2017 Size & Impact - Plastics Industry Associationplastics.plasticsindustry.org/acton/attachment/26665/f... · unemployment. In October 2017, for example, 20.3 percent of Americans

2017 Size and Impact Report - Plastics Industry Association (PLASTICS) 1

2017Size & Impact

$404 bill ion in revenue

965,000 people employed

ONE INDUSTRY THAT MAKES A POSITIVE IMPACT


Copyright and Disclaimer

Published by the Plastics Industry Association (PLASTICS) © 2017. This report is copyright 2017, the

Plastics Industry Association (PLASTICS). All rights reserved. The methodology used to prepare this

report is the sole property of Probe Economics LLC.

This report is offered in good faith and is believed to be accurate at the time of its preparation, but

is offered without warranty of any kind, either express or implied as to merchantability, fitness for a

particular purpose, or any other matter. PLASTICS does not endorse any products or third parties that

may be mentioned in the report and accepts no responsibility for any loss or damage arising from

its use. We strongly recommend that you seek separate counsel for guidance to the accuracy and

appropriateness of the report.


The plastics industry is one

of the economy’s largest industries, and it is growing.

EMPLOYMENT

COMPARATIVE GROWTH RATES2012–2016

Plastics Manufacturing All Manufacturing

1.4%

REAL SHIPMENTS1.4%

0.4%

0.9%

REAL VALUE ADDED1.6%

0.4%

PRODUCTIVITY GROWTH0.1% -0.5%

16,080

in 2016

77,000 $404 billion

Manufacturing Establishments Plastics Workers in California, the Most of Any State in Shipments

CA

One industry that makes a positive impactThe plastics industry is one of the economy’s largest industries and it is growing. Most

plastics are used in manufacturing, although the use of plastics in services is becoming

increasingly important. As can be seen from the Plastics Industry Association

(PLASTICS) study, Global Trends, low inflation and low-priced petrochemical

feedstocks have helped U.S. exports. That export advantage has been diminished by

lower world oil prices, but the U.S. plastics industry remains globally competitive.

Jobs Nationwide in 2016

Jobs in the U.S. when suppliers are included

965,0001.76 million


CONTENTSSummaryExecutive Summary

Overview Industry Size Comparison with Other Industries Rate of Growth Geographic Concentration Upstream (Supplier) Impacts Downstream (User) ImpactsForecasts

A. What Is Included in the Plastics Industry and How It Is Measured

B. The Size of the U.S. Plastics IndustryC. How the Plastics Industry Compares with

Other IndustriesD. Where the Plastics Industry is LocatedE. Upstream (Supplier) ImpactsF. Where Plastics End Up: How Downstream

(Using) Industries are AffectedG. Outlook for the Plastics Industry

0811111213131415151617

2126

324146

51



SummaryThe 2017 Size & Impact report, published by the Plastics Industry Association (PLASTICS), once again portrays a vibrant American plastics sector. Though the performance of the U.S. plastics industry is unique in many ways, it offers numerous lessons to business leaders and policymakers that can and, PLASTICS would argue, should be applied to the broader manufacturing and business communities.

Plastics Industry Remains Third-Largest Manufacturing Sector, Based on Government-Defined Data

For years the plastics industry has maintained its position as the third-largest manufacturing sector in the U.S. and this trend continued in 2016.

The Size & Impact report reaches a government-defined estimate for the size of the plastics industry based on the North American Industry Classification System (NAICS). When specific codes in plastics manufacturing (NAICS 325211, 325991, 3261, 3332201 and 33351105) and plastics wholesale trade (NAICS 424610) are combined, the government-defined size of the plastics industry in 2016 amounted to $335.3 billion in shipments. According to this measure, the U.S. plastics industry is the third-largest manufacturing sector in the country, behind petroleum and coal products and motor vehicles and just ahead of pharmaceuticals and medicines.

Shipments Decline but Employment Figures Rise

In 2016 the U.S. plastics industry accounted for $404.4 billion in shipments, a figure reached by combining the government-defined plastics industry with captive plastic products, a category that covers plastic processing activities conducted in establishments that are not classified by the government as part of the industry. This figure declined by three-percent from the 2015 figure of $418.4 billion. Much like last year’s decline, lower prices for plastic materials, and thus lower prices for plastic products, drove the decrease in shipment value.

However, employment in the plastics industry grew from 954,000 in 2015 to 965,000 in 2016, a one-percent increase. When suppliers to the plastics industry are included in this figure, the number of jobs grows to 1.76 million, which means 1.2 percent of the U.S. non-farm workforce either works in plastics or in an industry that depends on it.

The value of shipments for the industry also increases when suppliers are included, bringing the total impact of the U.S. plastics industry on the American economy in 2016 to $552.4 billion.

California Has the Most Plastics Workers, but Plastics Is Most Important to Indiana

While many viewed the shift of jobs away from California and toward Texas in prior editions of the Size & Impact report as a subtle rebuke to the former state and an endorsement of the latter, California reclaimed the top spot for plastics employment in 2016, with 77,000 workers total. Ohio came in second with 75,200 workers and Texas actually dropped two spots from 2015 to third with 74,800 workers.


Whether or not a business and regulatory environment is considered friendly or unfriendly by the manufacturing community, the fact is that California remains the largest state in the union, which will ultimately explain its continued position near the top of this list. A state with more people is a state with more workers. California also hosts the largest number of plastics companies, which further accounts for its leading number of plastics workers.

Plastics employment concentration, as measured by the number of jobs in plastics per 1,000 non-farm workers, provides a better indicator of just how important the plastics industry is to a certain locality. In 2016, Indiana retained its position as the state with the most plastics employees per 1,000 non-farm employees, with 16.5 out of every 1,000 non-farm jobs in Indiana in plastics.

Michigan follows Indiana closely in terms of plastics concentration, with 16.3 plastics jobs for every 1,000 non-farm jobs, and Kentucky leapt from fifth place in 2015 to third in 2016, with 14.2 plastics employees per 1,000 non-farm jobs.

The Workforce Outlook and the Future of Manufacturing Employment

In the final section of the report, which contains PLASTICS’ outlook for the future of the plastics industry, among other observations we note that employment figures in U.S. plastics should continue to grow, but that the rate of growth will decline over the next few years. The reason for this decline is the skills gap and an ever-deepening shortage of qualified workers.

While the skills gap and the decline of a qualified manufacturing workforce have been discussed for many years now, the nation has reached the point where their impacts will begin to be felt more acutely. And plastics is by no means the only sector that will be impacted; the entirety of U.S. manufacturing has watched this wave approach for some time, and it now appears to be on the verge of cresting.

Many companies and organizations—PLASTICS, its members and its many industry partners included—have taken action to stem these impacts and address their root causes. Now that the evidence is on the verge of going from anecdotal to empirical, the U.S. has an opportunity to make this the starting point for a new generation of manufacturing employment—a true manufacturing renaissance—through a concerted, collaborative response across all levels of government and all manufacturing sectors.

To make the most of the opportunity presented by the nation’s skills gap, our response must address all sides of a multi-faceted issue.

Employment in the plastics industry grew from 954,000 in 2015 to 965,000

in 2016, a one-percent increase.


