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Perspective
January 13, 2015 01:00 AM

Reshoring impacts are not immediate

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    SPI
    Carteaux

    Leading into 2015 economic indicators are pointing to another positive growth year for America's plastics manufacturing industry. That's why I was surprised when reading the article, “Study: Impact of manufacturing reshoring ‘less than hype' indicates,” in Plastics News.

    The study cited in the article notes that, while U.S. manufacturing production grew 6 percent from 2009 to 2013, the impact of reshoring on the turnaround is much less than suggested by many. I do agree that manufacturing production has grown. However, I question whether the aggregated trade data cited in this study are the most accurate indicators to gauge job reshoring.

    The decision to locate a manufacturing facility anywhere in the world is more complicated than ever, and especially the decision to bring one back to the U.S. from overseas. Survey data and numerous case studies substantiate that decisions to reshore are in fact being made and that an increasing number of executives are reevaluating whether to keep facilities abroad in light of an improved global competitive position for the U.S.

    For example, a Boston Consulting Group 2012 survey of American companies revealed that 37 percent of those with annual sales above $1 billion were planning or actively considering shifting production facilities from China to America. Meanwhile, the Massachusetts Institute of Technology found that 14 percent of more than 100 manufacturing firms surveyed, are considering returning some activity to the U.S. Grant Thornton's January 2014 “Realities of Reshoring” survey indicated that more than one-third of the 275 business leaders it interviewed were planning on bringing back at least some of their overseas manufacturing in 2014.

    In addition, SPI's 2014 Global Business Trends report shows that the domestic demand for plastics industry goods grew 6.5 percent, from $251 billion in 2012 to $267 billion in 2013. The previous high was $262.6 billion in 2006.

    The reshoring of facilities is not an immediate development.

    When taken in conjunction with the industry contraction we witnessed during the 2008-2009 global recession, increased imports are expected in order to keep up with this record-setting demand. I should also say that just because the U.S. plastics industry is looking at a tremendously favorable global competitive position this does not mean that the industry will suddenly start manufacturing all plastic products needed by our economy. Our industry still excels at manufacturing innovative and high-quality applications.

    In a Wall Street Journal article, titled “U.S. Factories Head Into 2015 with Optimistic Eye” (Jan. 2), Bradley J. Holcomb, who oversees the Institute for Supply Management survey, said a December study indicated that in 2015, revenues are expected to grow 5.6 percent, allowing employment to rise 1.5 percent and capital spending to increase 3.7 percent. I'm also quoted in the same article saying that the plastics industry is seeing more examples of reshoring as well expanded jobs and payrolls in 2014.

    Furthermore, SPI's triennial trade show, NPE 2015, is about to break all records, selling more than 1 million square feet in exhibit space. This is another solid indicator of projected growth for North American plastics manufacturing.

    SPI looks forward to another exciting growth year for plastics. And, we invite you to review 2014 Global Business Trends, located on our website at http://www.plasticsindustry.org, to learn more about the U.S. plastics industry's position in the global economy, and how it remains a competitive industry.

    William Carteaux is the president and CEO of the Society of the Plastics Industry Inc. 

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