Plastics industry ripe for consolidation

02/19/2013

Long known as a "fragmented" segment of the industrial supplier market, the plastics industry's—in particular processors and mold manufacturers—recent M&A activity is signaling that the industry is ripe for consolidation. Recent examples include Husky buying moldmaker KTW; Jabil buying Nypro; Milacron buying Mold-Masters; and Balda AG purchasing molding and moldmaking firms C. Brewer and HK Plastics Engineering.

There are likely several reasons for this sudden burst of M&A activity in the plastics industry. One is certainly the fact that many plastics and moldmaking companies are into the third and fourth generations of the family business. For those whose founder is still running the business, many of those who are in their 60s and 70s are trying to retire, primarily by selling the company to another entity who will keep it running.

The recession of the early 2000s, as well as the great recession of 2008-2009, resulted in the failure of the weakest molders and moldmakers. Those left standing tend to be the larger, stronger companies that have weathered the storm and gotten more financially stable due to an expanding customer base now that the smaller competitors have fallen by the wayside.


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