Culturally, there remains a pernicious skepticism about the value and opportunity presented by a career in manufacturing, particularly among those demographic groups that suffer from the highest rates of unemployment. In October 2017, for example, 20.3 percent of Americans between the ages of 18 and 24 were unemployed. Reaching these young men and women and opening their eyes to the realities of today’s manufacturing sector and the opportunities it presents them for personal, professional and economic growth will be a crucial part of any effort to bridge the skills gap.

For its part, the Trump Administration has made strides toward using its policies to legitimize and elevate educational programs designed to train workers for jobs in manufacturing. The proposal to allow Section 529 savings funds to be used for apprenticeship programs is a promising start, as is the Administration’s commitment to expanding the number, availability and quality of apprenticeship programs throughout the U.S.

Put simply, the U.S. must do a better job of training workers to fill the jobs that are available today and will be available tomorrow, rather than training workers for the jobs America formerly possessed. Automation in manufacturing has certainly eliminated a number of the most routine (and, not coincidentally, most dangerous) functions from the modern facility floor, but what remains are openings that require critical thinking and other skills that are cultivated by studies in science, technology, engineering and mathematics (STEM) and work in concert with today’s heavily mechanized factories. Investing in both this brand of education, and the way it is marketed to the people on whom it can have the greatest impact, should be the cornerstone of how the U.S. government and manufacturing community make the most of this opportunity.

Finally, though it might seem unrelated to a discussion about manufacturing employment policies, it must be said: the opioid crisis has had an impact on the ability of manufacturers to fill their open positions and, therefore, impeded the sector’s expansion.

The impact of this crisis will only grow worse the longer it remains unresolved. Furthermore, the communities it has already harmed the most are those that are traditionally viewed as hubs for American manufacturing, and those that could be on the brink of a new wave of economic growth should there be a talented, reliable workforce available locally to encourage companies to make new and larger investments. Companies can’t expand their operations if they can’t find workers that are able to pass drug tests; finding a way to expand access to drug treatment and prevent the senseless loss of young lives presents the opportunity for both a moral and economic victory for the U.S.

In the years following the Great Depression and on through the second World War, a generation of Americans made their living making things. The baby boomers grew up seeing bridges, buildings, bottles and all sorts of other items they encountered in their day-to-day lives and grew up knowing that someone they knew had built or made them.

Today’s economy is not the economy of the 1950s, and America’s services sector now provides the majority of its economic might. Indeed, the overall structure of the U.S. economy has changed dramatically, but it remains in America’s best interest to work together to create a new generation of manufacturing workers—a generation that possesses a skill set enabling them to operate and work alongside existing mechanization technologies, in positions that pay well and allow them to go home from work able to say to themselves “I made something today.” Surely this has the potential to impact the way a generation of unemployed young people relate to their role in the economy.


Executive SummaryThe plastics industry is one of the economy’s largest industries, and it is growing. Most plastics are used in manufacturing, although the use of plastics in services is becoming increasingly important. As can be seen from the Plastics Industry Association (PLASTICS) study, Global Trends, low inflation and low-priced petrochemical feedstocks have helped U.S. exports. That export advantage has been diminished by lower world oil prices, but the U.S. plastics industry remains globally competitive.

This is a report on the U.S. plastics industry in numbers. It answers several important questions on plastics industry size; rate of growth; geographic concentration, comparative performance relative to other industries; impact on the U.S. economy and outlook for the industry.

Overview

▶ The U.S. plastics industry accounted for 965,000 jobs and $404.4 billion in shipments during 2016.

▶ California regained the top spot as the state with the most plastics industry employment. As a percentage of total non-farm employment, the plastics industry is most important to Indiana, where it accounts for 16.5 of every 1,000 non-farm jobs. Michigan remains a close second.

▶ When suppliers to the plastics industry are considered, jobs grow to 1.76 million, and total shipments grow to $552.4 billion.

▶ The plastic products portion of the plastics industry held its position as the eighth-largest U.S. industry in 2015.

▶ The plastic materials and synthetics portion of the plastics industry (including rubber and fiber) was the fifteenth-largest industry in 2015, up from the sixteenth-largest in 2014.

▶ Recently, the plastics industry has been a success story for the U.S. economy: plastics manufacturing employment grew 1.4 percent per year from 2012 to 2016. This is compared with manufacturing as a whole, which saw employment grow only 0.9 percent per year during the same period.

▶ Real plastics manufacturing shipments grew at a 1.4 percent annual rate from 2012 to 2016, while real value added grew 1.6 percent annually.

▶ The acceleration of plastics industry production—downstream and upstream—reflects recovery from the recession and long-term trend growth.

▶ Although manufacturing is still the main outlet for plastics, an increasing share of plastics is going into services including wholesale and retail trade; finance, insurance and real estate; and healthcare.


Industry Size

Table S-1 summarizes the plastics industry impact by the following categories: plastics manufacturing, plastics wholesale trade, captive plastic products manufacturing, and upstream impacts. Captives are plastic processing activities located in establishments, such as automobile assembly and milk-bottling plants, that are not classified by the government, or most economists, as part of the plastics industry. The first three categories comprise the plastics industry.

TABLE S-1

Number of Establishments

Employees (Thous)

Value of Industry Shipments ($Mill)

Plastics Manufacturing

NAICS 325211 Plastics Materials and Resins 1,138 67.6 83,100.7

NAICS 325991 & 3261 Plastics Products 10,785 624.3 203,467.9

NAICS 3332201 Plastics Working Machinery 416 11.6 4,060.4

NAICS 33351105 Molds for Plastics 691 15.8 2,880.4

Plastics Manufacturing Totals 13,030 719.4 293,509.4

Plastics Wholesale Trade

NAICS 424610 Wholesale Trade for Plastics Materials, Forms and Shapes 3,050 34.0 41,796.1

Government-Documented Plastics Industry 16,080 753.4 335,305.5

Captive Plastic Products #N/A 211.2 69,077.0

Plastics Industry #N/A 964.6 404,382.4

Upstream Impacts #N/A 800.0 148,001.9

Full Impact * #N/A 1,764.6 552,384.3

*Excluding downstream impacts

The following conclusions can be drawn from Table S-1:

▶ The U.S. plastics industry, based on U.S. government data, operated 16,080 manufacturing establishments, employed 753,000 people and made shipments worth $335 billion in 2016. This excludes establishments producing captive plastic products or supplying goods and services to the plastics industry.

▶ When captive plastics processing is included in the definition of the plastics industry, the number employed rose to 965,000 people in 2016. Another 800,000 people were employed by the upstream industries that supplied the industry, which brought the total year 2016 employment impact to 1.76 million—1.2 percent of the U.S. non-farm workforce.

▶ The plastics industry generated $404 billion in shipments in 2016. Another $148 billion was generated by upstream, supplying industries, bringing the total shipments impact of the plastics industry to $552 billion.

▶ Table S-1 does not include downstream impacts on the industries that use plastics, or on the consumers who buy products containing plastics.


Comparisons with Other Industries

In order to rank plastics along with other industries, 82 manufacturing industries defined by the 4-digit North American Industry Classification (NAICS) system were considered. Data were available through 2015.

▶ Plastic products (NAICS 3261), which accounted for most of the plastic processing industry, was the eighth largest U.S. manufacturing industry in terms of shipments in 2015.

