Industries Co. of Kuwait fell through — and on Dec. 8, Liveris promised CNBC viewers that Dow’s dividend was safe.

Now the Rohm and Haas deal is on rocky ground, and Liveris on CNBC last week backed away from guaranteeing the dividend.

Did Liveris do a flip-flop? Obviously. He did a pretty poor job predicting the future, and executives need to learn from his mistake: If you’re going to sell an asset and use the proceeds to buy something else, make sure you close before inking the next purchase.

Liveris is not denying the mistake; he’s trying to explain the change in course. Circumstances change, and executives have to adapt. Better to preserve Dow (and Rohm and Haas) than keep a promise that no longer makes sense.

Loepp is managing editor of Plastics News and author of “The Plastics Blog.”

HONG KONG (Jan. 27, 1:45 p.m. ET) — Chinese toy makers should not compromise product safety amid tough economic times, as governments around the world continue tightening safety rules, said government regulators and toy industry officials at a recent Hong Kong trade fair.

Next month marks the first deadlines restricting phthalates in plastic toys and lead in children’s products, under new U.S. toy safety legislation. Also in February, the European Union will publish the first details of a new toy safety overhaul it approved in December.

By some estimates, more than 5,000 Chinese toy factories have closed in the past 18 months, casualties of more difficult economic conditions, and of 2007 recalls of Chinese-made toys over safety concerns in the U.S.

The changes, along with tightening regulations in mainland China, have pushed higher costs on to the toy industry in China and Hong Kong — together the world’s largest exporter of toys.

New product testing rules in China, for example, have caused toy factories to triple spending on testing in the past year, said Lawrence Chan, chairman of the Hong Kong Toys Council and chairman of Hong Kong-based plastic toy maker Wynnewood Corp. Ltd. As a result, some firms report squeezed profit margins. Sebring, Ohio-based American Classic Toys Inc., which subcontracts manufacturing to firms in China’s Guangdong Province and Mexico, estimates that the new testing has cut its profit margin by 20 percent.

“It squeezes our profit margin because the retail price is very often fixed by the price point a consumer will pay for an item,” President Jay Horowitz said at the Hong Kong Toys & Games Fair, held Jan. 5-8.

Other toy company officials said complete testing can cost US$20,000 for a single product.

Still, governments plan to continue implementing the new standards.

Export permits have been revoked for about 500 toy factories in Guangdong province — China’s major toy-making center next to Hong Kong — for not meeting regulations, said Zhang Xiao Lue, chief director of the province’s Entry-Exit Inspection and Quarantine Bureau. At a toy safety conference during the fair, Zhang warned local industry to maintain a focus on safety and quality, use safer materials and work closely with government.

As well, an official with the U.S. Consumer Product Safety Commission reminded the group that new U.S. regulations go into effect Feb. 10, including new restrictions on lead and six kinds of phthalates used to soften vinyl. Some in the audience questioned the hazardousness of phthalates and asked whether there were exemptions to those new rules. But Richard O’Brien, CPSC director of international programs and intergovernmental affairs, said the phthalates law does not allows his agency any such flexibility.

CPSC does have flexibility, however, to give exemptions for lead, if the lead is contained in a product and it is not accessible to children, O’Brien said.

Chan told the audience: “As far as safety is concerned, nobody can afford to compromise. We as manufacturers should not reduce our costs to compromise quality.”

He suggested that the wave of factory closings in China has improved safety, because many of the worst offenders were the smallest, lowest-cost operations that were among the first to close.

“Those small factories had a higher risk of producing undesirable products,” Chan said. “As the Chinese government tightened regulations, those factories simply could not survive.”

U.S. toy industry statistics show that 7.5 million toys were recalled in 2008 through early December, compared with 29.1 million in 2007.

Other Hong Kong toy officials suggested that the toy safety problems in 2007 have helped show large toy makers and retail stores that rely heavily on Chinese factories that they may have pushed too hard on reducing costs.

