U.S. plastics post trade surplus in ‘06U.S. plastics post trade surplus in ‘06

While much of the U.S economy continues to accumulate record trade deficits, America’s plastics industry saw its overall trade surplus grow in 2006 on the basis of strong resin exports and the beginnings of a reversal in the plastics products imbalance. Those facts and others gleaned from a pair of Society of Plastics Industry (SPI; Washington DC) reports released on Nov. 8 portray the U.S. plastics industry as a resurgent one, benefiting from a comparative feedstock advantage in natural gas compared to petroleum, a weakened dollar, and in many ways a processing sector that has found its global niche.

“I think we’ve seen the move towards sustainable manufacturing in this country,” SPI President and CEO Bill Carteaux explained in a phone interview with MPW. “Not from a green perspective, but what products, realistically, are suited for manufacturing in this country.”

According to Neil Pratt, SPI’s senior director of international trade, the value of goods shipped by the U.S. plastics industry, which employs 1.1 million workers at roughly 18,500 facilities, increased in 2006 to $379 billion from $341 billion in 2005. The employment figure is largely flat, year over year, dropping about 5000 overall, but the number of facilities is up by more than 300, making up for the overall drop of 1374 sites since 2002.

Exports of plastics from the U.S. rose from $38.6 billion in 2005 to $43.4 billion last year, while imports grew at a slower rate from $35 billion in 2005 to $37.6 billion last year. Through the first eight months of 2007, those trends have continued, with exports up 11.3% and imports actually down 3.1%. By August of this year, the industry had already surpassed 2006’s $5.8 billion trade surplus, registering $6.9 billion, with a full-year forecast projecting a trade surplus greater than $10 billion in 2007.

Resin makes up for deficits in products and machinery, accumulating a projected surplus of $16 billion for 2007, due in some part of a weak dollar opening export to Europe and other destinations, but more importantly, thanks to natural gas, which hasn’t climbed as precipitously as petroleum. Carteaux said that natural gas is used as a feedstock for 70% of the resin made in the U.S. Resin prices remain high in the U.S. however, with SPI stating that material costs have increased 37% from $140 billion in 2002 to just over $190 billion in 2006.

Moving its currency in parallel to the dollar, China has not been affected by a weaker greenback, and maintains a $10.1 billion surplus with the U.S. ($7.1 billion in plastic products). SPI is still encouraged by the U.S.’s competitiveness despite an inherent disadvantage. “The steep decline in plastic product’s (net trade position) flattened out in 2006, and we’re projecting that it will swing back the other way as we go into 2007,” Carteaux said. “If you consider that dollar weakness is having absolutely no affect in China, we’re doing a better job in exporting products today.” Overall, SPI anticipates that the plastic product deficit will drop from $4.8 billion in 2006 to $4.3 billion this year.—[email protected]