▶ Resin, synthetic rubber and artificial & synthetic fibers & filament (NAICS 3252), which primarily includes the plastic materials and resins industry, was the fifteenth-largest manufacturing industry in 2015.

Rate of Growth

▶ Over the last 19 years, plastics industry employment, real shipments and real value added fared better than manufacturing as a whole. Plastics are still relatively new compared to other materials and productivity in the industry is still growing, which partly explains its performance compared to other, older industries.

▶ Employment in the plastics manufacturing industry fell 1.5 percent per year between 1997 and 2016. This is lower than the annual employment decline of 1.8 percent in all of U.S. manufacturing, over the same period.

▶ Real value added in the plastics manufacturing industry grew 1.6 percent per year from 2012 to 2016. The real value of shipments by this industry grew 1.4 percent per year.

▶ Productivity in plastics manufacturing grew 0.1 percent per year from 2012 to 2016. Such low productivity growth has been typical for the economy as a whole due to low investment and the addition of large numbers of new workers. Still, plastics manufacturing did better than the whole manufacturing sector, which registered a 0.5 percent annual decrease in productivity over the period.

▶ The number of plastics industry establishments continue to drift downward slowly due to industry consolidation and efficiency gains.

▶ Employment fell up through the Great Recession and then began rising. The decline mirrored what happened in the rest of the manufacturing sector, but plastics manufacturing made a better turnaround.

▶ Low inflation, low-priced natural gas/liquid gas and a growing economy turned things around for the plastics industry. Lower world oil prices recently improved the competitive positions of overseas plastics producers, but not enough to erase the United States’ competitive advantage.

TABLE S-2

COMPARATIVE GROWTH RATES, 2012–2016

Rank Plastics Manufacturing

All Manufacturing

Employment 1.4% 0.9%

Real Shipments 1.4% 0.4%

Real Value Added 1.6% 0.4%

Productivity Growth 0.1% -0.5%


Geographic Concentration

▶ The plastics industry is found in all 50 U.S. states. As seen in Table S-3, California had the most plastics industry employees in 2016, followed by Ohio, Texas, Michigan, Indiana, Illinois, Pennsylvania, Wisconsin, North Carolina and New York.

▶ California is the most populous state, so it isn’t surprising that California regained the first spot in terms of total plastics employment. An alternative measure, plastics industry employees per thousand non-farm employees, indicates how concentrated the plastics industry is in a given state—or how much that state specializes in plastics. Using this alternative measurement, Table S-4 shows that Indiana has the largest number of plastics industry employees per thousand non-farm employees, followed closely by Michigan, and then by Kentucky, Ohio, Wisconsin, South Carolina, Alabama, Tennessee, North Carolina and Iowa.

▶ The states with the highest concentrations of plastics industry employees tend to have the highest concentrations of manufacturing activity, which is consistent with the fact that most plastic products go into manufactured goods.

TABLE S-3

TOP STATES FOR PLASTICS EMPLOYMENT (PLASTICS INDUSTRY, 2016)

Rank StatePlastics

Employment Thousands

1 California 77.0

2 Ohio 75.2

3 Texas 74.8

4 Michigan 70.6

5 Indiana 51.0

6 Illinois 50.8

7 Pennsylvania 47.9

8 Wisconsin 39.8

9 North Carolina 38.3

10 New York 30.6

U.S. Total 964.6

TABLE S-4

TOP STATES FOR PLASTICS EMPLOYMENT CONCENTRATION

(PLASTICS INDUSTRY, 2016)

Rank State Plastics Employees per 1,000 Non-Farm Employees

1 Indiana 16.5

2 Michigan 16.3

3 Kentucky 14.2

4 Ohio 13.7

5 Wisconsin 13.6

6 South Carolina 12.4

7 Alabama 10.8

8 Tennessee 9.4

9 North Carolina 8.8

10 Iowa 8.5

U.S. Average 6.7


Upstream (Supplier) Impacts

Jobs are created in the plastics industry, but they are also created in the industries that, directly or indirectly, supply goods and services to the plastics industry. These industries supply fuel, spare parts, office supplies, transportation services, etc. As discussed in connection with Table S-1, the employment and shipments of these upstream industries contribute significantly to the impact of plastics on the economy.

▶ During 2016, upstream industries accounted for 800,000 jobs in order to supply goods and services to the plastics industry—about 0.83 upstream jobs for every job in the industry itself.

▶ During 2016, upstream industries generated $148 billion in shipments in order to supply goods and services to the plastics industry.

Downstream (User) Impacts

Some plastic products, such as toys and wastebaskets, are final goods ready for use. Most are intermediate goods, which are sent on to other manufacturing steps for processing or assembly. Ultimately, all plastic products wind up as part of some kind of final good or service. The majority of this section, which details the industry’s downstream impacts, is based on data from 2014, which is the most recent data set available. Much of this information was previously published in the 2016 edition of Size & Impact, and is included here as well, along with updated figures on final consumption of plastic products in Figure 15.

▶ In 2014, 33.7 percent of the final consumption of plastic products, on a value basis, wound up in some form of service, like wholesale and retail trade, healthcare, food services & drinking places, and other services.

▶ Construction accounted for 9.0 percent of final plastic products, a percentage that decreased due to continued low housing starts.

▶ A large share of plastic products (30.6 percent) went into non-durable goods: food, tobacco & spirits (9.1 percent); plastic products (15.1 percent) and other non-durables (6.4 percent).

▶ Durable goods accounted for the remaining 26.8 percent share: transportation equipment (12.5 percent); furniture and related (2.4 percent) and other durables (11.9 percent).

▶ In terms of who ultimately bought these plastics-containing goods and services in 2014, 74.0 percent was consumed by households, 28.3 percent went into private fixed investment (by households and businesses), and 12.5 percent was used by state, local and federal government agencies.1

▶ The most intense final user of plastic products in 2014, in terms of the value of plastic products per dollar of final product or service, was the plastic products industry itself, followed by soft drinks and ice; mattresses, blinds and shades; snack foods; and seasonings and dressings.

1 These percentages add up to more than 100 percent, because we have not deducted the 14.9 percent that, on a net basis, was provided by imports – not supplied by domestic producers. The deduction would be required if the authors were using National Income and Product Account (NIPA) accounting.


Forecasts

In the final section of this report, Perc Pineda, Ph.D., Chief Economist with PLASTICS, develops a general outlook for the plastics industry, as well as numerical forecasts for employment and shipments.

▶ Growth in the plastics industry is accelerating in countries offshore where manufacturing is growing and consumer demand is seemingly insatiable. U.S. plastics companies are participating in this offshore growth.

▶ The U.S. domestic plastics market is expected to continue growing in step with an economy that is growing steadily at a moderate pace.

▶ Headwinds will come from skilled labor shortages, a maturing motor vehicle replacement cycle and a housing construction cycle that is not too far from peak sustainable levels.

▶ Tailwinds will likely come from improvements in manufacturing trade, including new foreign-owned manufacturing plants in the U.S., and also from new plastic resin capacity being built in response to new hydrocarbon feedstock supplies in the U.S.

▶ The plastics industry primarily supports the manufacturing sector and therefore will continue to shift toward states with new manufacturing facilities. Kentucky and some southern states are benefiting, especially in the context of new motor vehicle assembly plants.

