SPI reports paint clearer picture of U.S. plastics industry

Out go raw materials, in come finished goods-that is the story essentially told by the most recent data gleaned from a pair of studies released on Jan. 27 by the Society of the Plastics Industry (SPI; Washington, DC), which worked with Probe Economics, using the U.S. Census Bureau''s North American Industry Classification System (NAICS) codes, to track the flow of resin, plastics products, and contained plastics into and out of the U.S., as well as take the vital signs of the industry.

Strong exports of plastics pushed the U.S. plastics sector, the nation''s fourth largest manufacturing industry, to a trade surplus in 2004. However, when the amount of plastic entering the country as components in finished goods is accounted for, the U.S. had a $24.5 billion deficit in plastics trade. Not surprisingly, imported goods from China played a large part in the imbalance.

The SPI says from 2002 to 2004, high energy and resin costs, as well as a massive influx of imported Chinese plastic goods, led to a 5% (67,700 jobs) reduction of U.S. plastics industry payrolls, closure of 1145 facilities, and a drop in new capital expenditures of $860 million, or 7%. Skyrocketing crude oil prices actually aided U.S. plastics suppliers, which primarily use natural gas as a feedstock, boosting exports of materials, and pushing the industry as a whole from a $2.2 billion surplus in 2003, to a $2.8 billion surplus in 2004, with exports up 16.2%.

In that same period, however, China''s leverage as a plastics trading partner strengthened, with the U.S. running a $3 billion trade deficit with China on an industry-wide basis, and a $4 billion bilateral trade deficit in plastics products. The $4.69 billion global plastic-product trade deficit was an all-time high.

Record plastics prices'' increasing influence is also evident in this timeframe, with material costs rising 20% from 2002 to 2004, while shipments'' value rose only 15%, as many U.S. plastics manufacturers were unable to pass through higher materials costs.

In spite of these challenges, the SPI''s report details what is still very much a growth industry, with overall demand for plastics on the rise. From 2003 to 2004, the U.S. saw a 6.7% increase in apparent consumption demand for plastics, double the increase seen from 2002 to 2003. Going back as far as 1980, SPI reports that plastics demand has grown every year on a long-term basis, with employment up 1.3%, shipment value up 3.2%, and productivity up 1.8% on average every year.

Following only petroleum and coal, motor vehicles, and motor vehicle parts manufacturing, the plastics industry was the nation''s fourth largest manufacturing industry in 2004, with the value of its finished goods at $345 billion, 1.3 million employed, 18,814 facilities with plants in every state, and $8 billion spent in capital expenditures.

"[The U.S. plastics industry] is still large; we''re still strong, and certainly, demand in this market is still strong," Karen Bland Toliver, SPI''s senior director of international trade and industry statistics, said. "While we''re not on the brink of destruction, it is imperative that these challenges and these pressures be addressed for this industry so we can stave off any further significant declines."

SPI President Bill Carteaux, who along with Toliver has been highly visible in Washington DC, lobbying on behalf of the plastics industry with legislators on Capitol Hill, says that presence will continue. Particular focus will be paid to high energy costs, and the possibility of opening up the outer continental shelf for natural gas exploration, as well as countermeasures to Chinese yuan valuation, which Carteaux says has exacerbated the trade gap.

"I think the thing we''d like [SPI members] to realize," Carteaux said, "is through moves SPI made this last year to beef up our staff in critical areas, we''re going to be able to take this information and actually do something with it."

Along those lines, SPI is promoting two "fly-ins" in coming weeks, where members and industry officials will arrive in DC to meet with legislators and other government officials to state the plastics industry''s case. The first is the 2006 Manufacturers'' Fly-In (Feb. 7-8), which is sponsored by the National Assn. of Manufacturing, with the next fly in, calling for increases in the domestic supply of natural gas (Feb. 15-16), sponsored by the Industrial Energy Consumers of America.-Tony Deligio; [email protected]