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samuela lahai economics April 17

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Source Articles from

Chapter 4 Demand
This article from the April 1999 Wall Street Journal Classroom Edition demonstrates
the relationship between demand for a product and its environmental image. Demand

© Pearson Education, Inc. publishing as Pearson Prentice Hall. © 2005 Dow Jones & Company, Inc. All Rights Reserved.
for polystyrene—often incorrectly called Styrofoam—dropped sharply in the early
1990s because of consumer concerns about its environmental impact. By the late
1990s, polystyrene use had rebounded—but people still did not like it. In “Walking
on Clamshells,” Wall Street Journal Staff Reporter Jeff Bailey explains how the poly-
styrene industry worked to change the image of its product, even going so far as to
make it look like paper.
Before reading the article below, you may want to look up the following terms:
apologia, debunked, degrade, depleting, disrupters, endocrine, faux, hapless, loathed,
moot, mulled, prevail, and scorned.

A
ttacked by environmentalists and schoolchild- D’Agostino Supermarkets Inc., in New York,
ren, scorned by Starbucks and McDonald’s, ditched paper egg cartons for polystyrene foam last
the polystyrene industry year. Foam provides better cushion, costs less, and
is proving you can be loathed allows more elaborate print-
without being a loser. ing, says Scott Rzesa, senior
Quietly and with apolo- “Polystyrene is currently merchandising director.
gies for its shortcomings, poly- busy taking customers away Having said this, Mr.
styrene—known widely but Rzesa points out that his eco-
erroneously as Styrofoam— from paper, its politically cor- conscious customers hate the
has recovered from a near- stuff. “People in our market
death experience back in the rect competitor. This ought are brutal,” he says. So,
early 1990s. D’Agostino prints an elaborate
At that time, the “clam- to be a point of pride to the apologia on the inside cover of
shell” containers used to pack-
industry. But a certain gloom the egg carton. It reads: Less
raw material is used; no
age Big Macs became a symbol
of the garbage crisis: the prevails. ‘People use our ozone-depleting chlorofluoro-
widely held but now debunked carbons are used; the con-
notion that the U.S. was run- products,’ says Mike Levy, tainer is recyclable.
ning out of dump space and Pure polystyrene is made
that packaging was to blame. director of the Polystyrene by chemical companies such as
Polystyrene is currently
busy taking customers away
Packaging Council, ‘but they Dow Chemical Company
(which also makes Styrofoam-
from paper, its politically cor- don’t like them very much.’” brand home insulation), BASF
rect competitor. This ought to AG and Nova Chemicals Cor-
be a point of pride to the poration. Then it is sold to
industry. But a certain gloom prevails. “People use packaging and other companies to be turned into
our products,” says Mike Levy, director of the finished products.
Polystyrene Packaging Council, “but they don’t like True, it doesn’t degrade. But this is a moot
them very much.” point in a modern, dry-tomb trash dump, where

12 Chapter 4 Source Articles from The Wall Street Journal Classroom Edition
 samuela lahai economics april 17
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Source Articles from The Wall Street Journal Classroom Edition

water and gas are sucked out and even paper often
doesn’t degrade for decades.
Still, consumers feel better about paper, and
this explains one of polystyrene’s hot new products:
a foam cup made to look like paper. “People think
it’s a paper cup,” says Richard Wambold, a packag-
ing executive with Tenneco Incorporated.
Indeed, it is thin like paper, has a seam up the
side and a rolled lip like paper,
and a bottom that is pasted in
separately. It is made on a
“During the garbage
© Pearson Education, Inc. publishing as Pearson Prentice Hall. © 2005 Dow Jones & Company, Inc. All Rights Reserved.
In 1989, Mr. Johnson was trounced in a debate
with a third-grader and a fourth-grader on NBC’s
morning show “Today.” “It’s a nonrenewable
resource,” Bridget Sullivan-Stevens, a nine-year-old
redhead, said to Mr. Johnson.
This year, McDonald’s plans to begin using
clamshells again for its Big Mac sandwiches. This
time, however, they will be made of limestone,
starch, and other stuff by
EarthShell Corporation, a
company that sprang up to
crisis of

