Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Claudia Hueston - J.P. Morgan.
Claudia Hueston - J.P. Morgan
On the guidance for next year, I was wondering if you could comment briefly on your expectations for market demand in both Metal Packaging and Plastic Packaging.
Kenneth M. Roessler
I will give you the run down the way we have typically done it. We believe in 2009 metal paint can volumes to be down in the range of 3% to 5%, aerosol and injection molding pails to be flat, and blow-molded plastic containers to be up 2% to 4%.
Now let me temper that by saying the expert that has provided us with forecasts on architectural coatings in the past calls for negative growth for the first half of 2009 and then slight positive growth during the second half. We have not really baked that optimism, if you will, in, but that where her forecast, as we lie today, that’s where it sits.
Claudia Hueston - J.P. Morgan
But your expectation is just kind of weakness throughout the year?
Kenneth M. Roessler
It’s kind of a continuation of where we are. We look at it that we’ve been in kind of the doldrums for the last 18 months. It started about mid-2007 and frankly, I think we have shown pretty good resilience in coping with lower demand. And I think the cost-reduction program and other initiatives we made over the 18 months really positioned us well for 2009, in spite of weaker demand.
Claudia Hueston - J.P. Morgan
And I was wondering if you could just elaborate a little bit on the Plastic Packaging business. You mentioned non-resin-related costs. Just maybe some color there. And you also talked about poor productivity. Where does that stand now and how are the plants running at this point?
Kenneth M. Roessler
I will take each of those separately. On the non-raw-material inflation, what had happened is over the year, as you know, resin, or plastic, costs and metal costs, not so much for tin plate but hot-rolled bands, went up pretty dramatically earlier in the year through the summer and then both of them dropped like a stone later in the year. We were able to fend off a lot of the cost increases for our components, like handles, fittings, and gaskets during those run ups and then in our fiscal fourth quarter we had to bear some of those cost increases and we took them, in many cases, cumulatively.
- To read the full transcript on Seeking Alpha, click here »
