Mirroring much of the manufacturing industry's recent rocky performance, plastics processors finished 2002 with a year-end slide in production, according to new government statistics.
Industrial production for plastics processors, for example, was down 0.3 percent in December, and off 2.9 percent from its peak for the year in July. Still, the industry was up 2.4 percent from the dismal levels where it ended 2001.
``The fourth quarter was bad,'' with most industrial sectors slowing, said Dave Huether, chief economist with the National Association of Manufacturers in Washington.
Generally, economists said the figures show that the short economic expansion has stalled for manufacturers.
But both Huether and Bill Wood, president of consulting firm Mountaintop Economics & Research Inc. in Colrain, Mass., expressed guarded optimism that manufacturing will grow slowly in the next few months, given that leading economic indicators have risen for the last three months.
``Indicators continue to exhibit a pattern of recovery [but] it's not a very fast one,'' Wood said. ``We're not on a rocket ship here.''
Federal Reserve Board figures on industrial production, released Jan. 17, show that the plastics processing industry finished 2002 at roughly the levels it saw before Sept. 11, 2001, but still well below the highs it enjoyed in 2000.
Employment figures for plastics processors tell a similar story: Employment hovered at about 690,000 for much of 2002, down about 60,000 from the glory days of mid-2000.
The industry's capacity utilization figures also contained good news and bad news: It increased some during the year, to 79 in December, from 75.9 in January 2002. But it remains almost five percentage points below the historical average for the last 30 years.
The Federal Reserve's capacity utilization figures measure both rubber and plastics processing, while the industrial production figures measure just plastics.
The few companies that have reported late-year earnings thus far offer mixed results.
Diversified processor and compounder Spartech Corp. in Clayton, Mo., reported improved earnings and debt reduction in its fiscal 2002, which ended Nov. 2. But the company noted softness late in the year.
``Our fiscal 2002 was marked by major swings,'' said Bradley Buechler, president and chief executive officer. ``The tragic events of Sept. 11, 2001, negatively affected our fiscal first quarter of the year, and while we saw a mild recovery develop in the middle six months of our fiscal 2002, the last quarter of the year slowed again as the country's consumer confidence hit a nine-year low in October.''
Packager Pactiv Corp., however, reported strong performance in the fourth quarter ending Dec. 31, as volumes and productivity improved.
The Society of the Plastics Industry Inc.'s informal surveys of member companies suggests a mixed picture, with most companies expressing cautious optimism.
``We still remain in uncertain economic times,'' said Lori Anderson, senior director of economic and international affairs for Washington-based SPI. Markets such as automotive, electronics and office furniture struggle, while food packaging and health care fare better, she said.
Companies face rising energy and health-care costs and are particularly concerned about global competition, he said.
NAM's Huether said the manufacturing sector remains sluggish mainly because business investment remains slow, outside of spending on computers: ``I would characterize this as ... the slowest recovery we've seen.''
NAM uses the sluggish economic figures for manufacturing to argue in favor of the Bush administration's new tax-cut package.
Wood said uncertainties about a potential war in Iraq and poor stock prices are making businesses cautious.