U.S. plastics surplus rises

By Frank Esposito
Senior Staff Reporter

Published: March 12, 2007 6:00 am ET

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Bucking a recent trend, the U.S. plastics industry more than doubled the size of its trade surplus between 2005 and 2006.

The surplus jumped to $3.68 billion in 2006 after being at $1.68 billion last year. Officials with the Society of the Plastics Industry Inc. - the industry's Washington-based trade group - said increased exports of resin played a role in the turnaround. They also said they believed exports of products in the medical, construction and packaging markets played a role, although exact data was unavailable.

``Our industry is adjusting to the global marketplace,'' SPI President and Chief Executive Officer William Carteaux said in a March 8 conference call that accompanied the release of two major industry reports prepared by SPI. ``More and more of our [SPI] members are finding niche markets and exporting that hadn't done so before.''

By comparison, the industry's trade surplus had fallen about 40 percent between 2004 and 2005. As the resin surplus climbed past $10 billion pounds in 2006, the plastic products deficit remained at around $6 billion, halting the series of steep declines that had occurred every year since 2000.

SPI officials said it was too soon to tell if the flat-lining of the products deficit was a one-time event or a long-term leveling.

``Processors are really starting to increase their presence in exports,'' Carteaux said. ``Companies in the U.S. plastics industry have realized that they have great products to export to other parts of the world.''

But Carteaux and other SPI officials were quick to point out that the industry still faces its share of challenges.

``Consolidation, competitive pressures and high energy prices are still major issues,'' said Eugenia Ross, SPI's director of international trade and industry statistics. ``The cost of materials has risen more than the increase in shipment value because companies can't pass the complete cost on to their customers.''

New international data from 2006 also showed that Mexico has nearly caught up with Canada as the United States' largest plastics export destination. Both countries received about $10.6 billion in U.S. plastics goods last year. China ranked as the third-largest destination for U.S. plastics goods, with $2.8 billion.

Mexico also passed Germany to become the third-largest source of plastics imports into the U.S. At $2.7 billion, Mexico now trails only Canada ($12.6 billion) and China ($8.4 billion) in that category.

In the reports, SPI updated industry trends using new domestic and international data from 2005.

The U.S. plastics industry employed about 1.1 million workers in 2005, a drop of 19 percent from 2002 levels. Its value of shipments, however, increased 10 percent to $31.4 billion in the period. That valuation allowed the plastics industry to maintain its status as the fourth-largest manufacturing sector in the U.S.

SPI also tracked the closings of more than 1,700 plastics facilities - almost 9 percent of the industry total - between 2002 and 2005.

In terms of plastics jobs by state, California, Ohio and Texas still were ranked No. 1, 2 and 3, respectively, accounting for almost 25 percent of all U.S. plastics jobs. Massachusetts jumped from 20th to 14th in that ranking, while Kentucky and Minnesota fell three slots apiece to place 16th and 18th, respectively.

SPI also ranked states by concentration of nonagricultural jobs. In 2005, Indiana led the way with 20 plastics jobs for every 1,000 nonagricultural positions. Iowa rose five places to rank 10th on that list, while South Carolina fell from fourth to seventh.


U.S. plastics surplus rises

By Frank Esposito
Senior Staff Reporter

Published: March 12, 2007 6:00 am ET

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