Plastics firms get at least $1.6B in COVID-19 PPP loans

At least 6,000 plastics companies received emergency loans totaling more than $1.6 billion under a federal program to help pay salaries and soften the steep economic fallout of the coronavirus pandemic, new data shows.

The Small Business Administration released the loan data about the Paycheck Protection Program July 6, responding to pressure for more transparency about how the money was being used.

The $1.6 billion for plastics firms is a small part of what SBA said is $521 billion in PPP funds disbursed to companies in all parts of the economy and probably undercounts money flowing to the plastics sector, given how the government classifies industries.

But it does show that many firms actively sought help as they coped with an unprecedented slowdown that pushed the unemployment rate from less than 4 percent in February to 11 percent in June.

Plastics companies reported to SBA that the funds played some role in protecting at least tens of thousands of jobs.

A Plastics News analysis of data breaking out 14 industry segments, from resin to bottle making to plastic pipe and fittings, showed more than 6,200 firms received loans totaling between $1.65 billion and $3.71 billion.

The range is large because the federal information shows only a range, not a specific loan amount, for each company.

For example, it showed that 19 plastics firms received the maximum loans granted of between $5 million and $10 million, while 204 received loans of between $2 million and $5 million. About 3,200 of the loans, or roughly half the total, were for less than $150,000.

Companies said the loans helped them protect jobs.

Materials supplier Americhem Inc. had a loan of between $5 million and $10 million approved on April 8, the SBA data showed.

A few days before that, the Cuyahoga Falls, Ohio-based firm had told state officials in Ohio and Michigan that it would have to put 73 employees on temporary furlough.

In a statement to Plastics News, Americhem said the PPP funds allowed it to bring all previously furloughed employees back to work, which was its purpose in seeking the loan.

"Throughout the COVID-19 pandemic, Americhem has taken extraordinary efforts to safeguard the health, safety and financial well-being of our employees," the company said. "In addition to numerous health and safety initiatives, Americhem applied for and received SBA-sponsored PPP funding, which further protected our employees."

It said those efforts, including PPP, helped the company keep working closely with the medical sector and other customers in the crisis.

Other plastics firms receiving loans in the maximum range included Penda Corp. of Portage, Wis.; Phoenix Closures Inc. of Naperville, Ill.; Brentwood Industries Inc. in Reading, Pa.; and Interplastic Corp. in St. Paul, Minn.

SBA said across the economy, PPP supported 51 million jobs, and that 80 percent of the funds went to small businesses, with an average loan of about $100,000.

"The jobs numbers released last week reinforce that PPP is working by keeping employees on payroll and sustaining millions of small businesses through this time," SBA Administrator Jovita Carranza said July 6.

One firm high on the plastics list, Deceuninck North America LLC, said it gave back its loan of between $5 million and $10 million.

A spokeswoman said the Monroe, Ohio-based company, which is part of Belgium-based Deceuninck Group, said it determined that foreign ownership made it question its eligibility for the PPP program and it returned the money to the U.S. government.

Deceuninck said the Treasury Department had not resolved those specific questions when the company first received funding.

In an April 15 statement, the company had said it was cutting 30 percent of the jobs at its Monroe factory because of a downturn in orders and workplace requirements in the pandemic.

However, it said July 10 that demand has since picked up: "As a result, we have adjusted our operations, brought back furloughed employees and are now recruiting."

It's difficult to draw conclusions from the data, but a tax consultant who advises companies on applying for PPP funds said the money helped plastics firms retain jobs and weather problems.

"I think it's worked as intended on a high level, but the devil is in the details," said Mike Devereux, a partner and director of manufacturing, distribution and plastics industry services for Mueller Prost in St. Louis.

Devereux noted that there are questions around loan forgiveness and how benefits are calculated.

The program is designed to allow for the low-interest loans to be forgiven, essentially turned into grants, if the companies used the funds for payroll, mortgage, rent or utilities.

An SBA website suggested that companies use 60 percent for payroll, and that forgiveness is based partly on how quickly people are rehired and that salary levels are maintained.

Devereux said companies need to pay close attention to program rules to make sure they can get as much forgiven as possible. The loans are at 1 percent interest for terms of two to five years, depending on when they were approved.

Devereux said some companies are still looking at PPP funds, if they sat out earlier rounds. The program still has about $132 billion available.

For example, he said one mold making client was very busy early on in the pandemic and did not apply for PPP funds, but now it finds itself in a tougher situation, with 25 percent of its workforce testing positive for COVID-19.

"Initially he had not needed it, but now he's reconsidering it," Devereux said. "I don't believe we can say any company is out of the woods yet. We don't know what's going to happen this fall, and Congress is going to have to monitor it very carefully."

The parent company of Plastics News, Detroit-based Crain Communications, also received a PPP loan of between $5 million and $10 million.

Within plastics, the specific sector getting the most money was resin and materials, where companies reported between $216 million and $482 million in PPP funds.

A catchall category in the government data, miscellaneous plastics processing, actually reported much more in loan amounts: between $880 million and $1.9 billion. It was far and away the largest single category, but it contains so many different and unrelated plastic goods it can't be thought of as a single industry sector.

Within processing, three categories each tied for receiving roughly the most money: packaging, bags and a grouping for urethanes foams and nonpolystyrene foams had ranges of between roughly $83 million and $185 million.

The plastic pipe industry reported loans between $47 million and $107 million, while plastic bottle makers received between $31 million and $74 million.

Custom compounders received between $31 million and $71 million.

There are some key industry sectors missing in the Plastics News analysis of the data, however.

Plastics machinery, mold making or recycling are all within much larger industry groups in the SBA information, making it hard to break out plastics-specific companies.

The data does include some information on plastics machinery firms, however.

Both Wittmann Battenfeld Inc. in Torrington, Conn., and Uniloy Inc. in Tecumseh, Mich., received PPP loans of between $2 million and $5 million, the SBA data showed. They appeared in the Plastics News dataset because they are classified in government codes for plastics processing.

As well, some molding and processing firms don't show up in the plastics data we culled but reportedly received loans. Newspapers in Vermont reported that GW Plastics, based in Bethel, received a large loan of between $5 million and $10 million.

When looked at by state, the data mirrors industry manufacturing data, particularly for processing.

California topped the state list with 705 plastics companies there receiving loans. Ohio ranked second, with 445, followed by Texas at 408, Michigan at 371 and Illinois at 352.

One plastics processing company with financial ties to a member of Congress also received a loan, media reports noted.

The Roll Call newspaper reported that Arnold, Mo.-based processor Sinclair & Rush Inc. received between $2 million and $5 million. The paper said the company is part of a portfolio owned by La Jolla, Calif.-based Cameron Holdings and that the CEO of Cameron, Lynn Gorguze, is married to Rep. Scott Peters, D-Calif.

PPP funding has been a hot topic for industry groups and consultants.

A spokesperson for the Plastics Industry Association said the group has provided information about PPP and other programs to its members to help them avoid layoffs.

Brendan Thomas, the group's vice president of advocacy and voice, said the industry has been resourceful in avoiding job cutbacks and protecting customers.

"Like virtually every other industry during this pandemic, the plastics industry has suffered setbacks, forcing tough decisions at many companies," Thomas said. "In an unprecedented situation, which has required all but essential businesses to significantly slow down or shut down, acquiring quick assistance has sometimes been difficult."

Plastics News reporters Frank Esposito and Catherine Kavanaugh contributed to this story.