Pineda predicts slow, steady growth for US plastics sector

The U.S. plastics industry will continue its steady growth as demand for products in medical devices, packaging, cars and other markets expands, according to the Plastics Industry Association's chief economist.

Perc Pineda said in a May 6 speech during NPE2024 that the industry is growing, despite public concerns over plastic pollution in the environment and discussions about shifting to alternative materials. Pineda projected that the plastics industry will grow 2.3 percent this year, above most projections for overall U.S. gross domestic products growth, which range from 1.6 percent to 2.4 percent.

"It's safe to say that within the manufacturing sector of the United States, the plastics industry, despite our critics, the manufacturing activity has been increasing," Pineda said. "I know our critics are quick to say, 'Well, they could migrate to alternative sources,' but it takes years for that to be accomplished."

For 2025, he estimated U.S. plastics growth will slow to 1.7 percent, lagging overall U.S. economic growth that most estimates project between 1.8 and 2 percent, he said.

He said the U.S. plastics sector's pricing surge has ended but said overall inflation is still not easing fast enough.

Pineda pointed to a variety of factors helping and hurting the industry economically now, with headwinds coming from the higher cost of capital, weaker household spending, uneven economic performance in end markets, and inventory and capacity adjustments.

On the other hand, Pineda noted tailwinds for plastics such as a strong labor market, reshoring of production, stable health care and consumer products demand, and, for the longer term, "spillover effects" from artificial intelligence on end markets.

Pineda presented a snapshot of the economic impact of the plastics industry both in the U.S. and globally. He said, for example, that the U.S. plastics sector directly employs just a shade over 1 million people — 1.015 million — and if suppliers are added in, then employment rises to 1.59 million.

He told the audience at an industry conference on the sidelines of NPE that plastics labor markets are strong, pointing to an unemployment rate of 1.9 percent in plastics and rubber manufacturing in March.

"At that rate, we are looking for people," Pineda said. "That's how good the labor market is for this industry. We have been challenged with filling open positions, and we're having difficulty attracting young workers in our industry."

He said employment in the plastics products sector — the largest of the four segments including resin, machinery and molds in employment numbers — dropped from 615,000 in March 2022 to 595,000 in March 2024.

He said deaths from opioid overdoses in the United States have likely shrunk the labor pool in the country, an issue that is not unique to the plastics industry.

"We have an opioid epidemic," Pineda said. "Think about the entrants in the labor market that has actually decreased because a certain cohort of our society have lost their lives because of opioid overdose."

For the main end markets of plastics, Pineda saw different developments. For automotive, he predicted automotive and light truck demand to maintain a "steady course," with North American production volumes a little above 15 million a year through 2028.

For building markets, he said higher interest rates will dim the housing market outlook, while medical markets and food and beverage have stable outlooks.

"We are a mature industry," he said. "We will always track economic growth."

Pineda predicted that the U.S. Federal Reserve Board may only make one rate cut this year, with inflation still elevated, at about 4 percent, although down from its post-COVID-19 pandemic highs of about 9 percent.

He predicted inflation will drop to 2.9 percent this year and 2.3 percent next year.

He said the U.S. had the single-largest share of plastics machinery imports globally, accounting for 12.7 percent of world imports, followed by China at 11.2 percent and Mexico at 5.4 percent, in 2022.

"That's why you have to come to NPE, because we're the biggest buyer of plastics equipment," Pineda said.

Germany and India rounded out the top five in machinery imports, with 5.2 and 4.8 percent of global plastics machinery imports going to those nations, respectively, the presentation said.

By measuring broader trade volumes in plastics, Pineda said China is the world's largest contributor to plastics trade, with $234 billion worth of goods in 2022, with the U.S. second at $181 billion, followed by Germany, Italy and Belgium at $140 billion, $64.8 billion and $64.6 billion, respectively.

Pineda said the U.S. plastics sector overall is roughly in balance in world trade, with a slight surplus from $74.1 billion in exports and $73 billion in imports.

However, that masks big differences among parts of the industry. The resin and materials segment had a nearly $24 billion surplus with the rest of the world, while products, machinery and molds had deficits of $18.9 billion, $2.1 billion and $1.6 billion, respectively.

He wrapped up his presentation by criticizing calls in the plastics treaty to limit plastics production.

"International organizations' efforts by way of a treaty seeking to ban plastics production, to me as an economist, is really a solution looking for a problem," he said, ending with a slide encouraging innovation in the industry.

"Let me leave you with this slide: Let's not let our critics dim the light of innovation," Pineda said. "Get over it. Plastics are here to stay."