Shale-advantaged resins are affecting job growth in the plastics industry in a big way, according to Martha Moore, Senior Director, Policy Analysis and Economics, for the American Chemistry Council (ACC; Washington, DC). There is currently a "huge build-out" of capacity in the United States for plastics processing. "Since June 2012, plastics processing projects have been announced by over 400 companies in over 40 states, with additional projects in Canada and Mexico," Moore stated. "Sixty-three percent of those [are] with a foreign partner," said Moore, adding that ACC is tracking more than 500 plastics processor projects. Moore made these comments at the recent Global Plastics Summit produced by SPI: The Plastics Industry Trade Association and IHS in Chicago.
"Increased resin capacity equals increased processing capacity," Moore said, adding that of the 500 projects that the ACC is tracking, there are 246 individual projects valued at $153 billion. Thirty percent are greenfield projects and 70% are capacity expansions. Since 2010, investment in the construction of plastics processing plants has tripled, with some 30,000 jobs created. "It really is a U.S. story," she said. "It's happening in almost every state."
Approximately one-third of the new projects are for consumer and institutional products with medical and healthcare a large subset of that; another third is for transportation markets; one-fifth is for packaging; and the rest is in the building and construction market. Not only is there new capacity in plastics processing, but new capacity is being added in resin compounding, as well.
"Once those plants are built, we anticipate 127,000 direct jobs, with a half-million jobs supported by plastics processors," Moore said.
In spite of all this good news, there are risks to this capacity expansion, such as unpredictable energy dynamics, workforce development issues and equipment shortages, which lead to capital cost escalation, she said. There are also infrastructure bottlenecks, market accessibility issues and trade exposure, more stringent environmental issues and other regulatory restrictions that could hamper processor growth.
Automotive driving investment in plastics processing
All of that capacity expansion should bode well for machinery makers, and Paul Caprio, President of KraussMaffei, painted a successful picture for the company in 2015. KraussMaffei had $1.4 billion in orders in 2015 and is "seeing an increased revival in investment in the plastics processing industry since the downturn, with automotive leading the way," said Caprio.
Caprio noted that contributing to the company's success was the loss "of some competition, which left the door open for the company," and demand for new injection and extrusion equipment. "All machinery builders are at capacity," he stated. "Additionally, production utilization of our customers is at capacity, as well, as we're seeing the transfer of production from Asia to the United States. Demand from the building and construction market is helping our extrusion business," said Caprio.
Some of the mega-trends Caprio cited include high-gloss, paint-like molding that eliminates the painting process; clear-coat molding; skin-form molding; color-form molding; and Dynamic Mold Heating, which means that mold technology is in big demand, as well. "We look to moldmakers and others to help us bring new technology to the automotive industry in areas such as lightweighting, MuCell and renewable raw materials," Caprio said. "We're trying to do more in the molding machine cell without having to touch the part."
That brings up the trend of automation and taking people out of the equation in order to be the "low-cost provider," Caprio added.
With respect to compression molding, Caprio said it is "dependent on moldmakers to help us get cycle times down on these thick parts."
Co-injection (sandwich molding) is also becoming big, with recycled material being used for the middle layer to reduce the amount of virgin resin. Also trending for processors is energy savings and the awareness of those costs. "Our power [in the United States] is very competitive, but servo controllers and other machine controls are helping that even more," Caprio said.
Processors are also trending toward optimizing utilization of assets, such as the time it takes to change a mold. "Saving time is saving money," he noted.
This is plastics processing industry 4.0. "We call it Plastics 4.0," Caprio said. "Processors need to be more intelligent on the production floor with integrated production, integrated services and intelligent machines."
The challenges to that include availability of a technical workforce. "We can't find people; our customers can't find people," he said, urging the United States to benchmark the European method of training skilled workers. Another challenge, he noted ,is the "image of plastics—a huge issue," Caprio stated.
In spite of the challenges, Caprio concluded that the future of the plastics processing industry looks bright. "The reshoring we're seeing driven by the ultimate customer to make products in the USA is driving more capacity," he states. "That trend has resulted in at least 15 new customers coming from Europe to set up plants in the United States to serve the auto industry."