“Our customers and the consumers have to realize that if you want a safe toy, you have to pay for it,” said David Chu, president of the Toy Manufacturers Association of Hong Kong.

WALTHAM, MASS. (Updated Jan. 30, 9:30 p.m. ET) — Spearheaded by Recycline Inc., a consumer products manufacturer that makes its products out of 100 percent recycled polypropylene, a limited nationwide program to collect and recycle PP food containers is underway at 65 Whole Foods Market locations in 13 states.

Eleven Whole Foods stores in Florida will join the Preserve Gimme 5 program on Feb. 16. Preserve is the brand name for Recycline products, which include toothbrushes, razors, food storage containers and kitchen tableware, mixing bowls, and colanders.

The program, which began Jan. 27, is thought to be the first wide-scale PP food container recycling involving a major supermarket chain in the U.S. The other partners in the program are organic yogurt manufacturer Stonyfield Farms in Londonderry, N.H., and the Organic Valley Family of Farms, a cooperative of 1,200 farmers in 32 states and one Canadian province.

Consumers can also deposit their Brita water filters in the Preserve Gimme 5 recycling bins at Whole Foods supermarkets. There will be one Preserve Gimme 5 bin made from 100 percent recycled high density polyethylene near the front or outside each store. The cost of the bins and the transportation of the material back to Recycline with be shared equally by Stonyfield, Recycline and Organic Valley.

“Like us, our partners want to make sure there are growing recycling opportunities” for their products, said Eric Hudson, founder and chief executive officer of Recycline.”They have an interest in showing responsibility for their products after they are used. We want to have a lower impact on the environment, and there is less impact on the environment when you recycle than if you landfill it.”

John Wiley, director of the environment for Recycline said the program will only provide “a small percentage of the material we consume in a given year–roughly 4 million to 5 million pound per month in each Whole Foods region.” When Florida is added, the program will be in four of the chain’s regions. “But if we can expand this to 1,000 stores, it would meet all our volume needs and projects.”

That is not an unrealistic expectation, said Hudson. “We think the program will expand to all seven regions of Whole Foods Markets and we think it will happen quickly. We also are in discussions with others about adding this program. We will evaluate how quickly we can expand this based on the success of the first 4-5 months.”

Hudson also believes that the Preserve Gimme 5 program will spur others to launch similar programs, noting that Rubbermaid Inc. is looking into a take-back program for its Takealong food storage containers. “A lot of companies are now looking at taking on a responsibility for their products at the end of their lives,” he said. “Our program doesn’t cost a lot of money and doesn’t have a big budget.”

The program builds on a mail-back program Recycline started about a year. Under that program, consumers can mail back, in a box, to Recycline — via ground shipping and at their own cost — used PP food containers as long as the packages do not weigh more than 50 pounds. Those are typically yogurt, margarine and sour cream containers, ketchup bottles and cream cheese containers, as well as some ice cream tubs and food storage and take-out containers.

Since the Waltham, Mass., company started in 1996, it has had a mail-back program so consumers can use postage-paid, prepaid mailers to return used toothbrushes, tongue cleaners and razors to Recycline, with those products recycled into plastic lumber and decking products.

Stonyfield said that it has sent somewhere between 3 million to 6 million yogurt cups to Recycline since the two companies first partnered in 2000. The cups are recycled into raw material for Recycline products. Recycline estimates that its recycling and collection efforts will keep 1 million pounds of polypropylene out of landfills in 2009.

Information on mailing products back to Recycline and a list of participating supermarkets can be found at www.preserveproducts.com. The Park Slope Food Coop in Brooklyn, N.Y., which is only open to members, was the pilot store for the program and is also a participant in the Preserve Gimme 5 program.

GAINESVILLE, GA. (Jan. 28, 1:10 p.m. ET) — Industrial polypropylene recycler Sundance Products Group LLC has shut down operations at its three plants, is selling off its inventory of raw materials and finished pellets, and is looking for an investor or a buyer for the business.