paper-cup machine. But it is take advantage of the poor

still 100 percent polystyrene. the late 1980s, environmental image of polystyrene.
“This is part paper, part When the fast-food giant
Styrofoam, right?” John Zin- groups attacked McDonald’s bailed out, polystyrene sales
sel, owner of three Royal Blend fell as much as 15 percent.
Coffee & Tea House stores in use of polystyrene clamshells, Prices and profits tumbled.
New Orleans, asks hopefully. States and cities mulled out-
He says he pays two cents a knowing the burger chain is lawing it. Producers won-
cup for Tenneco’s faux-paper dered: “Will this industry be
sensitive to criticism. The
foam cups vs. about three cents around?” recalls Bob Beil,
for the paper cups he once company at first tried a costly Dow’s polystyrene chief.
bought. “And we were having This left polystyrene in a
to double-cup them,” he adds. and messy trash-sorting and poor position for the coffee
“It’s the shut-up factor,” boom. “Styrofoam cups didn’t
Anne Mularoni, a spokes- polystyrene-recycling plan. But fit,” a Starbucks spokes-
woman for Dart Container woman says. “We sell a pre-
Corporation, a Tenneco com-
on November 1, 1990—a date mium product”—in a paper
petitor, says admiringly. “Peo- important in polystyrene his- cup coated with polyethylene.
ple don’t know. They assume Mr. Beil cracks: “We get it
it’s paper and they’re happy.” tory—McDonald’s abandoned either way.”
Dart still puts out bulky white But in 1996, Borders
polystyrene cups. foam for coated paper. Group switched to poly-
During the garbage crisis styrene peanuts from paper
of the late 1980s, environmen-
Polystyrene people were padding for cushioning books
tal groups attacked McDon- shocked and sorry. McDonald’s and compact discs it ships
ald’s use of polystyrene from distribution centers to
clamshells, knowing the burger had ‘spent more money defend- stores, saving more than $1
chain is sensitive to criticism. million a year.
The company at first tried a ing polystyrene than this indus- Virginia Lyle, manager of
costly and messy trash-sorting environmental affairs at Free-
and polystyrene-recycling plan.
try did,’ said Jerry Johnson.” Flow Packaging International
But on November 1, 1990—a Incorporated, which sold Bor-
date important in polystyrene history—McDonald’s ders on the switch, introduces her company in the
abandoned foam for coated paper. usual shamefaced way: “We make packaging
Polystyrene people were shocked and sorry. peanuts. You know—the little things people hate so
McDonald’s had “spent more money defending much.” Part of its sales job involved convincing Bor-
polystyrene than this industry did,” Jerry Johnson, ders’ well-read employees that peanuts aren’t so bad.
a former Dow Chemical executive and onetime Things are looking up, with global polystyrene
Polystyrene Packaging Council chief, said after- sales, now at $8.5 billion a year, expected to rise
ward. “We’re not proud of that.” 3.4 percent a year through 2002, says Paul Ita,

Chapter 4 Source Articles from The Wall Street Journal Classroom Edition 13
NAME
samuela lahai CLASS
economics DATE April 17

Source Articles from The Wall Street Journal Classroom Edition

senior research analyst at Free- “I stay away from instant

donia Group Incorporated, “Things are looking up, with soup noodles in Styrofoam,”
unless “we get hit by another says Hiro Morikawa, a studio-
whammy.” global polystyrene sales, now lighting technician and noodle-
Don’t look now. A 1996 at $8.5 billion a year, cup fan. “No more Styrofoam
book, “Our Stolen Future,” in my life.”
puts forth the proposition expected to rise 3.4 percent The U.S. Food and Drug
that, among a bunch of other Administration is broadly
substances, some materials a year through 2002, says probing endocrine disrupters.
used in plastics production “As of now, there is no evi-
could be “endocrine dis- Paul Ita, senior research ana- dence of a problem” with

© Pearson Education, Inc. publishing as Pearson Prentice Hall. © 2005 Dow Jones & Company, Inc. All Rights Reserved.
rupters” that mimic hormones polystyrene, says George
lyst at Freedonia Group
and cause disease. Pauli, director of the division
Translated into Japanese Incorporated, unless ‘we get of product policy in the FDA’s
in 1998, the book caused sales center for food safety. “It’s not
of noodle cups, a fast-food sta- hit by another whammy.’” something consumers should
ple in Japan, to plunge in May worry about.”
before rebounding somewhat, But hapless polystyrene
the Japan Instant Food Industry Association says. officials are worried, as always.

QUESTIONS FOR DISCUSSION

1. Why did McDonald’s abandon foam for coated paper on November 1, 1990?

2. Recognizing Cause and Effect What impact did this change have on polystyrene prices?

3. Distinguishing False from Accurate Images Mike Levy, director of the Polystyrene Packaging Coun-
cil, says people use polystyrene products “but they don’t like them very much.” Why do you think
people dislike using goods made of polystyrene?

4. Identifying Assumptions Hiro Morikawa of Japan stays away from instant soup noodles in poly-
styrene. “No more Styrofoam in my life,” he says. What assumption about polystyrene do his
remarks show?

14 Chapter 4 Source Articles from The Wall Street Journal Classroom Edition