WASHINGTON (Jan. 20, 10 a.m. EST) — Plastics processing industries in Wisconsin and Pennsylvania seem to be faring best in the United States, while Ohio, Michigan and Indiana seem to be struggling the most among the largest states.
That is the picture that emerges from a Plastics News analysis of state-by-state industry data through 2001. The 2001 data was released Jan. 10 by the Society of the Plastics Industry Inc.'s Plastics Data Source, as part of its broad look at the industry's economic situation.
The analysis is a rough snapshot that does not, of course, capture the effects of a rocky 2002 on states like California. But it does show general trends, such as which states seem to have the healthiest local industries and which ones were hit hard by economic changes and the manufacturing slump.
Ohio, the second-largest state for plastics processing, with $11.4 billion in shipments in 2001, fared worst among the top 10, registering only 8 percent growth in shipments between 1996 and 2001. However, SPI's figures aren't adjusted for inflation — and when you factor in a government-estimated 2.7 percent growth in producer prices in plastics processing between 1996 and 2001, real economic growth in Ohio is closer to 5 percent.
Michigan and Indiana had the next-lowest growth rates in the period, of 12 percent and 13 percent, respectively. One observer offered a key reason why those states are not doing as well.
“They are automotive states,” said Jim Brogden, president of injection molder Master Industries Inc. in Piqua, Ohio, and a board member of the trade group Mid-America Plastics Partners Inc. in Indianapolis.
“Quite clearly, the automotives have been much more aggressive in trends of price reduction than other industries,” Brogden said.
Wayne Earley, executive director of the state-funded industry support group PolymerOhio, said the figures show that Ohio needs to take more advantage of technology and new manufacturing processes to grow.
The SPI data also confirms that 2001 was a tough year for most of the industry: Plastics processing in the vast majority of states shrank, and nationally it declined by about $5 billion, to $146 billion.
It's not clear why the two fastest-growing large states, Pennsylvania and Wisconsin, would grow so much — 33 percent and 34 percent, respectively. Some observers speculate their manufacturing bases are more diverse.
In the Southeast, the states that have grown the fastest have targeted plastics processors serving healthier industries, such as food packaging and medical, said Rick Sturgis, director of SPI's southern regional operations in Greenville, S.C.
Georgia and Virginia led the Southeast, with growth of 33 percent and 32 percent, respectively. In the size of their processing industries, Georgia ranked 12th in the country and Virginia was 15th.
“Rather than, let's say, targeting injection molding, they have targeted some substantial film manufacturing that is focused on the food industries,” Sturgis said.
North and South Carolina, by contrast, were more dependent on automotive and textiles, he said. South Carolina grew only 7 percent, while North Carolina grew 19 percent.
There are some important caveats with the data. An economist involved in calculating the figures for SPI said that the numbers for each year are estimates, and that smaller states' governments sometimes do not supply full data, forcing researchers to employ mathematical models.
The figures also do not capture what industry officials say have been significant changes since 2001.
For example, while California looked very strong in 2001, 2002 figures will show something very different. California's plastics processing industries grew 25 percent from 1996-2001 — above the industry average of 20 percent. Its growth of 10 percent from 1999-2001 was tops among the largest 10 states.
“In the last year, the local market cooled considerably,” hurt by increased competition and significantly higher prices for workers' compensation and electricity, said Kevin Kelly, president of the California Film Extruders & Converters Association in Newport Beach, Va., and chief executive officer of Emerald Packaging Inc. in Union City, Calif.
Electric costs are nearly twice the national average, he said.
“Any company in the molding or film business that is thinking of expanding or putting in a new plant in California — it just isn't going to happen as long as the [electric] rates remain where they are,” Kelly said.