Sundance, which has three plants in Georgia, was the eighth-largest plastics recycler in the Plastics News 2008 recycler rankings, with an estimated $57 million in sales in 2007 and a capacity of more than 200 million pounds. Private equity investment fund Soin Capitol LLC in Dayton, Ohio, owns a 70 percent stake in Sundance, purchased in May 2006.

In a letter to creditors Jan. 21, Sundance said that “absent a new infusion of capital or a going concern sale of substantial value, the business will have no future revenue.”

“Our continuing losses now require that we stop all operations,” said the letter. “Sundance is now working diligently to market its inventory and other assets, and to evaluate options that could allow it to resume operations in the future if it can find sources of additional capital or a buyer interested in running the business.”

Production operations were initially shuttered Dec. 12, one week after the company’s first round of layoffs, said Jim Frentheway, director of human resources. About 40 employees were recalled to work Jan. 5 at the Candler Road plant in Gainesville, Ga., that preps raw material for further processing, but that operation was shuttered again at the close of operations on Jan. 9, he said.

“We have shut down production operations due to a lack of sales,” Frentheway said in a Jan. 28 telephone interview. The drop-off in recycled resin purchases by buyers in China during the past four months led to a glut of materials and low prices for recycled plastics.

All but about 25 of the company’s 330 workers have been laid off, Frentheway said. He said the remaining employees are in logistics, maintenance, human resources, accounting, sales and purchasing and almost all of them in Gainesville, where the company has two locations. A handful of the 25 people remain at the company’s site in Buford.

Frentheway said that there is no plan in place “at this point” to sell any of the company’s equipment or machinery, even though the production operations have been closed down. He said Sundance was selling off its inventory, the majority of which is raw material, with the remainder pellets. The typical amount of raw material the company would have in a given month is between 3 million and 5 million pounds, and that the inventory currently on hand was probably “close to that,” he said.

In its letter, Sundance informed creditors that “the forced liquidation value of its assets is likely much less than the amount owed on account of our secured debt.” Unless conditions changes, the letter said that the company will have “no unencumbered funds from which to make any payments to suppliers or other unsecured creditors.”

The letter said Sundance would continue to try to “maximize the value of its assets to meet our obligations.”

There is no way to completely fireproof yourself or your company from the current economic fallout, but there certainly are steps one can take to prepare for the unexpected, or to fight for your legal rights. Nobody — be they a large multinational or a small, private firm — is immune from the chaos. Just ask Chrysler Corp., or Hoop Roche.

Roche, the former top official at rigid-packaging injection molder Erie Plastics Corp., saw his family company crumble beneath him, despite trying to do all the right things. After 48 years in the business, he thought he’d seen it all; he hadn’t. And now with Erie’s assets sold off, Roche is willing to share some of the painful lessons he learned, to try to help others avoid a similar fate. He will tell his tale for the first time publicly at the March 1-4 Plastics News Executive Forum 2009 in Las Vegas. Roche says he will focus “on what we did wrong, what we did right and what we would do differently.”

He will be followed on the program by a pair of attorneys with extensive restructuring and bankruptcy experience. William I. Kohn chairs Benesch, Friedlander, Coplan & Aronoff LLP’s Business Reorganization Practice Group, and he will partner with Deborah Thorne, a partner with Barnes & Thornburg LLP in Chicago and a board member of the American Bankruptcy Institute. They will offer tips on how to spot the warning signs when a supplier or customer is running into financial problems, and suggest what steps you can take to protect yourself legally.

Few sectors have seen more tumult than the automotive industry. Plastic parts suppliers are having difficulty planning for next week, much less next year. Consultant Kim Korth, president and founder of Grand Rapids, Mich.-based IRN Inc. serves as an adviser to several leading global auto suppliers. At the forum, she will tag-team with Jim Klunk, senior vice president at private-equity firm Macquarie Capital (USA) Inc., to discuss the current state of vehicle industry and to offer their views about key trends to watch and where the best prospects lie.

