The economy obviously slowed down in 2001, but what about the labor market, which can be a key factor in site selection decisions?
Anecdotally, some processors said it was not as tight as previous years. Certainly, it's not as tough to find and retain workers as it was 12 or 18 months ago, when a white-hot labor market meant companies suddenly were scouting more rural or out-of-the-way spots for that new plant.
Signals in the labor market are not clear now. While many more people are out of work, wages in the industry rose last year at a faster rate than 2000, according to government data.
``In the last 12 to 18 months, it is very hard to read anything because you don't have any barometers,'' said John Dugan, president of executive search firm J.H. Dugan & Associates Inc. in Carmel, Calif.
The Internet is making employees, even hourly employees, more aware than ever of other jobs, he said.
Local economies in many key plastics regions took a dive in 2001 - for example, the Greenville-Spartanburg-Anderson, S.C., metro area saw its unemployment rate more than double, to 4.4 percent, between November 2000 to November 2001.
But wage pressure seemed to remain strong. Plastics processing industry wages for hourly workers across the country went up 4.3 percent through November 2001, compared with a 3.8 percent rise in 2000, according to the Bureau of Labor Statistics.
One expert who says the labor market is softer advises making site selection decisions based on the assumption that tight labor markets will return.
``This is nothing but a temporary lull,'' said site selection consultant Dennis Donovan, a principal with Wadley-Donovan Group in Morristown, N.J. ``There was a severe labor shortage for the plastics industry and there will be again.''
Those like Donovan who expect a tight market in the future note that wages for plastics processing historically have risen faster than manufacturing as a whole. Between 1997 and 2001, plastics processing wages went up 16.7 percent while manufacturing rose only 12.7 percent, based on preliminary BLS estimates.
Rick Walters, vice president of operations at DeKalb Molded Plastics Co. in Butler, Indiana, said wages at his plant held steady in 2001 because of the slowing economy. That came after strong growth in wages in the previous two years, he said.
The plastics industry had ground to make up - the industry historically had paid less than competing industries in the area, such as metal stamping, and had to close that gap to keep workers, Walters said.
Getting good regional labor-cost data for the plastics industry is tough. Like all of BLS' manufacturing statistics, the plastics data - for Standard Industrial Classification code 308, a broad category that lumps plastic processing from bottle manufacturing to pipe making to injection molding - is based on a voluntary survey of manufacturers. Plus, BLS has plastics processing data for only eight of the industry's 25 biggest states. Even so, the data may shed some light on choosing a location.
Limited BLS data suggests that processors in one Midwestern state, Minnesota, faced the lowest wage pressures for hourly workers in 2001 - average wages for plastics processors actually dropped 1.8 percent from the year before, to $13.26. Massachusetts had the biggest increase from 2000-01, rising 7.9 percent from $13.67 to $14.75.
In fact, Massachusetts was the most expensive of the eight reporting states in terms of plastics labor for 2001. The state with the cheapest labor in 2001 in the BLS data was, surprisingly, California. The Golden State's plastics workers made $12.45 in 2001, a 14.3 percent jump since 1997. Ohio had the biggest increase in wages since 1997, rising 18.6 percent to $14.39.
Many plastics-heavy manufacturing areas have seen unemployment rates shoot up in recent months. Akron, Ohio, for example, saw its unemployment rise from 3.5 percent in November 2000 to 4.4 percent in November 2001, according to BLS data. Unemployment in the Grand Rapids, Mich., region went from 3 percent to 5.3 percent, Detroit from 2.9 percent to 5 percent, and Indianapolis from 1.9 percent to 3.8 percent.
While labor markets have softened across the country, one site selection expert said the general trend for plant location decisions will remain away from bigger cities.
``Generally, the shift is going to be toward smaller, more cost-efficient markets, even though the unemployment in some white-hot areas has gone up,'' said John Boyd, president of site selection firm Boyd Co. Inc. in Princeton, N.J. ``Those areas that have suffered from white-hot labor markets still have high wages.''