MAPP survey: US processing on a roll

The current optimism in the plastics industry is palpable and nothing makes that more apparent than the 2015 state of the industry report from Manufacturers Association of Plastics Processors (MAPP).

More than 70 percent of the 170 plastics processing executives surveyed said their sales today are better than they were a year ago — and 85 percent said they expect their sales a year from now to be even better.

Plastics has officially bounced back from the recession, and steadily moving forward to surpass pre-recession sales levels, said Troy Nix, executive director of MAPP.

“If there are companies out there right now that are still really, really sluggish and they're trying to blame it on the economy, it might be an industry sector I don't understand. I know not everyone is doing great but overall, our industry is kicking it,” Nix said.

A calming trend on raw material price swings, and recent declines in prices overall, have contributed to the optimism.

“When you lessen the volatility in the marketplace, it takes some of the variability and vulnerability out of how you run your business,” Nix said.

Improving overall economic health in the United States in the last three years, particularly in certain sectors, has also helped plastics' recovery, Nix said.

“Automotive is leading the way,” he said, citing a December J.D. Power and LMC Automotive Report projecting sales numbers around 17 million units for light vehicle sales for 2015. “When 65 percent of our members are touching automotive in some way, obviously a strong automotive industry is going to push a strong plastics industry.”

Consumer goods is the second end market about which respondents are most optimistic for 2015, followed closely by the medical market. An increase in consumer confidence and could boost the 51 percent of the processors surveyed that are feeling optimism on consumer goods, Nix said, but concerns about the medical device tax could be holding back any more than the existing 37 percent who said they felt good about the future of medical plastics processing.

“It's not as robust as I thought it would be,” Nix said. “The medical device tax has definitely created a rationale for changing their strategic plans for new facilities in the U.S.”

But when it comes to U.S. plastics facilities overall, Nix can hardly contain his optimism for the reshoring trend.

“Reshoring!” he said. “I just have too much data here telling me it's here in a big way.”

When asked if they have gained, lost or remained neutral in terms of losing work to foreign suppliers, 38 percent of respondents indicated they won work back from overseas in 2014, up by 4 percent from the previous year, and 40 percent said their customers are looking to move work back to U.S. suppliers.

A mere 8 percent of those surveyed said they lost business to foreign suppliers in 2014. Losses to overseas competitors are “the lightest it's ever been since we started tracking this question,” Nix said. “It's a pretty telling story.”

There remains room for improvement, however, when it comes to acquiring overseas tooling, Nix said.

“I watch this carefully for a lot of different reasons. We like to see our processors using U.S. tooling but sometimes that's just not in the cards,” he said.

Of those surveyed, 63 percent of respondents indicated they were buying tooling from overseas, up from last year's report. While it can be a factor on which the customer has their mind made up, there is a misconception that foreign tooling is always cheaper, Nix said, particularly once shipping and changes are factored in. While it's a fight, he said he thinks it's one that can be won.

“I think that there's an opportunity here for U.S. mold-making companies to take some market share back,” he said. “They were the first to get hit by the economy's downturn. It will never go down to zero, but if we can make progress, that's great for our U.S. companies.”

And even amid so much optimism, there are always challenges. Nearly 80 percent of those surveyed identified workforce development as one of the things they are most concerned about in 2015, and many of the other challenges for 2015 are workforce-related, with 34 percent identifying “seeking operational excellence and continuous improvement” as a major concern and 20 percent of respondents worried about healthcare costs and management.

“Almost 80 percent of respondents listed some kind of workforce issue,” Nix said, adding that the making the question a “fill-in-the blank” accounts for some variation in answers. “If they didn't say so, it might be because they are numb to it at this point.”