Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
November 07, 2013 01:00 AM

US processors and suppliers expect growth fueled by shale gas

Frank Esposito
Senior Staff Reporter
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    CHICAGO — Dow Chemical Co. makes resin. Berry Plastics Group Inc. buys resin. But both firms expect to benefit from discoveries of shale gas throughout North America.

    Executives with Midland, Mich.-based Dow and Evansville, Ind.-based Berry spoke at the Global Plastics Summit, held Nov. 4-6 in Chicago. Dow ranks as one of the world's largest plastics and chemicals makers. Berry is North America's third largest injection molder, fourth largest film and sheet maker and fourth largest thermoformer, according to recent Plastics News rankings.

    “A few years ago, we said we expected industry growth to be in the Middle East or in emerging geographies,” Dow's Greg Jozwiak said. “But starting in 2008, things changed significantly. Now it's about how plastics can seize these opportunities.”

    Dow and other regional resin makers are adding capacity for the first time in many years, since shale-based natural gas can be used to make ethane and then ethylene, a key feedstock for many plastics including polyethylene and PVC.

    The “shale gale” is expected to create 485,000 petrochemicals-related construction jobs, as well as 55,000 resin production jobs and 10,000 new plastics manufacturing jobs, added Jozwiak, who serves as North American commercial vice president for Dow's packaging and specialty plastics business. Shale expansion will lead to new growth in reshoring, materials, processing and finished goods exports, he said.

    Outside of resin, these investments are expected to create 60,000 support jobs and 50,000 related jobs in the communities that house the plants. “It's a major multiplying factor, not the same as from service-type industries,” Jozwiak said. Globally, Dow is adding more than 3 billion pounds of capacity for PE and related products on the U.S. Gulf Coast and almost 3 billion pounds of capacity for those items through a joint venture in the Middle East.

    Farmer — Berry's executive vice president of global purchasing — described the shale boom as “the most exciting thing to happen to the plastics industry in a long time.” He added that increased availability of PE will allow plastic to make inroads into the $170 billion global packaging market. “There's an opportunity to drive volume,” Farmer said. “Packaging is a huge, huge number and plastic plays in only a small part of that overall number today.”

    The shale edge also would allow Berry and other processors to invest in new capacity, he added. Berry had sales of almost $5 billion in its 2012 fiscal year and has made more than 30 acquisitions in the last 15 years.

    Jozwiak estimated that PE has 13 percent of the global packaging market, with other plastics holding a 17 percent share. “There's a very significant addressable market for plastics to substitute because of their light weight and value in food preservation,” he said.

    And as expected at an event that featured resin makers and buyers, the topic of pricing arose.

    “The people who drive the volume of plastic pellets are consumers,” Berry's Farmer said. “We have to get the [resin] cost to the point where [the shale advantage] can be passed on to converters and on to their customers.”

    According to Farmer, a 10 percent drop in PE prices would allow processors to create 5,500 new, well-paying manufacturing jobs as will as increase PE demand by 800 million pounds per year. “Jobs can be created if we can get low-cost polyethylene into the marketplace,” he said.

    Lower resin costs also would allow Berry and other processors to invest more in innovative products such as Versalite, a polypropylene-based packaging material launched by Berry earlier this year. Farmer said that Berry spent $30 million to develop Versalite, which he said “will revolutionize the hot drink cup market.”

    Dow's Jozwiak countered that North American PE prices already are the lowest in the world, which is why a significant amount of PE is still exported from the region. He added that profit margins at the resin producer level are put back into the industry in the form of investments. “We're putting that money to work,” Jozwiak said.

    Jozwiak also detailed a formula for growth for North American plastics manufacturing. He said that reshoring will add 1 percentage point to base PE market growth of 2.5 percent. Material substitution will add another 0.75 percentage point, with finished good exports chipping in another 0.25 for a total growth rate of 4.5 percent.

    That level of growth would create a need for another 1.7 billion pounds of PE capacity per year in North America. Each 1 percentage point of PE market growth also creates the need for 28 more plastics processing lines in the region.

    “In my 25 years at Dow, the industry has never been this exciting,” Jozwiak said. “Especially when you think that just a few years, people weren't thinking they'd be investing in North America at all. This is a great opportunity for our industry.”

    The Global Plastics Summit was co-hosted by Houston-based consulting firm IHS Chemical and the Society of the Plastics Industry Inc., a Washington-based trade group.

    RECOMMENDED FOR YOU
    Australian startup Samsara to commercialize its enzyme recycling
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    PVC feedstock in train derailment prompts evacuation in Ohio
    2
    Material Insights: Resin prices rise, nonmarket correction for PE
    3
    Illinois AG sues 14 firms over PFAS contamination
    4
    Prices on the rise for PP, PVC
    5
    This is the year the reality of plastics EPR arrives in the US
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified