WASHINGTON — The U.S. plastics industry has grown 35 percent since 1994 to $303.6 billion in sales, retaining its position as the fourth-largest manufacturing industry in the country, according to a new study. The report — from the Society of the Plastics Industry Inc. — also indicates that the industry's trade surplus shrank in the past three years because of economic problems in developing countries. And the report said processor productivity growth lagged behind the resin industry, but surpassed the manufacturing industry in general.
The SPI Economic Report paints a picture of a generally healthy industry: employment of 1.5 million workers in 1999, with average employment growth of 2.7 percent a year since 1972, compared with a 0.1 percent drop for all manufacturing.
The processor data includes captive operations, which account for about 40 percent of the industry, SPI said.
The capital-intensive resin industry has been able to make investments to boost productivity, and other industry segments are starting to do the same, particularly machinery companies, according to SPI President Donald Duncan. That may be harder for more labor-intensive industries such as plastics processing, he said in a May 31 telephone interview.
The resin industry saw a 4 percent annual increase in output per hour between 1989 and 1999, compared with 3.1 percent for plastics processors, the report said. Manufacturing averaged 2.2 percent growth.
The report indicates it is a "safe assumption" that the industry is handling labor shortages fairly well, although that will remain a significant challenge, Duncan said.
Lori Anderson, director of economic and international affairs for Washington-based SPI, said the mold-making industry is being hit particularly hard by foreign competition.
Mold makers increased capital spending 13.7 percent a year in the past decade, while seeing the value of their shipments increase only 1.4 percent, Anderson said. Those companies believe the expensive new technology they have bought will start to pay off, she said.
Contrary to industry perception, however, most of the U.S. mold makers' competition is not coming from China or Portugal, she said. In 1999, almost 60 percent of U.S. mold imports came from Canada, while 13 percent came from Japan, 6 percent from Germany, 4 percent from Taiwan and 3 percent from Portugal.
Other industry segments were able to see higher shipment growth, compared with capital spending.
Processors boosted capital spending 6.2 percent a year, while shipments grew 5.7 percent. For machinery, shipments grew 7.5 percent and capital costs increased 12.9 percent, while for resin makers, shipments grew 2.5 percent a year and capital spending increased 4.9 percent.
The report also offers a glimpse into international trade.
The U.S. plastics industry's overall trade surplus dropped from $6.9 billion in 1997 to $5.2 billion in 1999, mainly because of Asian and South American economic problems, Duncan said.
For plastic parts, the surplus dropped from $1.4 billion in 1997 to $558 million in 1999. But Duncan said the growth in Asian economies is expected to increase that surplus significantly again. That trade data does not include the plastics in products like automobiles, computers and televisions.
The three fastest-growing economies for plastic consumption are China, Malaysia and India, the report said.
China saw 17.5 percent annual growth in plastics consumption between 1989 and 1999, giving it 11 percent of the world's thermoplastic consumption. That's up from just 6.9 percent in 1996.
The United States, by comparison, consumes 24 percent of the world's thermoplastics, and its consumption grew 5.2 percent a year during that same period.
Malaysian consumption rose 14.6 percent a year, while India's increased 13.4 percent.
SPI still is finishing the report, but was to release more information June 2. The association said it plans to make hard copies of the report available soon, and will put some of the report's general data on its Web site, www.plasticsindustry.org.
More-detailed, downloadable data from the report will be available online for the first time in a searchable database at the PlasticsNews.com Web site. Plastics News and SPI are splitting revenues from the online portion of the venture.
The report was prepared by Probe Economics Inc. of Millwood, N.Y.