Wanted: good working crystal ball....
It's an understatement, but these are challenging times. Fresh out of the Corona crisis, we rolled seamlessly into all sorts of geo-political tensions. With dire consequences. At Hollarts, we are trying to find our way through these turbulent times. We try to anticipate possible scenarios and assess and name our risks as well as those of our customers. What makes it so difficult and unpredictable? Let me briefly take you through the factors that affect our daily business.
Material prices
Plastic prices have been rising since the beginning of 2021. The peak was reached last spring: compared to more than a year before, raw material prices had risen many times over in the intervening period. The large price increase caused many companies to look for alternative materials. In part, these were found in the form of regenerate (recycled plastic). This, combined with the market's drive for sustainability, also pushed the prices of this material to unprecedented levels. In fact, it almost got to the point where the normally much cheaper regenerate became more expensive than the usually more expensive virgin material. The unprecedented high demand not only pushed up prices, but also caused availability to suffer. More than once, our purchasing department was driven to despair when the required material did not appear to be available in time. Fortunately, our customers experienced little to no inconvenience from this.
Energy prices
The unprecedented price of materials is not the only thing that troubles us. Gas and electricity prices have been rising since the fall of 2021. And every time we think the peak is in sight or the decline has begun, another rise follows. Of course Hollarts has invested heavily in sustainability in previous years, but our roof full of solar panels as well as our LED lighting could not prevent our energy bill from rising to unprecedented levels. After all, the process of injection moulding is very energy intensive. When energy prices stabilized slightly this spring, the war in Ukraine began. Where we thought prices would be high by the end of 2021, we at Hollarts fell from one surprise into another. Negative highlight was August 2022 where energy prices were a factor of 10 higher than the "old normal."
The above developments make it almost impossible for us to have a stable pricing policy and unfortunately we have to go along with them. But we also realize that we cannot put the bill on our customers alone. That is why we continue to invest in sustainability. A good example is our first fully electric injection molding machine. This has been in operation for several months and is very economical in consumption. The plan is therefore to continue investing in this type of machine in the coming years.
We conclude where we started: these are challenging times.
However, Hollarts remains the stable partner who moulds your vision in plastic.
On behalf of Team Hollarts,
Eric Willemsen
Managing Director
