Dugdale, the Sowerby Bridge based PVC compounder, is investing £200K in a new high speed mixer in response to growing demand for its latest products and to improve lead times.
Acquired in 2003 by current owners Tom Durkin and Richard Bickerton, Dugdale is now reaping the benefits of a significant investment programme and customer focus initiative that has lead to a transformation of its management team. Sales have virtually doubled since the acquisition and the business continues to see healthy demand especially for its newly developed Ducafreeze and anti-microbial high performance technical compounds.
However, Tom Durkin, Executive Chairman at Dugdale, suggests that consolidation within the industry will force compounders and processors to change the way they do business in the future. “Fewer resin producers and compounders, coupled with firmer prices and the need to control or reduce working capital, will result in supplier loyalty taking on a completely different perspective to that of the past,” he says.
“But it’s not just resin,” adds Durkin. “Increased energy prices have significantly added to the cost of every tonne of compound produced. Credit terms have also been tightened aggressively, in part due to recent well publicised failures of compounding businesses.”
Ten years ago the Western European market for PVC resin was significantly over supplied. At this time there were 10-12 indigenous Western European producers of PVC and imports from Eastern Europe, the USA and South American were significant. Today the Western European producers have consolidated into a handful of suppliers and imports have virtually disappeared as the economies of these countries boomed. “Even in today’s tumultuous economic conditions the market could still be described as in balance,” says Durkin. “These conditions have created a more disciplined market place in which resin producers can get the prices they need for their products, be more selective about which sectors they will operate in and on what terms they will trade under,” he adds.
“PVC is a mature market in the UK but in recent times the sector has changed irrevocably and we have to respond. This doesn’t mean we should accept every price increase but we must take on board the fact that cheap resin and compound alongside extended credit lines are no longer viable. We have to sharpen up payment terms to reduce working capital. I believe that we should recognise that current market conditions, as difficult as they are, have created a unique opportunity for the industry to work together. Supplier/buyer relationships based on a realistic and sustainable approach to the future is the only way forward,” concludes Durkin.
Dave Outen, Managing Director, Dugdale Plc. Holmes Road, Sowerby Bridge, West Yorkshire HX6 2AA. Telephone: 01422 832501. Fax: 01422 833401.
Email: firstname.lastname@example.org www.dugdaleplc.com
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