Ohio secures spot as plastics production hub

Ohio is one of the top plastics producers in the U.S., with over 600 plastics-based manufacturers contained within its borders. A study released in late 2022 further centered the Buckeye State as a plastics production hub, as importing materials from overseas is no longer a bottom-line benefit for most companies.

According to the report from nonprofit Shale Crescent USA — shared in December by JobsOhio — Ohio's energy and transportation advantages have put previous overseas partners like China on the back burner.

Pandemic-driven supply chain snarls, combined with the larger region's abundant natural resources in resin production, illustrate that these goods are cheaper to manufacture locally, the report said.

For decades, manufacturers shifted production abroad — primarily to China — with an eye on cheaper labor costs and improved margins. Increased shipping prices with longer lead times have reversed that course while spotlighting the benefits of shorter supply chains.

Steve Millard, president and CEO of the Greater Akron Chamber, recognized the need for rapid product delivery during the height of COVID.

"People couldn't get gloves, face masks, bottles for sanitizer or the sanitizer itself," said Millard. "The chemical and polymer composition of those products woke people up on how to get it cheaply in big quantities. We knew this would come domestically."

Echoing key findings from the study, Millard pointed to Ohio manufacturers' proximity to the end-to-end industry supply chain, starting with the low-cost natural gas liquids utilized to produce plastic resin. Ohio, West Virginia and Pennsylvania produce over one-third of the country's natural gas supply; compare this to energy-deficient China, where resin is mostly generated from a costly oil-based chemical called naphtha.

The Utica and Marcellus shale formations will keep the region rich in natural gas well into the future, Millard said. Shell's ethane cracker plant along the Ohio River, meanwhile, is expected to ramp up to full production in the second half of the year. Shell officials say the complex will generate 3.5 billion pounds of tiny polyethylene pellets annually.

With shipping costs a significant factor in the overall supply network, Ohio's ability to meet raw material production and finished goods within a day's drive gives the state yet another leg up, said Millard.

"It's stunning when looking at the depths of the supply chain here," Millard said. "From processors to materials to transportation to warehousing, all the pieces have come together, when otherwise you would be moving products across the country."

Over the last 10 years, China accounted for about $25 billion of plastic imports shipped to the U.S. annually, according to the Shale Crescent USA study. Considering Northeast Ohio's long-term standing as a hub for plastics engineering — the world-renowned polymer science program at the University of Akron being just one example — the region is raring to take the next step, noted Mike O'Donnell, vice president of operations at MAGNET in Cleveland.

More natural gas extraction means extra work for local injection molders not currently running at full capacity, said O'Donnell. Area expertise is also needed for plastic compounding, a process that adds coloring and other properties to basic plastic material. For example, the orange pigments for Tide bottles are blended on Cleveland's East Side by the DayGlo Corp.

"They blend color and additives with a polymer, when before you'd ship to a factory," said O'Donnell. "Think of a ready-mix for a recipe rather than making your own mix."

Northeast Ohio's plastics ecosystem is bolstered by skilled labor coming from the University of Akron and other local pipelines. As posited by the recent report, an increase in automation can help mitigate labor costs, a point that MAGNET is now conveying to small and medium-sized manufacturers in its network.

Robotics, data monitoring and preventative maintenance are all areas that producers should be pondering in the years ahead, said MAGNET president and CEO Ethan Karp.

"These companies need automation to make them state-of-the-art — that is a big piece of the blueprint," Karp said.

O'Donnell, a former Rubbermaid executive, said manufacturing plastic products does not require the same intricate labor as a car or even a Vitamix blender. Yet, companies seeking to cut labor costs are wise to invest in high-tech equipment.

"Right now, we can't find more workers," O'Donnell said. "But you could have a collaborative robot on the second shift where one operator is running three machines. Plus, you can run this equipment at night without hiring three times more people."

A greener supply chain is another factor driving Northeast Ohio's reshoring opportunity, said Baiju Shah, president and CEO of the Greater Cleveland Partnership. On a basic level, eliminating transportation across oceans reduces pollution, global emissions and fossil fuel consumption.

"Lots of companies are working on the sustainability side of things — it's what their end users are expecting," said Shah. "From product processing to material innovations, to recapturing materials after products have been used."

Ohio producers have a distinct advantage over China in ESG (environment, social and governance) performance, another integral part of modern business operation and investment decisions. Ohio's natural leadership in ESG, paired with its resource, location and talent assets, is a boon for an industry still digging out from the pandemic, Shah added.

"We make things that matter — that is our history and it's the future," he said. "The more we support growth of these sectors through innovation, with an eye toward what the market is seeking, the more we will drive high-value economic growth."