▶ U.S. plastics industry employment is expected to grow 0.9 percent in 2017, 0.7 percent in 2018 and 0.6 percent in 2019. Skilled labor shortages are the principal cause for the slowdown.

▶ Because of labor shortages, all manufacturing facilities, including those involved with plastics, are expected to increase their investments in labor-saving equipment and technology.

▶ Real plastics industry shipments (after correction for inflation) are expected to grow 2.0 percent in 2017, 2.2 percent in 2018 and 2.5 percent in 2019. The principal source of the acceleration is the construction of new resin plants in the U.S., along with some related expansion in plastic products.


A. What Is Included in the Plastics Industry and How It Is Measured


To understand how this study was developed, one needs to know what is included in the “plastics industry” and the kinds of data that were used to measure it. The authors used a range of data sources, primarily from the U.S. government, in order to develop a complete picture of the plastics industry and its impacts. These data sources have different coverage areas, which lead to some differing industry definitions.

The overall structure of the plastics industry is represented by Figure 1, which shows the flow of goods and services into the plastics industry and into the economy as a whole. Figure 1 also provides a road map to help the reader navigate through the plastics industry definitions and concepts used in this report. The left-hand, or upstream, side of Figure 1 shows upstream goods and services, such as chemicals and transportation, flowing into the plastic materials and resins industry, as well as into industries producing plastics working machinery and molds for plastics. The plastic resins, machines and molds are then provided to the plastic products manufacturers, or processors, who convert the resins into bottles, film, pipe and other plastic products.

Most plastic products are categorized under the North American Industry Classification System (NAICS) code 3261, “Plastic Products Manufacturing,” which is covered by government survey reports. This study also includes NAICS 325991, “Custom Compounding of Purchased Resins,” as part of plastic products. The authors refer to these two categories as government-documented plastic products.

Captive plastic products represent the other major category of plastic products. These are produced in plastic processing activities similar to those measured by the government, but they are not located in establishments that the government identifies as being plastics-related. Captive plastic products include such items as plastic milk jugs that are blow molded in dairy establishments and automobile bumpers that are injection molded in automotive parts manufacturing plants. The authors estimate captives by tracking plastic resins that are shipped to establishments with NAICS codes other than 3261.

A portion of plastic materials and resins go on to plastics wholesale trade firms, which sell them to downstream users or to upstream plastics facilities. Most plastic products are provided directly to downstream using industries, such as automobile manufacturers and home appliance plants, where additional assembly or processing steps are performed. Some plastic products go directly to end users, including households, businesses and government agencies, without further processing (see the right-hand block in Figure 1). Examples of such plastic products ready for final consumption include children’s toys, plastic tote-bins for manufacturers and specialty items such as plastic eye protection devices and medical tubing.


FIGURE 1

PLASTICS-RELATED GOODS AND SERVICES FLOWS: The Full Impact of Plastics on the Economy

Upstream Goods

and Services

Plastic Materials

and ResinsNAICS325211

Plastics Machinery

NAICS3332201

Molds for PlasticsNAICS

33351105

Plastic Products

Gov’t Documented

Plastic Products

NAICS 3261 & 325991

Captive Plastic

Products

Plastic Materials

and Products Wholesaling

NAICS424610

Down-stream Using

IndustriesEnd Users, Including

Consumers, Businesses

and Government

Agencies

Plastics Manufacturing Industry plus Captive Plastic Products

Plastics Industry

Full Impact of Plastics

As Figure 1 shows, the full impact of plastics covers goods and services flowing from upstream goods and services on through to downstream, end uses. The full impact is estimated in this study. Usually, the study refers to the “plastics industry,” which includes everything from the boxes on the left for plastic materials and resins, plastics machinery and molds for plastics, to the box on the right for plastic materials and products wholesaling. All of these activities, except for captive plastic products, are covered by government data. Sometimes the study refers to the government-documented plastics industry, which includes everything in the plastics industry except captives. Data on plastics wholesale trade are limited, particularly at the state level, so some of the study’s conclusions are based on an industry sub-sector called the plastic manufacturing industry, which includes everything in the government-documented plastics industry except wholesale trade.


Table 1 presents the same information in a different form. Instead of trying to master all of these concepts now, the reader might want to refer back to Figure 1 or Table 1 when industry definitions are encountered in this report.

TABLE 1

PLASTICS INDUSTRY DEFINITIONS USED IN THIS STUDY

SEGMENTS Upstream Goods & Services Suppliers

Plant & Equipment Suppliers

Plastics Mold &

Machinery Makers

Plastic Resin

Producers

Gov’t Doc. Plastic

Products Makers

(Processors)

Captive Plastic Products Makers

(Processors)

Plastics Wholesale

Trade Firms

Down- stream Using

Industries

End Users

Upstream (Supplier) Impacts

Plastics Industry

Plastics Manufacturing Industry

Government-Documented Plastics Industry

Captive Plastics Industry

Downstream (Purchaser) Impacts

Plastics Final Demand Content

Full Impact of Plastics

DEFINITIONS


B. The Size of the U.S. Plastics Industry


This study measures the plastics industry primarily in terms of employment and the value of shipments. In some cases, it also provides measures such as payroll, value added, new capital expenditures and the number of establishments. See Table 2.

In 2016, the plastics industry, including plastic materials and resins, government-documented plastic products, plastics working machinery, molds for plastics, plastics wholesale trade and captive plastic products, generated $404.4 billion in shipments and employed 965,000 people, who had a total payroll of $49.5 billion. A “shipment,” in this case, is defined as the movement of goods from one business establishment to another.

The data are more complete for plastics manufacturing than for the entire plastics industry. Plastics manufacturing employed 540,300 production workers, which was 75 percent of all plastics manufacturing employees. The others were researchers, supervisors and various “white collar” personnel. Plastics manufacturing generated $293.5 billion in shipments, which were made up of the cost of materials purchased and the value that was added to those materials. Plastics manufacturing establishments purchased about 55 cents worth of materials for every dollar of goods that they shipped in 2016.

In recent years, the plastics industry has been consolidating, and shrinking in terms of employees and number of establishments. The decline in the number establishments continued during the 2011–2016 period, but employment was rising, at a 2.0 percent annual rate (see Table 3). Shipment levels for plastics manufacturing as a whole rose from 2011 to 2016 at a 2.3 percent annual rate.

In 2016, the plastics industry...generated $404.4 billion in

shipments and employed 965,000 people, who had a total payroll

of $49.5 billion.