Business-management guru Jim Collins, author of such books as Built to Last and Good to Great, said in a recent interview with Fortune magazine that in troubled times, a business needs enduring values. Fred Keller would call that “social capital.” Keller, who is chairman, CEO and president of Cascade Engineering Inc., for years has passionately embraced issues outside the typical realm of manufacturing firms — from social workforce programs to sustainability. He has invested heavily in such initiatives, and seen the payback, both emotionally and financially. At the forum Keller, who also serves as chair of the U.S. Department of Commerce’s manufacturing council, will share how these efforts have helped give Cascade a competitive advantage.

Meanwhile, Jeff Mengel, a partner at Plante & Moran PLLC, will offer the results of fresh, original research that examines what different approaches highly leveraged and low-leveraged U.S. processors are taking to deal with the credit crunch, and what the industry may look like coming out of the recession.

Other presenters will offer management best-practices advice, including how to:

• save money by better managing your energy consumption;
• enter the medical products or other profitable businesses;
• distinguish your firm through marketing and branding;
• buy resin more competitively, and more.

To view the full program or to register, go to www.plasticsnews.com/forum2009.

Prices for plastics scrap material have plummeted in recent months, but industry executives say the downturn should not be allowed to jeopardise the success shown in UK plastics recycling growth.

The plastics recycling industry and supply chain needs to keep a steady nerve, according to Chris Dow, md of Closed Loop Recycling. Speaking to PRW, he criticised national newspaper reports suggesting that local councils are having problems due to lower prices and claiming some councils are cutting back their collection of plastics bottles and other waste.

The situation is that there are lower prices but we can still sell our products said Dow.

The company opened its first plant producing rPET flake and rHDPE pellets in Dagenham, east London, earlier this year and is aiming to be at full throughput capacity of 5 tonnes per hour by January. It has now taken a short-term lease on neighbouring land to store more bales of waste PET and HDPE bottles.

Dow said that Closed Loop is not making capital out of the downturn and is paying a fair market price for its raw material.

Our goal is to support councils who are supporting recycling and to work on long-term relationships, he said. This market situation won’t go on forever.

The price fall has not deterred Closed Loop from moving ahead with its second project, a similar plant to produce food grade rPET and rHDPE at a site in Deeside, North Wales (PRW 19 September 2008). Dow said the company’s board of directors have shown no hesitation in continuing with the second plant, and orders for equipment with long lead-times are being placed. Around 70% of the Welsh projects proposed 50,000tpa output has been contractually sold, he added.

Wrap plastics sector manager, Paul Davidson, said there had been some misreporting in the national press and no council has stopped collecting used plastic bottles. He acknowledged there is an uncertainty in the plastics scrap market at the moment, but believes this will pass.

A fall in demand in China – previously a powerhouse in driving collection of scrap for export in western countries – has played a major part in the sudden downturn in global plastics scrap prices (PRW 28 November).

Davidson said it is difficult to have a definitive view of what is happening in Chinese demand, but things are likely to become clearer in the next two months. Scrap markets often slacken in the run-up to the Chinese New Year in late January, but, in contrast to now, they were tight in the last two years and prices were unusually strong.

Wrap last week launched an online market knowledge portal and advice forum to help local authorities understand the market downturn.

Liz Goodwin, Wrap’s CEO, said in a release: “Many local authorities have told us that they are continuing to find markets for recovered materials, particularly high quality materials such as plastic bottles and glass. The vast majority of materials that are being put out for recycling are still being recycled.

Coca-Cola has officially opened what it claims is the world’s largest bottle-to-bottle recycling plant, in South Carolina. The US facility, which was built by United Resource Recovery, will annually produce 100 million pounds of recycled plastic for reuse as bottles when at full capacity.

The 30-acre plant, which has been running at low volumes since November, will eventually employ 100 people. The facility will help Coca-Cola meet its long-term goal of recycling or reusing 100% of its bottles and cans in the US.

