By: Steve Toloken
April 1, 2012
ORLANDO, FLA. (April 1, 3:40 p.m. ET) — The U.S. plastics industry has an “extremely good chance” to recover to production levels from before the global recession by the end of this year, barring a Eurozone meltdown or other unforeseen economic shocks, a senior official with the Society of the Plastics Industry Inc. predicted in an April 1 speech at NPE2012.
“If the trends continue in the same direction, and nothing of a large negative scale like a Eurozone meltdown or something unforeseen like what happened in Japan does not occur, I think we have an extremely good chance by the end of the calendar year of returning to pre-recession levels,” said Michael Taylor, SPI’s senior director of international trade.
Washington-based SPI is one of the largest U.S. trade associations for plastics and sponsors the NPE show. Taylor made his comments in a speech at a forum on exporting sponsored by the U.S. Department of Commerce, and in an interview afterward.
While overall plastics industry GDP is expected to recover this year, Taylor offered some sizable caveats, such as that neither jobs nor the number of facilities are expected to regain pre-recession levels by that time.
The U.S. plastics industry employed just under 900,000 people in 2010, the last year figures are available, compared with about 1.1 million in 2005, according to SPI.
“Obviously facilities are not going to be back to where they were and on the employment side we’ve done tremendous things there but it may still lag somewhat, but it is recovering,” he said.
In comments at the April 1 forum on exporting, sponsored by U.S. Department of Commerce, Taylor said the overall manufacturing sector is recovering faster than the American economy.
Manufacturers as a whole in the United States have added more than 400,000 jobs in the last two years, the first time since the 1990s that the sector has added employees, Taylor said.
U.S. manufacturing should outperform overall GDP through 2013, with growth of 3.5 percent to 4 percent a year, compared with growth just over 2 percent for the U.S. economy generally, Taylor said.
The U.S. plastics industry’s recovery is not uniform, however. The resin sector is faring best while the mold making sector is “problematic,” Taylor said.
The other two of the industry’s four core sectors – machinery and plastics product manufacturing – are faring reasonably well, he said.
“I think resin stands out among the four core as recovering the best, because of some other advantages, like the value of the dollar” and the price of natural gas in the United States, Taylor said. “All three core segments are doing pretty well. Molds are problematic.”
As of mid-2011, production levels in the plastics product sector were also lagging, achieving about 85 percent of its levels in 2007, SPI said. That’s better than it was in the worst of the recession, when production levels were 75 percent of 2007 figures, but at least by mid-2011, that sector’s recovery was still in progress, SPI figures showed.
Some mold making companies express concerns about SPI’s support of free trade agreements, including new pacts with South Korea and Columbia, Taylor said.
“I know when we talk about free trade advocacy, we do hear some negative comments about supporting free trade agreements from the mold side,” he said. “The mold segment is the one I want to understand better. What is the more complicated answer as to why mold making, among the four segments, is having a harder time? It doesn’t jump right out at you.”
He said the mold making sector showed signs of closing its trade gap at the end of 2011, and he noted that SPI is interested in following up any complaints of unfair trade practices.