Plastics industry aim for $4b sales figure

New Zealand's plastics industry aims to double sales to $4 billion within 10 years with a new assault on research, education and training.

Industry advocate Plastics New Zealand - its members include the Fisher & Paykel companies, Gallagher and Vertex - says a new strategic plan calls for better tertiary qualifications, training to beat the skills shortage and a focus on design innovation.

Plastics NZ chief executive Robin Martin said the 400-company industry was an "enabling" vehicle that supplied products used by other industry sectors, such as food, technology, health and appliances.

The strategy was devised after a Government-funded survey this year helped to fill an information void about the industry.

It calls for direct exports to increase from $350 million to $500 million a year in five years, and to $1 billion a year by 2015.

Indirect exports - plastics that leave as part of another item - are targeted to increase from $500 million to $850 million within 10 years. The strategy calls for training to be started for 200 technicians a year, and productivity per worker to lift from $250,000 a year to $300,000 by 2010 and $325,000 by 2015.

Martin said the industry wanted to establish a plastics polymer and process research centre by year's end. It would be modelled on the light alloys group at Auckland University and Technology NZ would contribute funding.

The university would introduce an engineering degree with a plastics option from next year and Canterbury University was to offer a mechanical engineering degree with a plastics focus from 2007.

On the design front, the aim was to give New Zealand a unique selling point, like Switzerland's watches or Scandinavian furniture.

Martin said the strategy was a milestone for the industry, emerging from a "painful" and drawn-out restructuring, which started 13 years ago when tariffs were removed.

Many manufacturers shifted production overseas and China became the big source of plastic toys and cheap housewares.

Plastic bags, particularly check-out bags, used to be made in New Zealand, but now 95 per cent were imported, he said.

Plastics products were now about 15 per cent of the industry's output by value, components 30 per cent, and packaging 55 per cent.

"We've had to deal with this flood of imports, but now those low-value commodity items have gone away and we have shifted to high tech."

Even with the production losses, the plastics industry had grown on average by 8 per cent a year, he said.

The survey showed many companies were privately owned and profitable but owners needed the ambition and incentive to grow. Individual companies had to "go the extra mile", he said.

Thirty-two per cent of plastic businesses had 50 per cent of their ownership offshore.

More research and development was required, and commercialisation of R&D was a big industry challenge, Martin said.

Respondents among the 334 companies surveyed predicted job growth of 8 per cent in the next 12 months. Most had some investment in R&D with half investing more than 5 per cent of annual sales.

The industry had an average profit margin of 33 per cent.

The plastics industry

Employees: 8000
Businesses: 400-plus
Investment: $70 million a year
Wages: $370 million a year
Target: double sales to $4 billion by 2015