TABLE 2

SELECTED DATA ON THE PLASTICS INDUSTRY, 2016

Number of Estabs

Number of Employees

(Thous)

Annual Payroll ($Mill)

Production Workers (Thous)

Production Worker Wages ($Mill)

Value Added ($Mill)

Cost of Materials

($Mill)

Value of Industrial

Shipments ($Mill)

Capital Expenditures

($Mill)

Plastics Manufacturing

Plastics Materials and Resins, NAICS 325211

1,138 67.6 5,433.5 44.6 2,919.0 30,221.2 52,876.7 83,100.7 4,944.9

Custom Compounding, NAICS 325991

430 18.0 1,061.0 12.8 599.5 3,944.5 6,520.8 10,470.3 259.9

Plastics Bags, NAICS 326111

333 26.7 1,264.4 22.2 913.7 4,588.9 5,660.7 10,269.6 448.9

Plastics Packaging Film & Sheet, NAICS 326112

440 31.7 1,798.9 25.5 1,279.1 5,226.7 7,964.9 13,213.6 581.0

Plastics (Except Pkg) Film & Sheet, NAICS 326113

545 35.9 2,162.4 25.0 1,236.3 8,243.6 9,441.3 17,674.9 454.4

Plastics Profile Shapes, NAICS 326121

392 18.8 1,035.7 13.6 586.3 4,229.2 3,030.5 7,247.7 169.1

Plastics Pipe & Pipe Fittings, NAICS 326122

495 24.0 1,122.0 17.9 750.9 4,372.5 6,306.5 10,729.0 377.8

Laminated Plate, Sheet & Film, NAICS 326130

239 10.4 577.3 7.9 362.0 2,076.6 1,780.0 3,856.5 139.5

Polystyrene Foam Products, NAICS 326140

385 23.8 1,086.3 19.1 772.6 4,375.8 4,216.0 8,594.2 385.7

Urethane & Other Foam Products, NAICS 326150

682 30.7 1,394.2 23.5 803.5 4,787.8 6,173.9 10,938.1 210.2

Plastics Bottles, NAICS 326160

456 28.0 1,308.0 23.6 976.1 4,816.7 6,838.6 11,720.3 632.9

Other Plastics Product Manufacturing, NAICS 32619

6,388 376.4 17,180.9 285.8 10,651.4 50,867.6 48,036.0 98,753.6 3,985.8

Plastics Working Machinery, NAICS 3332201

416 11.6 719.5 6.9 319.3 1,730.1 1,685.0 4,060.4 77.7

Molds for Plastics, NAICS 33351105

691 15.8 875.6 11.9 586.9 1,817.3 1,063.1 2,880.4 146.3

Total Plastics Manufacturing

13,030 719.4 37,019.6 540.3 22,756.8 131,298.4 161,594.0 293,509.4 12,814.0

Wholesale Trade for Plastics Materials, Forms and Shapes (NAICS 424610)*

3,050 34.0 2,314.1 #N/A #N/A #N/A #N/A 41,796.1 #N/A

Government Documented Plastics Industry

16,080 753.4 39,333.7 #N/A #N/A #N/A #N/A 335,305.5 #N/A

Captive Plastic Products #N/A 211.2 10,151.1 161.4 6,414.0 33,023.3 35,952.3 69,077.0 2,587.7

Plastics Industry Totals #N/A 964.6 49,484.7 #N/A #N/A #N/A #N/A 404,382.4 #N/A

* The Wholesale Trade for Plastics Materials, Forms and Shapes “shipments” figure of $41,796.1 million is actually a “sales” number and therefore does not include shipments among establishments of the same enterprise or company.


TABLE 3

PLASTICS INDUSTRY SECTORS (Annualized Rates of Growth)

Number of Establishments

Number of Employees

Value of Shipments

Plastics Manufacturing 2006–2011 2011–2016 2006–2011 2011–2016 2006–2011 2011–2016Plastics Materials and Resins, NAICS 325211 0.3% 2.3% 1.3% 3.3% 1.6% -0.5%Custom Compounding, NAICS 325991 -3.6% -0.9% -4.1% 1.1% 0.7% 0.1%Plastics Bags, NAICS 326111 -2.7% -0.4% -0.7% -2.7% -0.1% 1.3%Plastics Packaging Film & Sheet, NAICS 326112 3.3% 2.2% 1.9% 5.3% 3.8% 5.9%Plastics (Except Pkg) Film & Sheet, NAICS 326113 -3.4% -1.4% -3.9% 0.6% -0.9% 2.1%Plastics Profile Shapes, NAICS 326121 -4.0% -0.8% -7.6% 1.0% -6.9% 8.4%Plastics Pipe & Pipe Fittings, NAICS 326122 1.8% 1.0% -0.3% 4.0% -3.2% 6.3%Laminated Plate, Sheet & Film, NAICS 326130 -1.6% -0.1% -0.6% 1.7% 4.0% 3.5%Polystyrene Foam Products, NAICS 326140 -3.4% -2.5% -5.5% -0.7% 0.0% 0.1%Urethane & Other Foam Products, NAICS 326150 -0.6% 1.0% -4.3% 2.9% -4.1% 5.0%Plastics Bottles, NAICS 326160 0.8% -0.1% 0.3% -1.3% 3.5% -0.1%All Other Plastics Product Mfg, NAICS 32619 -1.6% -1.3% -6.6% 2.6% -2.7% 4.2%Plastics Working Machinery, NAICS 3332201 -0.8% -0.6% -1.5% 1.2% -0.5% 8.0%Molds for Plastics, NAICS 33351105 -6.0% -1.1% -6.1% 3.3% -1.7% 4.7%Total Plastics Manufacturing -1.7% -0.6% -4.6% 2.1% -0.5% 2.3%Wholesale Trade for Plastics Materials, Forms and Shapes (NAICS 424610) # -0.4% -1.7% -2.9% 1.1% -3.3% 0.4%

Government Documented Plastics Industry -1.4% -0.8% -4.5% 2.0% -0.9% 2.1%

Figure 2 illustrates that the bulk of plastics industry employment falls into two categories, “All Other” and “Captive Plastic Products.” “All Other” includes a wide range of plastic processing operations, the most notable being injection molding. The remainder of employment is divided among a number of smaller categories, such as resin, wholesale trade, molds and machinery.

FIGURE 2

PLASTICS INDUSTRY EMPLOYMENT, 2016 Breakdown by Industry Sector

�� Plastics Working Machinery (3332201)

Molds for Plastics (33351105)

Wholesale (424610)

Captive Plastics Products

Plastics Materials & Resins (325211)

Plastics Bags (326111)

Plastics (Except Pkg) Film & Sheet (326113)

Urethane & Other Foam Products (326150)

Plastics Bottles (326160)

All Other

1.2% 1.6% 3.5%

21.9%

7.0%

2.8%3.7%

3.2%2.9%

52.1% U.S. TOTAL: 964,640

Plastics manufacturing is innovating more

rapidly.


C. How the Plastics Industry Compares with Other Industries


The authors obtained shipments data to compare the sizes of individual industries through 2015.

1. Plastics Industry Shipments Ranked with Those of Other Individual Manufacturing Industries

The size ranking of manufacturing industries with respect to shipments depends on how the industries are defined. Using data at the 4-digit NAICS level, Table 4 shows that Plastics Products (NAICS 3261) accounted for $183.8 billion in shipments in 2015, which made it the eighth-largest manufacturing industry. That ranking has been stable since 2008.

Resin, synthetic rubber, and artificial and synthetic fibers and filaments (NAICS 3252) ranked fifteenth in 2015. A key component of the plastics industry, plastic materials and resins, accounted for 84.8 percent of NAICS 3252 shipments in 2015.

