The Known Unknowns Confronting the Plastics Industry in 2025The Known Unknowns Confronting the Plastics Industry in 2025

International trade shows typically are a vehicle for promoting the industry as well as individual companies — exuberance tends to be the default mode. NPE in Orlando, FL, last May largely followed this model. Some companies had a positively bullish outlook: LS Mtron showcased its injection molding systems at a massive stand, tripling its footprint from the previous event. At a press conference at the show, the Korea-based company announced that it has set a goal of capturing 20% of the North American market. To put that in perspective, it had 1.5% market share in 2018.

A tale of two economies

The mood at Fakuma in October in southern Germany was strikingly different. At press conferences, machine makers, mostly based in Germany and Austria, reported on a difficult 2024 and projected a fairly gloomy outlook, at least for the first half of 2025, if not for the entire year ahead.

Arburg, for example, forecast a turnover of approximately €620 million ($638 million) for 2024, compared with €784 million ($806 million) in 2023. And the stubbornly Germany-centric manufacturer embarked on a strategy of internationalization, assembling its first Allrounder machine outside of Germany — in China — and announcing that it was sourcing a location for assembly operations in North America. Given Europe’s high energy and labor costs and inflationary pressures, the company sees little relief on the horizon.

Related:What a Trump Win Means for the Plastics Industry

In the United States, the outlook, while uncertain, is more promising. The new year is building on the foundations of an economy that is the envy of the world, as the Economist recently proclaimed in a cover story. Perc Pineda, PhD, chief economist at the Plastics Industry Association (PLASTICS), acknowledges that the exceptional performance of the US economy in recent years has garnered global attention. “However, this growth has not been broad-based or consistent across the goods-producing sector. Manufacturing and housing remain laggards, with both industries struggling to sustain current activity levels. For these sectors to thrive, interest rates will play a critical role in 2025,” Pineda told PlasticsToday.

“The 75 basis-point cut in the federal funds rate to date signals a potential shift toward lower interest rates in the near future,” said Pineda. “While the US economy is projected to grow by 2.7% [in 2024], the manufacturing sector continues to face constraints from elevated borrowing costs. Equipment suppliers have been directly and indirectly impacted by higher financing costs. Consequently, new projects remain scarce as processors and their customers carefully evaluate the risks associated with increased borrowing costs,” said Pineda.

Nevertheless, Pineda sees an increase in production and a rise in capacity utilization compared with 2024 as the likely scenario for 2025. “Lower interest rates should reduce risk aversion, encouraging new projects that positively impact the industry’s supply chain beyond materials — extending to tooling and conversion.”

Tariffs: Will he or won’t he?

The biggest known unknown at this point could be the broad-based tariffs that the incoming administration has threatened to impose. Most economists agree that if Trump follows through, prices would rise for US consumers as would the cost of doing business for companies across the board. Tariffs could also wreak havoc up and down the supply chain. The unknown at this point is whether President-elect Trump will actually make good on those tariffs on day one or shortly thereafter, or if it is a negotiating ploy, allowing him to claim mission accomplished on terms he deems satisfactory.

It’s a guessing game at this point, or, as Pineda put it: “Distilling Trump’s pronouncements on tariffs is challenging.”

A scenario involving higher tariffs on all imports from all countries seems unlikely, said Pineda. “Additionally, there appears to be little momentum for renegotiating the USMCA [US-Mexico-Canada] trade agreement, suggesting it will likely remain intact. Based on the first Trump administration’s trade and tariff policies, tariffs were targeted by both product and country of origin, leading to a diversion of supply chains from one country to another.”

No end in sight for US labor shortage

The skilled labor shortage that has dogged manufacturing for several years does not appear to be improving. In fact, according to PlasticsToday columnist Paul Sturgeon, CEO of recruitment firm KLA Industries, it’s about to get a whole lot worse. “Consider that the baby boomers added 25 million workers to the labor force over the 10-year period of the 1970s. Contrast that with the six to seven million expected to be added over the next 10 years, according to the Bureau of Labor Statistics. We are going to have a major labor shortage that will have us looking back fondly at 2022, when we had two job openings for every available worker,” wrote Sturgeon in a recent column.

Trump’s promised “mass deportation” of undocumented immigrants can only aggravate matters.

Resin prices on the rebound in 2025

Polyethylene and polypropylene resin prices fell in the last half of 2024, probably hitting a bottom in December, just in time for a rebound at the start of 2025. In resin pricing dynamics, as elsewhere, several factors will impact trends in the new year, including geopolitical events, the Trump tariffs, overcapacity, and, more close at hand, a possible port strike in mid-January.

A more measured tone on sustainability

Sustainability has been an industry buzzword for some time now, but Coca-Cola’s announcement in early December that it is revising its 2030 sustainability goals may be a harbinger of things to come. As Robert Lilienfeld noted in his article, 4 Predictions for Sustainable Packaging in 2025, “the naïve days of corporate managers stating that they will eliminate all plastic in their packaging over the next five to 10 years are behind us. But that doesn’t mean that they don’t want to reduce its use. Ironically, this new mindset reflects one of the oldest adages made about sustainability: It’s a journey, not a destination.”

Coca-Cola has “been a leader in the recycled plastics space, and having it pull back now at the end of 2024 makes me question if other brands also would not consider slowing their pace as well,” noted Emily Friedman, recycled plastics expert at ICIS, in a recent article in PlasticsToday on the prospects for plastics recycling in 2025.

Whatever happened to the global plastics treaty?

By this time, we were supposed to have a solid outline for a binding global plastic pollution treaty spearheaded by the United Nations (UN). That didn’t happen. The fifth — and what was supposed to be final — session of the UN Intergovernmental Negotiating Committee ended in the early hours of Dec. 2 in Busan, South Korea, without an agreement. Participants will meet again this year at a date and location to be determined. The sticking point has been whether or not limiting plastics production and banning certain harmful chemicals should be part and parcel of the effort to reduce plastic pollution. The division largely rests on which side of the barricades you find yourself: Industry by and large is opposed to curtailing plastics production while a handful of governments, academics, and NGOs view it as a necessary tool to tackle a reduction of plastic waste.

PLASTICS is on the hopeful end of the spectrum. “Our CEO, Matt Seaholm, and our sustainability team, led by Patrick Kreiger, have been actively engaged with US government negotiators from the outset of discussions on the global plastics treaty,” explained Pineda. “There is optimism that nations can reach agreements to foster innovation, secure funding for infrastructure, and prevent plastics from entering the environment. A treaty that supports the global trade of plastics, while encouraging investments in recycling technologies, material innovation, product design, and production — without diminishing the consumer benefits of using plastics — would benefit economies worldwide.”

That would be a grand outcome. Let’s see if it happens. In any case, we will let you know how things shake out in 2025 in PlasticsToday. Happy new year?