The industry body representing the local vinyls industry Southern African Vinyls Association (SAVA) hosted a virtual annual general meeting in May.
Speaking about the impact of Covid-19 on the polyvinyl chloride (PVC) industry, SAVA chairperson George Diamond said the PVC industry globally is known for its resiliency and adaptability.
“The association has no hesitations about embracing the possibilities and opportunities it is afforded through use of technology when it comes to communicating with its members, fulfilling its obligations or executing its duties. Owing to the Covid-19 pandemic, we recognised the importance of getting used to a new way of doing things if we are to survive, grow and thrive in these extraordinary circumstances,” Diamond said.
He warned that the vinyls industry should prepare itself for a challenging and intriguing time over the next few months. The industry faces possible supply chain challenges and expected price hikes as a result of petrochemicals production curtailments in lockdown. This could result in demand outstripping supply amid having to deal with job losses, a struggling economy and financial constraints caused by the recent lockdown.
Consulting agency Accenture strategy & consulting practice manager Philipp Ciolek echoed these warnings as he spoke about how companies operating in the chemicals industry should navigate the human and business impact of Covid-19.
“Globally, the chemicals industry is no stranger to disruption. We have faced and successfully navigated the negative impacts of the Severe Acute Respiratory Syndrome, trade policy conflict and the financial crisis. However, Covid-19 is unprecedented in its impact and disruption of global demand, supply chains, and customer/investor confidence.”
For the chemicals industry in particular, these challenges are compounded by the fact that its customer industries, such as automotive and electronics, are deeply affected by plant shutdowns and the disruption of sales channels.
“In the weeks following the Covid-19 outbreak, the chemicals industry’s share price index dropped further and more deeply than it did in previous crises. Further, the oil industry is experiencing oversupply in tandem with weak demand resulting from reduced economic activity associated with the virus. This is disrupting the oilfield chemicals business, as well as the economics of alternate feedstock routes and recycling,” he explained.
While these are very real and concerning impacts on the industry, Ciolek stressed there are certain actions that could be taken and implemented immediately in order to mitigate near-term operational risks and protect the people, liquidity and operations of companies operating in the PVC sector.
“More than anything, the Covid-19 crisis has highlighted the importance of going digital in a world disrupted by lockdown. Unlike many other sectors, the chemicals industry is not in a position to stop production and send workers home. It is therefore imperative that the industry strikes the right balance between social distancing and keeping plants running to provide the basic necessities for society through the use of a fully digital marketing and sales capability, intelligent automation, robotics and remote control,” he emphasised.
Ciolek noted that industry players should recognize that it has been given an opportunity to reset for the future, to strategically re-evaluate business models and plan for growth.
“Companies who are able to sense short-term market and demand trends and meet these needs quickly and at scale, will grow and flourish. Similarly, it is imperative to recognise that the post-Covid world will not be the same as before. Companies should take digital customer interaction seriously, innovate and change business models by working with customers and value chains,” suggested Ciolek.
Speaking about the past year’s successes, projects and strategy for the next year, SAVA CEO Adri Spangenberg singled out SAVA’s interaction and cooperation with vinyl institute Global Vinyls Council and voluntary sustainable development programme Vinyls Plus, as well as the various training and brand building initiatives that took place during 2019.
A major focus for the association was promoting the use and versatility of vinyls to key decision-makers within the government, to brand owners, retailers and industry bodies such as the Green Building Council of South Africa by educating them about SAVA’s role and responsibilities, strategic objectives and its various projects.
The SAVA management committee also launched the Clingfilm Compliance Initiative. Clingfilm is a vinyl product that is frequently criticised owing to health concerns over migration levels and use of harmful substances.
In an effort to address these issues, SAVA launched its Clingfilm Compliance Framework during the fourth quarter of last year. This initiative integrates all the members of the clingfilm value chain – such as raw material suppliers, intermediate compounders, converters or film manufacturers, and distributors and importers of clingfilm to wholesale and retail markets – who are requested to sign a Declaration of Compliance that all raw materials, intermediates and substances used in the manufacture of their Vinyl Clingfilm have been food approved.
Moreover, these members of the value chain agree to comply with Good Manufacturing Practices, and they commit to using correct and approved labelling codes together with “Intended Use” information.
SAVA is proud to report that four of South Africa’s biggest suppliers of clingfilm have signed up to be part of this initiative, namely paper and plastics manufacturer Mpact, vinyl cling manufacturer Cibapac, polystyrene manufacturer Strand Group Development and manufacturing and packaging company Easypack, who have all agreed to have their products and documents audited at every level in the supply chain by an independent SAVA representative under a signed nondisclosure agreement.
Although the first round of audits was interrupted by the Covid-19 lockdown, the association says it is eager to restart this process as soon as possible and that it looks forward to reporting back to the industry on the progress made.