PLASTICS CUSTOM RESEARCH SERVICES

695 Burton Road

Advance, NC 27006

Phone: (336) 998-8004

Fax: (336) 998-8044

RECENT PATTERNS OF GROWTH AND TECHNOLOGICAL

CHANGE IN THE BOTTLE BLOW MOLDING BUSINESS

On the surface the North American bottle blow molding business has enjoyed buoyant growth over the past few years. The volume of consumption of plastic material has been growing at an average annual rate of 6%, reaching 10.8 billion lbs. by 2004. In the same way the value of output has been growing at an average annual rate of 8.75%, reaching $14.3 billion by 2004. However, a large measure of the growth in value terms is attributable to soaring resin price inflation in 2003 and 2004. The result is what economists would term “immiserizing growth” – that is, nominal growth accompanied by declining profitability as many bottle blow molders have been unable to pass along these relentless raw material cost increases to their customers.

In 2002 PCRS researched and published its original report on the North American bottle blow molding business. Here in 2005 we have revisited this marketplace, conducting over the period April-June a telephone-based survey of over 100 North American companies with bottle blow molding operations, as well as the companies on their material and machinery supply chain. The focus of this new research program has been on identifying and rationalizing the changes taking place in this business – changes in the industry infrastructure, changes in industry concentration as the processors pursue economies of scale in production and greater leverage in material and equipment sourcing, changes in plastic material preferences and bottle designs among their customers, technological changes that enhance the processors’ competitive position vis-a-vis domestic and foreign competitors, and so on.

The growth dynamic in bottle blow molding is quite remarkable insofar as the leading end-use market, soft drinks, has experienced a marked slowdown from the boom conditions of previous decades. Sales of 2-liter soft drink bottles have plateaued, and consumers have become disenchanted with the 3-liter bottles. Yet the 20-ounce soft drink bottle remains popular, and prospects seem bright for the 12-ounce soft drink bottle.

The softening apparent in soft drink packaging stems in large part from the trend to healthy life-styles and diets. This has spurred strong growth in still and carbonated water packaging, making water the third largest blow molded bottle category. Juice consumption is also rising as a result of this new-found health consciousness, and plastic bottles capable of hot-filling are steadily replacing glass and metal containers. Meanwhile the #2 ranked plastic bottle end-use market, household and industrial chemicals (HIC), continues to record steady 5% average annual growth.

This report presents the most up-to-date and comprehensive analysis of the past, current and likely future state of the regional bottle blow molding business. The data and insights in this report represent critical market intelligence for processors and the companies on their material and machinery supply chain.

Publication: July 2005

TABLE OF CONTENTS

INTRODUCTION

EXECUTIVE SUMMARY

The Current State of the Business

The Recent Run-Up in Resin Pricing

Competition from Alternative Materials and Plastics Processing Methods

Competition from Offshore Bottle Blow Molders

Corporate Consolidation and the Trend in Industry Concentration

Past, Current and Likely Future Growth of the Business

PART I: THE SIZE OF THE BOTTLE BLOW MOLDING BUSINESS

The Long-term Trend in the Volume of Consumption of Plastic Material in Bottle Blow Molding,

