The business of plastics processing has been challenging over the past decade, with the more localized recession of 2000-2001, followed by the global recession of 2008-2009. In fact, many in the industry say we're still not back to 'normal' in the plastics processing business. But then what is normal?
That's a question that Peter Mooney PhD, an economist and well-known researcher of the plastics industry, attempts to answer in his latest macro view of the industry. His latest report covers the decade (plus one year) from 2000 to 2011, and takes a peek into the future of the industry as well. It also covers all three North American economies to include Canada and Mexico.
Mooney studied 341 Structural Plastics Processors (blowmolding, injection molding, rotational molding, thermoforming, and pipe, profile, tubing and sheet extrusion), and 199 Non-Structural Plastics Processors (bottle blowmolding, thermoformed packaging, film extrusion and injection molded packaging).
Great Recession reverberates
Of the 'Great Recession' Mooney's report notes that it "proved to be much more severe and relentless compared to other post-WWII recessions," adding that U.S. real GDP declined steadily for six consecutive quarters (Q4 2007 through Q2 2009), "the longest period of declining U.S. output since the Great Depression of the 1930s."
Canada, reports Mooney, faired pretty well during this 'Great Recession' and "rebounded strongly in both 2010 and 2011, returning to the sort of growth rates registered prior to the Great Recession."
Mexico, as the least developed economy in North America, should have registered the strongest economic growth rate of the recent past, yet averaged annual GDP growth of only 2.0% over the decade of the 2000s, "not much greater than that registered by the United States (1.6%) and Canada (1.9%)," Mooney said. It experienced a "greater loss of output (-6.3%) than the U.S. and Canada in 2009 during the Great Recession." However, noted Mooney, "In many ways, Mexico emerged from the Great Recession in better shape than its two NAFTA partners," registering real GDP growth of 5.5% in 2010 and 4.0% in 2011. Its unemployment rate hovers around 5.0%, "well below those of the U.S. (7.5%) and Canada (7.0%)."
The sales trend of the 341 companies producing structural plastics parts shows that during the mini-recession of 2001, they suffered only a 0.7% decline in sales, followed by three years of robust sales growth. Signs of weakness started showing up in 2006, followed by three straight years of sales declines, "including deep, double-digit percentage drops in 2008 and 2009," said the report. "By 2011 the sales of this group of companies were still 16.5% below those of 2006." Perhaps for this group, that's the so-called 'new normal.'
The Non-Structural Plastics Processors fared much better than the Structural plastics processing companies. "The net effect of the mini-recession of 2001 was basically 'a wash,' followed by a strong 10% sales rebound in 2003, followed by two more years of sales gains. Things weakened a bit over the next three years, with a sales decline in 2009 of 3.2%. A return to earlier growth patterns came when sales grew 4.9% in 2010 and 5.5% in 2011, with the average annual growth rate of 3.7% during this entire period of 2000-2011.
Mooney also presents some forward-looking trends for the "Past and Likely Future Growth of Major Markets for the Structural Plastic Parts Processors 2004-2014" and includes growth outlooks for appliances, automotive, building & construction, furniture, heavy trucks, marine, material handling, medical, recreational vehicles and others.