Shale gas, reshoring spell good news for US manufacturers

By Frank Esposito
Senior Staff Reporter

Published: November 7, 2013 5:15 pm ET
Updated: March 24, 2014 12:49 pm ET

Related to this story

Topics Reshoring, Resin Pricing
Companies & Associations Society of the Plastics Industry Inc.

CHICAGO — Economies around the world are improving, with North America in particular improving as new supplies of shale gas feedstock come on stream.

“The dull, old economies are showing signs of life, even as the emerging ones look a little wobbly, IHS chief economist Nariman Behravesh said at the Global Plastics Summit, held Nov. 4-6 in Chicago. The event was co-hosted by Houston-based IHS Chemical and the Society of the Plastics Industry Inc. in Washington.

“The world stage is set for modest acceleration this year and into 2014,” he added. “U.S. growth is set to strengthen in spite of the problems in Washington. China growth is stabilizing but there are major challenges ahead.”

“Europe has finally turned the corner but their recovery isn’t broad-based. First-half growth in Japan was four. There’s a modest expansion underway. But growth is weakening in emerging markets. BRIC [Brazil, Russia, India and China] aren’t growing a lot faster anymore.”

North American GDP growth is expected to average 2-3 percent through 2020, with Western Europe checking in at 1-2 percent in that period. Behravesh added that he does not expect the U.S. Federal Reserve to increase interest rate until early 2015.

Shale gas and oil development also are reducing U.S. dependence on foreign energy, according to Bill Sanderson, vice president of downstream research and consulting for IHS. Imports of crude oil soon will fall below pre-1970 levels and are expected to stay there through 2025, he said.

But at the same time — even with lots of new oil coming on — prices need to remain above $80 per barrel for development to be economically viable, Sanderson added. As a result, oil prices are expected to remain in the $75-$120 per barrel range through 2025 — a range that he described as “relatively strong by historical standards.” Natural gas prices also are expected to remain relatively stable in the $4-$5 per unit price range through 2025.

The U.S. additionally is benefiting through manufacturing work coming back to the region — primarily from Asia — in a practice that’s come to be known as reshoring.

One industry survey estimated that almost 40 percent of firms with annual sales of more than $1 billion are planning or considering moving production from China to the U.S., according to Michael Taylor, senior director of international affairs and trade for SPI.

Taylor also cited a recent MIT study that showed that 14 of 108 multinational companies polled were reshoring as well.

Reasons cited for the moves included problems with quality, language, culture, graft and intellectual property protection in China. The U.S. now offers lower energy costs and a relatively weak dollar, Taylor added.

“U.S. manufacturers are becoming more competitive, while Chinese plastic processing is seeing slower growth,” he said. “U.S. businesses also are very innovative, which gives us strong reasons to be very optimistic moving forward.”


Comments

Shale gas, reshoring spell good news for US manufacturers

By Frank Esposito
Senior Staff Reporter

Published: November 7, 2013 5:15 pm ET
Updated: March 24, 2014 12:49 pm ET

Post Your Comments


Back to story


More stories

Image

Appliance market boosted by NAFTA, energy efficiencies

November 19, 2014 3:30 pm ET

Changing global trade patterns, a maturing market, environmental concerns and innovation were all key forces that have shaped the appliance sector in ...    More

Image

Delegation from 13 Latin American countries headed to NPE

November 7, 2014 9:21 am ET

U.S. trade officials will lead buyer delegations from 13 Latin American countries to NPE2015 in Orlando, Fla., in March under the auspices of the U.S....    More

Market Reports

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events