Domestic demand for plastics industry products grew at a record-breaking pace in 2013, reflecting the value of manufacturing to the U.S. economy, a report released by SPI staff said. The latest figures available show that the U.S. plastics manufacturing industry operates as a $374 billion sector that employs 900,000 men and women with representation in each of our nation’s 50 states.

SPI’s 2014 Global Business Trends report indicates that the domestic demand for plastics industry goods grew 6.5%, from $251 billion in 2012 to $267 billion in 2013. The previous high was $262.6 billion in 2006.

Surpassing previous consumption levels confirms that the U.S. plastics manufacturing industry is a major player in the world’s economy. And while U.S. exports of raw materials continue to show profitability, thanks in part to increases in shale gas supplies, domestic demand holds the key to a wealth of job growth and economic benefits for firms that invest in the nation’s manufacturing renaissance.

The U.S. resin trade surplus has grown in dollar terms, falling off slightly during the 2008-2009 recession, and again in 2012-2013, because of strength in the U.S. economy relative to the rest of the world. Meanwhile, the U.S. manufacturing trade balance has improved in part due to “reshoring,” or the return of manufacturing operations that had been “offshored” to other countries. Our country has become more competitive for four main reasons: low wage inflation, a lower-valued dollar, high productivity, and abundant energy.

Exports resumed growth in 2013, recording a 2.7% increase across most sectors (resins, plastic products, and molds), excluding machinery. However, machinery sales and exports historically expand on a triennial basis in conjunction with NPE, SPI’s premiere international plastics showcase. (NPE2015 is scheduled for March 23-27, 2015, in Orlando, Florida, USA.)

Because of the flourishing domestic market, more production was needed in 2013 to meet the demand. The ratio of industry exports to domestic shipment fell from 22.2% in 2012 to 21.5% in 2013—another sign of an improving U.S. economy. 

As has been the case in recent years, Mexico and Canada remain the U.S. plastics industry’s largest export markets, with $14.9 billion in exports going to Mexico and $12.5 billion to Canada in 2013. The industry had its largest trade surplus with Mexico in 2013, at $10.8 billion, which is largely attributable to the North American Free Trade Agreement (NAFTA). U.S. plastics companies continue to take advantage of duty-free access to Mexico’s market, and this should serve as an indication of the potential positive trade benefits that await the U.S. should it successfully conclude negotiations on the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

Analysis of the report also demonstrates the opportunity within the U.S. plastics industry to reshore manufacturing positions. According to the Reshoring Initiative, bringing jobs back to the USA reduces the cost of ownership and improves quality and consistency, among other reasons. The report also provides deep insight into industry-wide trends as well as movements in molds, resins, machinery, and plastic products. 

Among the key findings in the resin sector, the report states that resin exports have been competitive as feedstock costs have fallen in response to growing shale gas supplies. While U.S. natural gas costs rose 35.4% in 2013, crude oil prices rose only 4%. The price of oil is higher than the price of gas on a weight or Btu basis, therefore the domestic industry, which relies primarily on gas-based feedstocks, continues to have a significant cost advantage over the majority of overseas resin competitors that use crude oil-based feedstocks.

Here are few more facts:

• The U.S. resin industry had a $20.5 billion surplus in 2013 (it was about the same in 2012).
• Resin exports increased 2.2%, while imports increased 5.5%.
• Plastics product trends: The estimated value of plastic products contained in exports was $27 billion, and the estimated value contained in imports was $47.6 billion, giving the USA a $20.6 billion deficit in contained plastic product trade.
• Mold trends: The U.S. moldmaker market share was 54.7% market share in 2013, compared with 55.5% in 2012.
• Machinery trends: The U.S. machinery producers’ market share was 36.6% in 2013, up from 34.5% in 2012.
  
  

If you’re interested in an analysis of the report, I would invite you to view a replay of the recent webinar, “America’s Competitive Position in a Global Economy,” accessible on our website at www.plasticsindustry.org. Along with Michael Taylor, SPI’s senior director of international affairs and trade, other speakers were Cliff Waldman, director of economic studies at Manufacturers Alliance for Productivity and Innovation (MAPI), and Harry Moser, Reshoring Initiative founder and president. The full report is also available at www.plasticsindustry.org.