WASHINGTON — The U.S. plastics industry for years has bragged about its trade surplus, which grew even as other industries ran deficits. But the little secret in the numbers always was that massive surpluses in resin exports hid deficits in the rest of the industry — finished products, molds and machines.
Until last year, that is.
Plastic products showed a $660 million trade surplus in 1996, a big swing from a deficit of $46 million in 1995, and a strong turnaround from the billion-dollar-plus deficits of the late 1980s and early 1990s. That translates to about 4,000 additional U.S. jobs, according to one estimate.
That growth comes as Congress debates giving President Clinton fast-track authority to negotiate trade deals and pry open markets.
Pinpointing where the plastics industry growth came from is complicated.
Several sectors in plastic products showed strong increases in their surpluses: tubes and pipes, self-adhesive plates such as tape, and packaging. The export surplus for each of those categories grew by more than $100 million in 1996.
``It's a real shocker,'' said Kim Copperthite, international trade specialist for plastic resins and products in the Commerce Department. ``That is usually the stuff we get beat up on.''
Analysts pointed to several possible reasons, from the plastics industry awakening to international trade, to the increasing competitiveness of U.S. manufacturing.
The biggest factor in pushing plastic products into surplus is probably improvements in U.S. manufacturing productivity, said Fred Peterson, president of Probe Economics Inc., a Millwood, N.J., research firm whose analysis determined that plastic products hit a surplus in 1996.
Peterson is updating the Probe Report for the Washington-based Society of the Plastics Industry Inc.
``I've taken plant owners from Latin America [on tours] and they think that cheap labor makes cheap products,'' said James Meinert, one of the owners of Snider Mold Co. Inc. in Mequon, Wis., and an industry official who has testified before Congress on trade issues. ``Efficiency and automation make the difference.''
Also contributing to the strength of the U.S. plastics economy are manufacturing wages that have fallen in inflation-adjusted terms and a U.S. dollar that remains below its 1985 peak, Peterson said.
The U.S. trade balance for all segments of the industry showed improvements in 1996. Resins hit a $6.3 billion surplus, up $100 million from 1995, while molds and machinery each saw the size of their deficit shrink by at least $200 million, to $735 million and $800 million, respectively.
Peterson cautioned against drawing too many conclusions from the $660 million surplus because it is just 3.3 percent of the almost $19.5 billion in plastic products shipped into and out of the United States last year, but it is almost four times as large as any previous plastic goods surplus.
Overall, plastics machines, molds, products and resins had a $5.5 billion surplus in 1996, up from $4 billion a year earlier, according to Peterson's estimate, while Commerce Department figures suggest a $7 billion surplus last year.
Lori Anderson, SPI director of government affairs for economic and international trade issues, attributed the surplus in part to increasing awareness of international trade. SPI international trade meetings attracted a half-dozen people five years ago, but now 40 or 50 attend, many to pick the brains of export-savvy companies, she said.
Some of the increase in exports in the growth market of plastic pipe, for example, comes because U.S. manufacturers realized about five years ago that export markets provided growth, said Bill Altermatt, vice president of marketing for Hancor Inc., a Findlay, Ohio, manufacturer of polyethylene pipe.
Hancor's high density PE sewer and water pipes for Central and South America do not face strong local competition in those markets, and sales have been helped a lot by the North American Free Trade Agreement, he said.
Products such as boat hulls and chemical storage tanks also have strong export markets because they are high-quality, even though shipping costs for such products can be high, said Joseph McDermott, a Cresskill, N.J., industry consultant who has written about foreign trade issues.
``Companies are more efficient, or they are simply making the effort,'' he said. He added that U.S. ``energy management and efficiency is just the envy of the world.''
``This is one of the few areas where you can give the government some credit,'' McDermott said. ``There was an effort about five years ago to raise the consciousness of industry about export markets.''
According to Commerce Department figures, U.S. plastics companies fared best in Canada and Mexico.
Not surprisingly, Canada was the top trade partner, accounting for $4.9 billion of roughly $20 billion in total plastic exports, and a trade surplus of $900 million.
Mexico remained the No. 2 trade partner, with $3.5 billion in exports and a $2.8 billion trade surplus — about 40 percent of the global surplus.
While U.S. companies had surpluses with their next-door neighbors, the country ran a very large deficit with China.
China was the largest U.S. trade debtor, shipping $1.4 billion more in goods to the United States than it received. The United States also had a $300 million plastics trade deficit with Japan and a $340 million deficit with Taiwan, while it ran surpluses of $700 million with Hong Kong and $275 million with South Korea. Hong Kong since has folded with China.
The flexible packaging industry — about two-thirds of which is plastic — showed large deficits, mainly from plastic bags, with three Pacific Rim countries: China, South Korea and Taiwan.
The deficit with those three countries was $198 million, about 85 percent of the total trade deficit for flexible packaging, said Brett Biggers, director of business and economic research for the Washington-based Flexible Packaging Association.
Still, the trade deficit for flexible packaging shrank 17 percent in 1996, to $234 million, mirroring a better export picture across all plastic products.
