Page 39 - The Inside Scoop Archive

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How to Reduce Stretch Film Price Increases

Whenever multiple price increases are announced on stretch film, as is currently happening, it pays to once
again focus on how you can reduce the impact of these price increases on your operating budget. Remember
that your customers do not pay you more for your products because you wrap them in more stretch film.
They could care less, as long as the product arrives in excellent condition. Stretch film is a "cost" and
needs to be controlled and reduced whenever possible.

Here is what is currently happening on pricing. The resin suppliers have implemented a resin increase of $
0.04 per pound effective October 1st. This is being passed through to the street by the stretch film
manufacturers as an 8% increase on November 1st. A second resin increase has been announced by the
resin suppliers for November 1st in the amount of $ 0.05 per pound. At least some stretch film
manufacturers have announced this increase to the street in the amount of 8% effective November 15th.
The resin suppliers have also announced an additional increase for December 1st in the amount of $ 0.06 lb.
This one has not been announced to the street at this time as everyone is hoping that it will be delayed or
will just go away.

These increases are the direct result of supply and demand on the world stage. The low value of the US
dollar against other currencies such as the Euro, is making our US resin look like a real bargain to users
around the world. Strong exports of resin at higher prices are pulling the US price for resin higher. The
short of it is that users in other countries are willing to pay more for our resin than we have been paying.
In order to keep the resin here in the US to use, we have to pay the world level price.

Ok, here is how you can reduce the impact of these price increases on your operating budget.

If you have not already actively pursued a cost reduction program on stretch film, you should do that
immediately. Let me give you two examples of what the impact can be on your bottom line.

Example 1: The following two hand wrap films will give you the same performance on load. Note the
difference in impact that the three nominated price increases have on your bottom line.

80 gauge 18" x 1,500' = 34.6 lbs per case x $ 0.15 ( the 3 nominated increases ) = $ 5.19 per case increase

42 gauge 18" x 1,500' = 18.2 lbs per case x $ 0.15 ( the 3 nominated increases ) = $ 2.73 per case increase

If you are buying 10 TL's per year ( 48 cs x 26 plts X 10 TL = 24,960 cs ), and are still using 80 gauge 18" x
1,500' you will be paying $ 129,542.40 more than you are currently paying. But if you are using the
INFHW18PX2 ( 42 gauge 18" x 1,500') you will be paying only $ 68,140.80 more. The impact of the
increases will be $ 61,401.60 less for the PX2 user than for the full gauge user. You have reduced the
impact of the increases by 47.4% by using a thinner high performance film.

Example 2: The following two machine films give you essentially the same performance on load. Note the

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