TABLE 4

TOP 25 MANUFACTURING INDUSTRIES RANKED BY SHIPMENTS (Current Dollars, 4-Digit NAIC Basis)

NAICS Code Industry Description

2015 Shipments $Millions

2015 Rank

2014 Rank

2013 Rank

2012 Rank

2011 Rank

2010 Rank

2009 Rank

2008 Rank

2007 Rank

2006 Rank

3241 Petroleum and Coal Products 498,793 1 1 1 1 1 1 1 1 1 1

3361 Motor Vehicles 367,342 2 2 2 3 2 2 5 3 2 2

3254 Pharmaceuticals and Medicines 274,497 3 6 6 6 4 4 2 4 4 4

3364 Aerospace Products and Parts 269,333 4 4 4 4 5 5 3 5 6 7

3363 Motor Vehicle Parts 268,289 5 5 5 5 7 7 7 6 5 3

3251 Basic Chemicals 241,978 6 3 3 2 3 3 4 2 3 5

3116 Meat Products and Meat Packaging Products 208,321 7 7 7 7 6 6 6 7 8 8

3261 Plastics Products 183,842 8 8 8 8 8 8 8 8 7 6

3345Navigational, Measuring, Electromedical, and Control Instruments

167,143 9 9 9 9 9 9 9 9 9 10

3344 Semiconductors and Other Electronic Components 124,748 10 10 10 10 10 10 10 10 10 9

3121 Beverages 113,501 11 13 12 14 15 11 11 19 15 15

3115 Dairy Products 107,896 12 11 14 15 12 14 17 18 17 26

3119 Foods, Nesoi 106,118 13 18 20 19 20 19 16 24 23 25

3339 Other General Purpose Machinery 104,146 14 17 17 16 19 21 23 20 18 19


NAICS Code Industry Description

2015 Shipments $Millions

2015 Rank

2014 Rank

2013 Rank

2012 Rank

2011 Rank

2010 Rank

2009 Rank

2008 Rank

2007 Rank

2006 Rank

3252 Resin, Synthetic Rubber, & Synthetic Fibers & Filaments* 103,189 15 14 13 13 14 12 21 13 13 13

3331 Agriculture and Construction Machinery 101,685 16 12 11 11 13 17 19 17 19 18

3391 Medical Equipment and Supplies 99,732 17 19 19 20 18 15 12 21 22 20

3222 Converted Paper Products 99,694 18 16 16 18 17 16 14 15 14 14

3329 Other Fabricated Metal Products 94,791 19 20 21 21 24 27 29 26 27 27

3112 Grain and Oilseed Milling Products 91,835 20 21 18 17 16 20 13 16 28 29

3231 Printing, Publishing and Similar Products 87,838 21 22 22 22 22 18 15 12 11 11

3311 Iron and Steel and Ferroalloy 86,571 22 15 15 12 11 13 26 11 12 12

3323 Architectural and Structural Metals 84,306 23 23 25 25 25 25 22 14 16 16

3221 Pulp, Paper, and Paperboard Mill Products 83,225 24 24 23 24 23 22 20 22 21 17

3256 Soaps, Cleaning Compounds, and Toilet Preparations 76,989 25 25 24 23 21 23 18 23 20 23

All Others 1,783,751

Total 5,829,553

* Includes rubber and manmade fibers. Plastics Materials & Resins represented 84.8 percent of NAICS 3252 category shipments in 2015.

Source: U.S. Department of Commerce, Bureau of Economic Analysis, and Probe Economics LLC

2. Growth of the Plastics Industry Compared to Total Manufacturing

To facilitate the calculation of growth rates, the authors focused on the plastics manufacturing industry, for which more complete government data are available, rather than for the entire plastics industry. Plastics manufacturing represented 74.6 percent of all plastics industry employment in 2016 (see Table 2). It excludes captives and wholesale trade, but it still provides a good approximation of plastics industry growth patterns.

Table 5 shows employment, real2 value added and real shipments in the plastics manufacturing industry from 1997 through 2016. The data reflect the negative effects of the 2000–01 and 2008–09 recessions. The figures at the bottom show that, from 1997 to 2016, a period of 19 years, plastics manufacturing employment fell 1.5 percent per year (at a time when employment in manufacturing as a whole fell 1.8 percent per year). In the more recent, 2012–16 period, plastics manufacturing employment grew 1.4 percent per year (while employment in manufacturing as a whole grew only 0.9 percent per year).

During the same 2012-to-2016 period, real value added in plastics manufacturing grew 1.6 percent per year, and real shipments grew 1.4 percent per year.

When Wholesale Trade for plastic materials, Forms and Shapes (NAICS 424610) is included, employment grew 1.4 percent per year from 2012 to 2016.

2 “Real” means the data were corrected for inflation. The correction was done by Probe Economics LLC using separate price deflators for each industry segment. The deflators were obtained from the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis.


TABLE 5

GROWTH IN THE PLASTICS INDUSTRY (Not Including Captives)

Year Plastics Manufacturing & Trade # Employment (Thousands)

Plastics Manufacturing *

Employment (Thousands) Change Value Added

(Billi on 2016 $)

Value of Shipments

(Billi on 2016 $)Change

1997 996.7 953.0 125,359 280,990

1998 1,012.2 969.4 1.7% 131,386 296,117 5.4%

1999 1,035.6 994.0 2.5% 136,216 308,229 4.1%

2000 1,047.2 1,007.4 1.3% 133,139 309,445 0.4%

2001 999.3 961.0 -4.6% 120,824 290,624 -6.1%

2002 968.2 932.3 -3.0% 128,948 306,176 5.4%

2003 932.3 895.7 -3.9% 127,089 301,408 -1.6%

2004 881.3 845.1 -5.7% 131,784 305,163 1.2%

2005 874.6 836.9 -1.0% 138,984 314,680 3.1%

2006 857.8 820.5 -2.0% 135,180 313,060 -0.5%

2007 834.4 797.2 -2.8% 130,471 310,122 -0.9%

2008 799.6 763.3 -4.3% 115,404 285,582 -7.9%

2009 681.7 648.2 -15.1% 106,050 239,067 -16.3%

2010 673.5 642.0 -1.0% 116,765 263,834 10.4%

2011 680.8 648.7 1.0% 113,030 263,427 -0.2%

2012 713.9 681.4 5.0% 123,059 277,320 5.3%

2013 716.7 684.0 0.4% 126,340 282,134 1.7%

2014 726.8 693.8 1.4% 128,708 286,337 1.5%

2015 745.7 712.1 2.6% 127,906 284,520 -0.6%

2016 753.4 719.4 1.0% 131,298 293,509 3.2%

Compound Growth Rates

1997–2002 -0.6% -0.4% 0.6% 1.7%

2002–2007 -2.9% -3.1% 0.2% 0.3%

2007–2012 -3.1% -3.1% -1.2% -2.2%

2012–2016 1.4% 1.4% 1.6% 1.4%

1997–2016 -1.5% -1.5% 0.2% 0.2%

* Includes NAICS 325211, 325991, 3261, 33322201, 33351105. # Also includes NAICS 424610.


Figures 3, 4 and 5 compare the growth of plastics manufacturing with all manufacturing on the basis of employment, real value of shipments and real value added. In all three categories, over the 1997 to 2016 period, plastics manufacturing did better than all manufacturing. Plastics manufacturing is more cyclical than all manufacturing, so it was hit harder by the 2008–09 recession, but it has regained that ground. Plastics manufacturing is a younger industry than manufacturing as a whole, and it is innovating more rapidly. It is also more energy-intensive, so it is benefitting disproportionately from the new supplies of oil and gas produced with unconventional technologies.

