00:02Yes, we know that petrol and diesel has been in short supply due to the effective closure
00:08of the Strait of Ormourish during the war in the Middle East. But what is less known
00:12at this is also choking supply of crucial polymers and resins that go into all sorts
00:19of everyday plastic items. Now, I've been speaking to manufacturers of everyday product
00:25containers here in Australia that for the last month or so have been absolutely scrambling to
00:32shore up supply in advance of these products that they make containers out of. Here is two bosses
00:38of factories here in Australia speaking to me about the issues that they're experiencing.
00:44The issue that we have now with this COVID 2.0 environment is that every single aspect of the
00:51supply chain is affected. I expect to see a further reduction in available resin material
00:57and I also expect to see prices continue to climb while the war in the Middle East continues
01:02to rage on. We've got sort of, you know, a double headed monster here. One is a lack of supply
01:11and as a result of a lack of supply, price has gone crazy because everyone's chasing a very
01:18small amount of raw material. How widespread is the use of plastic resin
01:22in Australia? So those two factory bosses, one of them makes
01:27squeezy containers for lip balms and things like moisturiser. The other company makes two
01:35and three litre bottles of milk bottles. They're producing hundreds of thousands of those daily,
01:43something in the era of 115 million milk bottles a year out of one of their factories alone.
01:50And that is just two companies here in Australia that are dependent on these resins and these
01:56polymers to make containers. So you think about how these materials are going into everything from
02:02margarine containers. They're also going into chocolate wrappers. I actually got a statement from
02:09the company Nestle, which relies on these resins and these plastics to make the wrappers that go on
02:15Kit Kats. They say that they're expecting supply on these materials to tighten up in coming weeks.
02:22And that is just food and cosmetics container manufacturing. These materials are used in so
02:29many sectors of the economy, including crucially health care. So this is why this is becoming such
02:36a concern for manufacturing here in Australia. And so will this push up prices for us at the
02:41checkout? So the bosses of those companies that I've spoken to, they've confirmed both of them that
02:48they've already increased the prices that they're charging brands to make containers for them.
02:54It's obviously then up to the brands to decide if they push this through to the checkout and also
03:00to things like supermarkets to decide if they also push this onto consumers. Now, Coles and Woolworths
03:07have confirmed that they've already increased the price of home brand milk that they sell in their
03:12supermarkets, in part due to rising costs on things like packaging, as well as other pressures on
03:19farmers like soaring diesel prices and production prices. I've spoken to other brands who are quite
03:27reluctant to go public and talk about the possible impacts on pricing at the checkout. It's obviously
03:34a very price sensitive environment at the moment. We have forecasted inflation will rise as consumers
03:41are battling higher petrol costs already. We actually have inflation data for Australia coming out tomorrow,
03:48and that will show the very beginning of the inflationary spike that could be emerging from higher fuel
03:54costs. But economists say additional extra supply chain inflation like this one on plastics,
04:01it could take months to show up officially in the data and therefore at the checkout.
04:06And is there another way to get around this crisis?
04:10So, first of all, both of the manufacturing bosses I spoke to said this really should create a bigger
04:17conversation on Australia's sovereign capability on plastics. They actually had a supplier of one
04:25polyethylene here in Australia until just a few years ago, but that company collapsed.
04:31Polypropylene, another crucial material, only one major local supplier of that left. That is actually
04:39the refinery Viva hereby in Geelong. Now, both of the manufacturing bosses also say that this should create
04:47a bigger conversation around recycling of plastics. So, rather than depending on overseas refineries for
04:55virgin materials to look more closely to the circular economy of recycling, so that that could also
05:04create another stream for this material. And of course, there's also the conversation to be had around whether
05:10this could prompt a conversation about the reliance of so many parts of our manufacturing sector on
05:17plastic. I actually spoke to a milk company that's based out of Queensland. They're also battling this
05:24issue on the supply chain of plastics. They said to switch from plastic milk bottles to glass or to use
05:32more recycled material, that would be something that would take them quite a while to set up, something in the
05:38realm of 12 to 18 months. So, really, right now, the biggest thing they're focusing on is just ensuring
05:44they can get more of that virgin plastic to make their milk bottles for Australians.
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