Though Confer Plastics in New York state is 1,200 miles away, the severe winter weather that hit Texas in mid-February has almost halted its production, causing the company to declare a force majeure for the first time in its 48 years.
“It’s going to be six weeks of [only getting 30% of the normal amount of] material,” says Bob Confer, president of the company. “That is causing us to ration what machines to run, which jobs to run and flip-flopping molds. And we’ve laid people off, which is the really unfortunate part because we’ve got a good team. I hate putting them off, not earning income, especially when this year had so much potential.”
Confer has laid off 40 employees advising their customers they will not be able to meet some orders or honor certain pricing. Confer manufactures steps, pads and siding for hot tubs, selling both to retailers and OEMs.
Confer and other plastics companies use polyethylene resin to make their products. Ethylene is one of the building blocks of polyethylene resin. Because of the power outages, and then damage caused by them, 100% of the ethylene capacity in Texas was shutdown, which is 75% of the ethylene capacity in the U.S.
“When it comes to making ethylene, they use steam to crack the molecules,” Confer says. “When [the power] got shut off without any notice, the water froze and then the things in the gaseous phase became almost a solid. It blocked the lines. Now they have to manually go in, take the pipes down and clean them out. There’s a lot of abnormal restart that’s involved.”
Confer says there’s also a nitrogen shortage, which is what is used to purge the blocked lines.
The company was on pace for 2021 to be its best year. With the increase in demand for hot tub and pool products it was already a little bit behind. “It’s a perfect storm,” Confer says. “There was the staycation economy, supply chain issues because of Covid and now this.”
To help continue to serve its customers, Confer is going to only make its spa steps in black for a couple of months, allowing it to use any leftover material it has.
“I’m hoping it’s a lesson learned for the plastics industry going forward,” Confer says. “The resin producers can work with the state and the state can tell them, OK electricity is going to go off, be ready for it. That way they can clean their lines, purge them out and be ready to make material on the other side.” He says a new resin facility being built in Pennsylvania should also help to prevent any more supply chain issues by giving them an option that’s not on the gulf coast.
Confer says hot tub manufacturers and retailers should expect significant price increases for the remainder of this season. In addition to the hit that his company will take in lost revenue, opportunity and income for his employees, Confer says he’s also worried about the chain reaction in the marketplace.
“If a spa retailer is unable to fulfill an order, that’s lost sales for them, that’s an impact that’s happening in their neighborhood, in their business,” he says. “It’s a significant domino effect that concerns me for everyone.”