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April – May 2020 News & Updates

Alliance Plastics

Resin Market

In an unprecedented event, oil was trading at negative levels last week. That means as a buyer of oil, actually, I am charging the oil producers to store their oil. At one point it was over 35.00 a barrel for storage charges. Or, it was the net effect of my Dad telling me to change 2 10s for a 5 dollar bill. The effect on resin pricing is that the increase that we knew was going to be short-lived, is rolled back the exact amount that it went up.

The world economy was put into a medically induced coma and all of us know someone who is adversely affected personally. Too many of my dear friends are either furloughed or laid off permanently. The record unemployment is greater than the numbers from the Great Depression. Twenty-six million Americans have filed for unemployment with many more to come. We are nearing one million cases in the United States and already more people have lost their lives than in the war in Vietnam, I wonder about the long term effect on the economy.

Resin will continue to struggle in the near future and I see another 2-3 cents coming off before we actually rev up our economic engines. It only takes us cranking the engine, it’s not going to be a clean start, but once we start moving again and feeling safer, the US economy will rebound. I just wish my crystal ball could tell you when, but looking to the South, our good neighbor Georgia is opening up already. The Governor in Georgia has decided to push his chips in and say, “All in, let’s take a gamble and see if this pair of deuces is going to win.

Paper Market

As State Farm, Progressive, and even my own insurance company, USAA is giving refunds back to me, my favorite paper suppliers decided to pass an increase. I have had extensive conversations with these wise men and women. I called them a few choice words, mostly for my own venting. The audacity to continue to have lower raw material pricing and not passing on a decrease then to suddenly raising prices during the middle of a crisis. I likened it to my hoarding all the snickers bars when the kids on Halloween rang the doorbell, and I gave them only candy corn and pennies. I would say that I deserved the egging my house took on. My exact words to the paper mills were, “I love how you are kicking America when we are down”.

We committed to keeping all our team together, our people continue to work, even though, like all of you, we see business is down. The paper mills admitted they are also down 30% but still, in an effort to be “Patriotic” they decided to increase our paper prices by $50.00 per ton. I wish I could tell you they were sorry or empathetic, instead, they were sardonic and apathetic. Also, I received a note stating it’s the full $50.00 and that they have to go up. I understand they shut down capacities, but when business is down anyway, when we are in the middle of a pandemic, and when our economy is teetering into a recession, I marvel at the greed and disengagement of the paper industry. Take a note Son(of a)oco and Grief, not GREIF, you deserve this bad press and so much more.

Our view:

The world has changed and may never be the same again. As we fight the coronavirus, this is a defining moment, much like WW2 and 9/11 were. I can see a world with elbow taps and having to read eyes as the mouth and face are covered with a mask. I can only imagine what happens next or what our world will look like from here. We will be at sporting events again, but I think I will have a Panthers face mask on, lifting it just to take a drink of my hermetically sealed beer with my latex-gloved hands. I often tell people this is like the beginning of some disaster movie or some type of zombie apocalypse. I have discovered a new currency in this world today; toilet paper and sanitizer. I have done some shameful things for this currency and I am not a great dancer!

We are fighting an enemy that can’t be destroyed with guns and warships. We can’t show our strength with aircraft flying over. We can only hope that the team of scientists that are working feverishly to get treatment and even better, a vaccine will flex our mighty intellectual muscles and finish this virus off for good. Until we all feel safe again, we must and will continue to practice social distancing. As for my salespeople, they continue to do a remarkable job. They are still selling and they have mastered Zoom meetings and Google Hangouts.

We are training our distributors, we are presenting new ideas and products. We are showing our ELITE Program that gives one lucky distributor in every sales area an opportunity to be exclusive with us. We are offering a 55 layer stretch film at prices 15% below anyone else. The tests are also impressive – we have beaten every major film in the market. If you don’t believe those assertions, bring it on. Challenge us. As I told one of our customers yesterday, “soon, we will all be in need of higher profitability because it is the only medicine for a down economy.”

I have also had the good fortune of working in the office with my team because we are deemed an essential business. This has been crucial for my own sanity as cabin fever is taking over my brain on the weekends. I have even been reduced to watching old Law and Order episodes, you know, the seasons before cell phones. My team continues to work hard and accept these new conditions with grace and dedication. They have also kept me from going stir crazy because I was starting to draw a face on a volleyball and talking to him. We are so fortunate to have assembled such a great group of people. They are working hard to fulfill all your orders and I know that we will be strong together and we will get through this before long. My hope is that we are all going to see each other again soon and we are able to toast to the end of social distancing and when Corona is associated with a weak Mexican beer with lime and not a virus.

I wish you all the best and together, we are strong!

Together, We are Strong

We invite you to spend a minute to look at our Steelflex 2.0 Elite Partnership Program. Now would be a great time to get on board!

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Alliance plastics SX 2.0
Ron Grubbs, Jr.