The U.S. plastics industry had a lot going its way in 2013, due in large part to its globally competitive resin sector.
The industry's trade surplus for the year fell almost 8 percent to $12.1 billion, officials with the Society of the Plastics Industry Inc. said during a Dec. 10 webinar. Its $20.5 billion resin surplus was flat with 2012, while trade deficits in plastic products, molds and machinery actually grew.
The plastic products deficit grew more than 8 percent to $6.2 billion, as the U.S. economy improved more than economies in other parts of the world, SPI officials explained. The U.S. plastics machinery market saw its 2013 deficit grow almost 43 percent to $1.3 billion because of weak overseas markets.
This data and much more is contained in SPI's annual Global Trends study, which recently was released. During the webinar, SPI President and CEO Bill Carteaux said that the study “shows that U.S. plastics remains a large and dynamic industry — it's healthy and getting healthier.”
Growth of 6.5 percent in consumption of plastics industry goods also shows that the U.S. “is a major player in the world economy,” he added. The webinar also featured economic analysis from industry experts Cliff Waldman, Harry Moser and Michael Taylor.
Waldman — economic studies director with the Manufacturers Alliance for Productivity and Innovation in Arlington, Va. — said that U.S. economic growth “is getting better, but is still sub-par.”
U.S. GDP has rebounded stronger from previous recessions, often hitting 4-6 percent growth instead of the 2 percent rates seen in recent years, he added. After predicting GDP growth of 2.2 percent this year, 2.8 percent in 2015 and 3 percent in 2016, Waldman said that an improved labor market, reduced household debt and lower gasoline prices should boost U.S. consumer spending.
But, globally, Waldman described growth as “sluggish but moving forward.”
“The world lacks mojo,” he said. “There's a dearth of the kind of risk-taking that's often the difference between sluggish and strong growth.”
Reshoring of manufacturing work to the United States is improving the U.S. plastics industry's competitive position, according to Moser, founder and president of the Reshoring Initiative in Kildeer, Ill. Higher wages and other factors in foreign locations have allowed contract manufacturers, toymakers and even conglomerates like the General Electric Co. to return work to U.S. shores in recent years, he explained.
GE is investing $800 million in its appliance-making facilities in Louisville, Ky. The project will create 1,300 jobs there. Across all industries, reshoring is expected to create a net of 50,000 additional U.S. jobs by 2016, Moser said. By comparison, the nation lost 148,000 jobs to offshoring in 2003. “The bleeding has stopped,” he said.
U.S. plastics growth has carried over into 2014, said Taylor, SPI's senior director of international affairs and trade. The market has added 4,200 jobs so far this year, ranking third among the country's manufacturing sectors. U.S. plastics also ranked second in that group with manufacturing production growth of 8.2 percent between October 2013 and October 2014.
Shale gas has played a big role in the U.S. plastics comeback by allowing the region to continue to export resin, rather than become a net importer as many had anticipated would happen before a wave of new shale-based natural gas hit the market. This production has helped the U.S. economy as a whole, Taylor said, by adding jobs, tax revenue and GDP growth.
“The U.S. plastics industry is in a historically positive competitive position globally,” he explained.
In the short term, U.S. plastics also should benefit from lower oil prices, which have dropped from more than $100 per barrel to less than $70 in recent months.
“In an obvious sense, lower oil prices are good,” MAPI's Waldman said. “It means lower prices at the pump and for heating — but it's a mystery as to what's causing it.”
Carteaux added that chemical industry officials at a recent conference he attended said that lower oil prices presented “no risk” to currently announced plastics and chemicals expansions.