FIGURE 3

EMPLOYMENT (Indexes, 1997=100)

110

100

90

80

70

60

50

All Manufacturing IndustriesPlastics Manufacturing Industry

19971998

19992000

20012002

20032004

20052006

20072008

20092010 2011 2012 2013 2014 2015 2016

Plastics manufacturing is also more energy-intensive, so it is benefiting

disproportionately from the new supplies of oil and gas produced with

unconventional technologies.


FIGURE 4

REAL VALUE OF SHIPMENTS (Indexes, 1997=100)

120

110

100

90

80


19971998

19992000

20012002

20032004

20052006

20072008

20092010 2011 2012 2013 2014 2015 2016

FIGURE 5

REAL VALUE ADDED (Indexes, 1997=100)

120

110

100

90

80


19971998

19992000

20012002

20032004

20052006

20072008

20092010 2011 2012 2013 2014 2015 2016


D. Where the Plastics Industry is Located


This section shows state rankings. Figure 6 shows that California has the highest number of plastics industry employees, which makes sense: California is the most populous state and also serves as home to the nation’s largest number of plastics establishments. In 2014 and 2015, Texas had the greatest number of plastics industry workers, followed by California and then Ohio. In 2016, Ohio took second place while Texas fell to third. When compared to 2015, plastics employment in California increased by 1.9 percent in 2016, whereas in Ohio plastics employment increased by 0.8 percent and in third-place Texas plastics employment fell by 2.4 percent. Filling out the top ten for total plastics industry employment in 2016 are Michigan, Indiana, Illinois, Pennsylvania, Wisconsin, North Carolina and New York.

FIGURE 6

PLASTICS INDUSTRY EMPLOYMENT, 2016 Breakdown by State

�� California

Ohio

Texas

Michigan

Indiana

Illinois

Pennsylvania

Wisconsin

North Carolina

New York

Others

7.8%

7.8%

5.3%

5.0%

3.3% 4.0% 4.1%

42.4%

8.0%

7.3%

5.3%

U.S. TOTAL: 964,640

Table 6 shows how state employment rankings have changed since 2006. There still is a movement of manufacturing and plastics operations from the Northeast, Mid-Atlantic and Midwest states to the South. Table 6 shows that the rankings of the southern states Georgia, South Carolina, Louisiana, Florida and, especially, Alabama have risen, but so has border state Kentucky and midwestern states Indiana and Kansas. The part of Kentucky along the Ohio river is almost part of the Midwest. The rankings of northeast and Mid-Atlantic states Massachusetts, Connecticut and New Jersey have dropped in rank.


TABLE 6

PLASTICS INDUSTRY EMPLOYMENT RANKED BY STATE NAICS 325211, 325911,3261, 333220, 33351105, 424610, PLUS CAPTIVES

(Thousands of Employees, 2016)

Without Captives Captives Total Percent

of Total

Rank for

2016

Rank for

2015

Rank for

2014

Rank for

2012

Rank for

2011

Rank for

2010

Rank for

2009

Rank for

2007

Rank for

2006

U.S. Total 753.4 211.2 964.6 100.0% – – – – – – – – –

California 59.7 17.3 77.0 8.0% 1 2 2 1 1 1 1 1 1

Ohio 60.1 15.1 75.2 7.8% 2 3 3 2 2 2 3 2 2

Texas 53.9 21.0 74.8 7.8% 3 1 1 3 3 3 2 3 3

Michigan 57.2 13.5 70.6 7.3% 4 4 4 4 4 4 4 4 4

Indiana 40.4 10.6 51.0 5.3% 5 6 6 7 7 7 6 7 7

Illinois 40.9 9.8 50.8 5.3% 6 5 5 5 5 5 5 5 5

Pennsylvania 39.8 8.0 47.9 5.0% 7 7 7 6 6 6 7 6 6

Wisconsin 32.6 7.2 39.8 4.1% 8 8 8 8 8 8 8 8 8

North Carolina 29.2 9.1 38.3 4.0% 9 9 9 9 10 10 9 10 9

New York 24.9 5.7 30.6 3.2% 10 10 10 10 9 9 10 9 10

Georgia 22.7 6.4 29.1 3.0% 11 11 11 12 12 11 12 13 13

Tennessee 20.4 7.6 28.0 2.9% 12 12 12 11 11 12 11 12 12

Kentucky 20.9 6.3 27.2 2.8% 13 13 13 15 16 16 14 16 15

South Carolina 18.7 6.7 25.4 2.6% 14 14 14 13 14 14 15 17 17

Alabama 15.3 6.1 21.4 2.2% 15 16 17 21 21 21 21 23 22

Minnesota 16.3 5.0 21.3 2.2% 16 15 16 17 17 18 17 15 16

New Jersey 18.2 3.1 21.3 2.2% 17 17 15 14 13 13 13 11 11

Florida 16.5 4.5 21.0 2.2% 18 18 19 19 19 19 16 20 20

Massachusetts 14.9 4.8 19.7 2.0% 19 19 18 16 15 15 18 14 14

Missouri 13.9 3.5 17.5 1.8% 20 20 20 20 20 20 20 18 18

Virginia 14.0 3.3 17.3 1.8% 21 21 21 18 18 17 19 19 19

Washington 11.2 3.0 14.1 1.5% 22 22 22 22 22 22 22 22 23

Iowa 10.1 3.2 13.4 1.4% 23 23 23 23 23 23 23 21 21

Kansas 9.5 1.3 10.8 1.1% 24 25 25 26 26 26 25 27 28

Louisiana 5.7 4.5 10.2 1.1% 25 24 24 27 27 27 29 28 29

Connecticut 7.6 2.4 10.0 1.0% 26 26 26 24 24 24 24 24 24

Arkansas 7.6 1.6 9.2 1.0% 27 27 27 25 25 25 27 26 26

All Other 71.2 20.5 91.7 9.5% – – – – – – – – –

The state rankings vary by plastics industry sector, as demonstrated in Figures 7 through 12. The plastic materials and resins segment is concentrated in Texas, where raw materials are abundant and the petrochemical infrastructure is highly developed. Texas is trailed by Ohio and Michigan, South Carolina, Illinois, Pennsylvania, North Carolina, Indiana, California and Louisiana.


Plastic products are often hollow or have shapes not conducive to packing and long-distance shipping. Also, from the standpoint of service and delivery, manufacturers prefer that their processors be located nearby. As a result, plastic products activities tend to be located near manufacturing sites, such as automobile and appliance assembly plants.3 California and Ohio have the most plastic products employment, followed by Michigan, Texas and Indiana. California is not a manufacturing-oriented state, but again, it is the largest state in terms of population.

The plastics machinery industry is similarly concentrated in the manufacturing belt, where many plastic processors are concentrated. Michigan has the highest number of employees in plastics machinery, followed by Ohio, Illinois, Pennsylvania and Wisconsin.

