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May 13, 2019

Dylan and BOPA: The Times They Are A-Changin’

The recent announcement of the cessation of manufacturing BOPA and OPA films at AdvanSix’s Pottsville, PA plant brought to mind Dylan’s 60s classic about change. Dylan released that song in 1964; in 1961, Allied Chemical began extruding nylon (polyamide) and other materials in Pottsville, PA. Those times were best captured by the famous quotation from Mr. Maguire to Benjamin Braddock in the Graduate, “One Word, Plastics!”.

And in Pottsville, the mandate was to take specialty plastic resins and make high-performance films out of them. Roughly 58 years later the times indeed have changed. It is a good time to reflect on those changes.

Early Film

Film properties come from essentially two areas: the raw material(s) used in their production and the machines used to process those materials into film. In earlier times, well before the first oil shock, plastic raw materials were cheap, production machines required skilled operators and technical leadership to make those films, and end-user markets compared the plastic film pricing to alternative materials, usually glass or metals, and found most pricing to be quite attractive. This often meant that on a per unit basis (lb., kg., MSI, etc.) the film processor captured, with relatively little pressure, healthy margins for processing resin into film.

Initial Inflection Point

Starting with the oil shocks in the 70s, this changed. The price of the raw material took off at the same time end users grew in sophistication and begin to compare pricing between suppliers of plastic materials, not plastic against glass or metal. While raw material prices trended ever higher, film processing margins decreased.
Ironically the most obvious solution short term, producing more film per hour, actually over time increased the margin squeeze on film processors while supporting resin manufacturers’ focus on increasing volumes. Perhaps in no film processes is this clearer than in BOPA and BOPP. Production efficiency (either tons or m² per hour) meant buying ever more expensive equipment, while end users became more sophisticated in negotiating price.

Challenges & Changes Today

The Pottsville announcement points to this challenge. Today nylon 6 6 supply is tight, pricing increasing, forcing film processors to buy ever larger machines. Clearly, both the resin suppliers and the OEMs win in this scenario. It is extremely difficult to win processing resin into film.
The times they are a-changin’ – it will be interesting to watch whether transferring the film production to new, larger lines south of the border “fixes” this margin squeeze or simply moves it to another processor.

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