Coca-Cola has invested $60m in a series of recycling initiatives including the South Carolina plant. According to the company, bottles made from recycled materials use less energy to produce than bottles made from raw materials.

SHANGHAI (Feb. 3, 7 p.m. ET) — As the tremors of the financial crisis continue to shake factories throughout China, the future looks rocky for plastics manufacturers in the country. Exports are down and domestic consumption is slowing. Some companies, however, are looking to find a silver lining in China’s economic stimulus plan.

As part of the plan, which the Chinese government released in November, 4 trillion yuan ($586 billion) will be spent to expand domestic demand in 10 areas. These areas include the acceleration of housing construction; increased infrastructure development such as railways; further supporting ecological and environment-friendly construction; and raising the income of urban and rural residents.

The need for an added boost to China’s economy seems clear. After clocking 11.9 percent growth in 2007, China slowed to 10.1 percent in the second quarter of 2008 and down to 9 percent during the third quarter. In November, for the first time in seven years, the country saw a year-on-year drop in exports, down 2.2 percent compared with November 2007. Those slowdowns resonate in the country’s plastics industry, particularly those focused on exports.

“The U.S. economic crisis is having a [negative] effect on demand in many of the industries we supply for the export markets,” said a spokeswoman with Bayer MaterialScience LLC’s office in Shanghai. “In those sectors that are driven by local consumption demand, the prospects remain healthy.”

BMS sees opportunities in a number of areas that will benefit from the stimulus package, particularly when it comes to infrastructure development. For example, China is planning to invest nearly $300 billion to improve and accelerate development of its railway infrastructure. The network will be extended from around 78,000 miles that it currently covers to nearly 100,000 miles by 2010.

“We are keen to support the market,” Volker Mirgel, senior vice president of BMS Coatings, Adhesives, Specialties [CAS] business unit for the Asia-Pacific region, said in a statement. The company’s materials portfolio combined with its local production put it in a good position to help develop China’s rail industry, he added.

Mirgel referred primarily to the company’s series of waterborne coatings and adhesives, but BMS also is looking for opportunities for its polyurethane materials. PU could be used to provide seating cushions for passengers. Durable engineering plastics could also be of use in helping to lighten trains and improve their energy efficiency.

Some evidence points to weaker domestic demand in China. The country’s imports fell 17.9 percent in November, for example, with analysts citing both falling oil prices and flagging consumer and business demand.

DuPont Co. sees opportunities in the stimulus package’s emphasis on railway spending, particularly for its Zytel nylon and Hytrel thermoplastic elastomer, which are used in rail infrastructure projects, said Doug Muzyka, president of DuPont Greater China Holding Co. Ltd.

He said it’s tough right now to predict what will happen with the Chinese economy, but said the stimulus package has helped boost confidence.

“What we see is a measure of hope, at least, among our customer base that these will be beneficial to them and indirectly beneficial to us,” he said Dec. 10 at the InnoAsia 2008 conference in Hong Kong.

Muzyka said another of Beijing’s attempts to boost the economy, the reinstatement of some value-added tax refunds, has helped some export-dependent customers, although overall the company’s business in China has suffered in the slowdown.

“We’re not immune to it in the plastics business,” he said. “We had record revenues through the first half of [2008], a moderate slowdown in the third quarter and … a really harsh change in October and November.”

“We’ll work on it one quarter at a time,” he said.

Other companies are looking to different aspects of the plan. The money going into rural infrastructure also will impact the pharmaceutical industry, pointed out James Ji, project manager at Shanghai Haishun Packaging Material Co. Ltd. “There could be opportunities for pharmaceutical packaging companies there,” he said.

Other opportunities might be found in environmental protection projects and in helping to rebuild earthquake-damaged sections of Sichuan, all priorities of the stimulus package.

“These sectors are very relevant and important to our businesses,” said a BMS spokeswoman. “Any government stimulus efforts in these sectors will benefit not just us, but our entire industry.”

Plastics News Asia bureau chief Steve Toloken contributed to this report.