1989-2009

The Trend of Bottle Pricing, 2001-2004

The Value of Blow Molded Bottle Output, 2001-2009

The Trend of Profitability in the Bottle Blow Molding Business, 2004-2005

PART II: THE EVOLVING INFRASTRUCTURE IN THE BOTTLE BLOW MOLDING BUSINESS

The Number of Companies in Bottle Blow Molding

Corporate Consolidation in the Bottle Blow Molding Business, 2001-2004

Recent Entries into and Exits from the Bottle Blow Molding Business

The Number of Bottle Blow Molding Plants

The Geographical Distribution of Bottle Blow Molding Plants

The Installed Base of Bottle Blow Molding Machines

The Number of Employees in Bottle Blow Molding

Shifts in Capital- and Labor-Intensity in Bottle Blow Molding

Summary of Changes in the Bottle Blow Molding Infrastructure

PART III: THE PROCESSING TECHNOLOGIES IN BOTTLE BLOW MOLDING

The Extrusion Blow Molding Process

The Injection Blow Molding Process

The Stretch Blow Molding Process

The Injection Stretch Blow Molding Process

PART IV: THE MAJOR MARKETS FOR BOTTLE BLOW MOLDERS

The Participation of Processors in the Major Plastic Bottle Markets

Automotive Oil and Other Car Care Products

Beer

Cosmetics

Juice

Milk and Other Dairy Products

Personal Care Products

Pharmaceuticals

Soft Drinks

Sport/Fitness Drinks

Water

The Growth of the Major Plastic Bottle Markets, 2001-2009

PART V: TRENDS IN RESIN SELECTION IN BOTTLE BLOW MOLDING

The Distribution of Resins in Bottle Blow Molding, 2004

The Consumption of Resins in Bottle Blow Molding, 2001-2009

The Extent of Resin-Switching Due to Changing Resin Price Relativities

The Role of Post-Consumer Recyclate (PCR)

The Trend to Clear Bottles

Polyethylene Terephthalate (PET)

PET Supply/Demand Balance

PET Processing and Performance Strengths and Weaknesses

Recycled PET Supply/Demand Balance

Polyethylene (HDPE and LDPE)

Polypropylene

Polyvinyl Chloride (PVC)

Polycarbonate

Styrene-Butadiene

Thermoplastic Elastomers (TPEs)

PART VI: RECENT TECHNOLOGICAL CHANGES IN MATERIALS AND EQUIPMENT FOR

BOTTLE BLOW MOLDING

Perceptions of Technological Change among the Bottle Blow Molders

The Continuing Search for Superior Oxygen and Moisture Barrier

Barrier Technologies for Monolayer Bottles

Polyester Modification

Polyethylene Naphthalate (PEN)

Polytrimethylene Naphthalate (PTN)

Nitrile-based Resins

Nanocomposites

Liquid Crystal Polymers

Barrier Technologies for Multilayer Bottles

Barrier Coatings

Oxygen Scavengers

Active/Passive Systems

UV Stabilizers

Biopolymers – Polylactic Acid (PLA)

PART VII: THE BOTTLE BLOW MOLDERS’ MATERIAL AND MACHINERY SUPPLY CHAIN

Leading Plastic Material Suppliers

Leading Bottle Blow Molding Machinery Manufacturers

Leading PET Preform Molding Machine Manufacturers: Injection Molding and Compression Molding

Leading PET Preform Mold Manufacturers

Leading Suppliers of PET Preform Inspection Systems

Leading Bottle Blow Mold Manufacturers

Caps and Closures: In-House vs. Commercial Sourcing

PART VIII: PROFILES OF SELECTED BOTTLE BLOW MOLDERS

156 Pages 31 Tables 4 Figures

ABOUT THE AUTHOR

Dr. Peter J. Mooney is the founder and president of Plastics Custom Research Services. Dr. Mooney holds a Ph.D. in economics from the University of North Carolina, and he has covered the plastics industry as a technical/economic market research analyst and consultant since 1980. He is a member of several plastics industry associations such as the Society of the Plastics Industry, the Society of Plastics Engineers, and the Association of Rotational Molders. He is also a member of the National Association of Business Economists. He has researched and written over 75 multi-client reports, as well as over 100 single-client reports, in the field of plastics and related industries. He has also organized, chaired, and made presentations to numerous conferences on critical issues facing the domestic and global plastics industry.

ABOUT PLASTICS CUSTOM RESEARCH SERVICES

Plastics Custom Research Services was formed in 1993 in response to the growing demand for accurate and insightful market research tailored to the evolving needs of plastic industry participants. PCRS is able to utilize research methods developed through 25 years of experience in this field - methods that yield cost-effective and timely data and insights of relevance to the product and service offerings of the plastics industry. These research methods include telephone-based and in-person surveys of key decision-making officials in the field, as well as hard-copy and electronic searches of trade literature and patents. Research findings, conclusions and recommendations are provided in written and oral reporting formats. PCRS also provides multi-client Plastics Industry Reports, dealing with subjects that are part of its core competencies and that have relevance to a wide range of plastics industry operatives.