Rising oil prices are putting a double whammy on the plastics industry in northern Nevada.
Not only is the industry paying higher prices for much of its petroleum-based raw material, but it's paying higher transportation costs to get it delivered.
And the squeeze on plastics manufacturers is no small factor in the regional economy.
By one recent count, at least 65 plastics manufacturers work in the region and their employment totals more than 2,200 workers.
While the run-up of oil prices above $50 a barrel pushed raw materials prices higher for plastics companies, some felt a growing pinch for the past year as the price of natural gas, a key component for other plastics raw materials, also climbed.
At the same time, demand from Chinese plastics manufacturers has put even more pressure on raw materials prices, some of which now stand at record highs.
Plastics companies in northern Nevada say they haven't been able to pass those price increases to their customers.
"We've absorbed most of it in the past year," says Wayne Myers, president of Carson Hi Tech, a Carson City company that manufactures plastic components for the vending, gaming and scientific instruments industries.
"We've absorbed most of it in the past year," says Wayne Myers, president of Carson Hi Tech, a Carson City company that manufactures plastic components for the vending, gaming and scientific instruments industries.
If Carson Hi Tech folds the higher commodity costs into its prices,Myers worries that he'll lose the business entirely to offshore competitors.
Instead, the company looks to tighten its belt and shops hard for raw materials.
But there's not much room to shop.
"The prices are going out of sight,"Myers says, noting that one supplier has announced about eight price increases in the past year.
Those same worries about the potential loss of customers haunt Laurel Stadler, president of John Jantos Menus, a Mound House company that creates plastic-bound menus.
"We're a very small business, and we have a very small product margin," she says.
That doesn't give the menu-maker much room to absorb higher raw materials costs, Stadler says, but a highly competitive market doesn't give her much room to raise prices.
Then, too, the company long has prided itself on using only American-made materials even though foreign-made materials often are less expensive.
Higher freight bills for incoming shipments of materials squeeze margins all the more.
The answer? For the moment at least, Stadler looks to grow an advertising specialties business she runs under the same roof while she waits to see what happens in the plastics industry.
Other companies look for ways to add value to their products to support improved pricing.
Dillen Products, a maker of plastic flowerpots that runs a big plant at Sparks, has put a lot of energy into improving the looks of the pots purchased by its customers in the horticulture industry.
Better-looking pots and baskets help planters and retailers sell more product, says a spokesman for Dillen's parent company,Myers Industries Inc.
of Akron, Ohio.
The added value helps protect margins even when costs are rising.
For some plastics companies, the effects of rising oil prices at the diesel pump are more troublesome than their effects on raw materials prices.
Warren Tripp, president of Tripp Plastics in Sparks, says his company has learned to deal with the steady increases in plastics prices, but now must work even harder to overcome sharp increases in freight costs.
One strategy: The company's bids guarantee prices for a shorter period than they did the past, providing some protection against surging prices.
Still, Tripp says the company has long experience in dealing with higher commodities prices.
For instance, he says, the rapid increase in gold prices posed a potential problem with some gold-plated high-end components Tripp manufacturers for the gaming industry.
In that case, he says, the company simply imposed a surcharge onto the bid price that reflected the price of gold at the time the product was made.