The location of the plastic mold industry seems to be related to the location of the plastic products manufacturers (plastic processors) that use the molds. There also is significant “captive” mold activity located within plastic product establishments. Michigan has the highest employment in molds for plastics, followed by Ohio, California, Wisconsin, Illinois and Pennsylvania. Many of these states have extensive plastic products activity and might also have concentrations of the machinists and other skilled workers needed to make molds.

Plastics wholesale trade is scattered around the country, indicating that wholesalers serve a wide range of customers. California and Texas, the two most populous states, also have the most plastics wholesale trading employment. The third-ranked state, Michigan, is a center of plastic processing.

Captive plastic products operations are found at manufacturing sites, such as automobile assembly plants, that are large enough to produce their own plastic products or require the kinds of plastic products that are expensive to transport (such as milk jugs). Texas has the most captive plastic products activity, followed by California, Ohio, Michigan and Indiana.

FIGURE 7

PLASTICS MATERIALS & RESINS (325211) Breakdown of Number of Employees by State, 2016

� �� Texas

Ohio

Michigan

South Carolina

Illinois

Pennsylvania

North Carolina

Indiana

California

Louisiana

Others4.6%

7.1%

5.2%

4.5%

4.3%4.4%

4.4%

36.0%

18.8%

5.6%

5.0%

U.S. TOTAL: 67,600

3 Plastic merchandise bags and builders’ ware are notable exceptions. They are delivered directly to retailers like Wal-Mart, Home Depot and Kroger.


FIGURE 8

PLASTIC PRODUCTS (325991 & 3261) Breakdown of Number of Employees by State, 2016

�� California

Ohio

Michigan

Texas

Indiana

Pennsylvania

Illinois

Wisconsin

North Carolina

New York

Others

5.3%

8.1%

6.0%

5.3%3.4% 3.9% 4.5%

42.1%

8.1%

7.4%

5.6%

U.S. TOTAL: 624,300

FIGURE 9

PLASTICS MACHINERY (3332201) Breakdown of Number of Employees by State, 2016

� �� Michigan

Ohio

Illinois

Pennsylvania

Wisconsin

Virginia

Vermont

Connecticut

Massachusetts

New York

Others

5.3%

9.7%

7.3%

5.1%

3.6%3.6%

3.7%

33.5%

12.6%

8.5%

7.0%

U.S. TOTAL: 11,640


FIGURE 10

MOLDS FOR PLASTICS (33351105) Breakdown of Number of Employees by State, 2016

� �� Michigan

Ohio

California

Wisconsin

Illinois

Pennsylvania

Indiana

New York

Minnesota

Tennessee

Others

5.6%

10.2%

6.8%

4.6%

3.2%3.6%

3.7%

27.7%20.7%

7.1%

6.8%

U.S. TOTAL: 15,850

FIGURE 11

PLASTICS WHOLESALE TRADE (424610) Breakdown of Number of Employees by State, 2016

� �� California

Texas

Michigan

Illinois

Ohio

Florida

Pennsylvania

New York

New Jersey

Indiana

Others

5.9%

8.9%

6.3%

4.9%

3.7%4.2%

4.8%

35.9%

12.7%

6.4%

6.1%

U.S. TOTAL: 33,990


FIGURE 12

CAPTIVE PLASTIC PRODUCTS Breakdown of Number of Employees by State, 2016

� �� Texas

California

Ohio

Michigan

Indiana

Illinois

North Carolina

Pennsylvania

Tennessee

Wisconsin

Others

4.7%

8.2%

6.4%

4.3%

3.4% 3.6% 4.2%

43.5%

9.9%

7.1%

5.0%

U.S. TOTAL: 211,200

Because the states that rank highest in plastics employment are often also the most populous, the authors also examine the concentration of plastics activity, as measured by the ratio of the number of plastics industry employees to the total number of non-farm employees in the state. As Table 7 indicates, Indiana has the greatest concentration of plastics industry personnel—16.5 per thousand non-farm employees—followed closely by Michigan, Kentucky, Ohio, Wisconsin and South Carolina.

The state rankings fluctuate from year to year, but changes over a period of 10 years are significant. From 2005 to 2016, Alabama gained 13 ranking points. Georgia and Delaware gained 6 points. Nebraska and South Dakota gained 5 points. The biggest declines were in New Hampshire (down 10), Mississippi (down 9) and Missouri (down 6).

The overall concentration of plastics employment throughout the U.S. has decreased in recent years. In 2016, the average concentration in the country was 6.7 plastics employees per 1,000 non-farm workers, down from 8.6 in 2005. Plastics employment in Indiana, the state with the highest plastics concentration, declined from 20.3 employees per 1,000 non-farm workers in 2005 to 16.5 in 2016.4 These declines in concentration primarily reflect the decline of manufacturing relative to other sectors, especially services.

4 Indiana’s plastics employment, and that of most other states, has actually been increasing. It is just that the total number of non-farm workers has increased even faster.


TABLE 7

PLASTICS EMPLOYMENT CONCENTRATION: Plastics Industry Employees Per Thousand Non-Farm Employees

Ranked by State, 2016

Plastics Industry

Employees

Total Non-Farm Employees

Plastics Employees

Per Thousand Non-Farm Employees

Rank for

2016

Rank for

2015

Rank for

2014

Rank for

2012

Rank for

2011

Rank for

2010

Rank for

2009

Rank for

2007

Rank for

2006

U.S. Total 964.6 144,593.6 6.7 – – – – – – – – –

Indiana 51.0 3,083.2 16.5 1 1 1 2 1 1 1 1 1

Michigan 70.6 4,325.6 16.3 2 2 2 1 2 2 2 2 2

Kentucky 27.2 1,914.2 14.2 3 3 5 5 6 5 5 5 5

Ohio 75.2 5,480.9 13.7 4 5 3 3 3 3 3 3 3

Wisconsin 39.8 2,924.2 13.6 5 4 4 4 4 4 4 4 4

South Carolina 25.4 2,053.9 12.4 6 6 6 6 5 6 6 6 6

Alabama 21.4 1,975.8 10.8 7 7 7 15 15 16 12 21 20

Tennessee 28.0 2,965.8 9.4 8 8 8 8 8 8 7 12 10

North Carolina 38.3 4,339.9 8.8 9 9 9 13 13 13 14 15 15

Iowa 13.4 1,570.4 8.5 10 10 10 10 10 10 9 11 13

Illinois 50.8 6,012.8 8.4 11 11 11 7 7 7 8 7 7

Pennsylvania 47.9 5,883.6 8.1 12 12 12 11 11 12 15 14 14

Rhode Island 3.8 490.0 7.8 13 13 13 9 9 9 10 8 9

Kansas 10.8 1,409.9 7.7 14 14 15 20 21 21 17 17 17

Arkansas 9.2 1,227.5 7.5 15 15 14 14 12 11 13 13 11

Minnesota 21.3 2,895.6 7.4 16 16 16 18 18 19 18 16 16

Mississippi 8.2 1,144.6 7.1 17 18 17 12 14 14 11 9 8

West Virginia 5.3 747.8 7.1 18 17 18 21 20 20 22 20 19

Vermont 2.1 313.1 6.8 19 20 30 17 19 18 20 19 24

Georgia 29.1 4,378.0 6.6 20 21 20 24 24 25 24 27 26

Delaware 3.0 452.8 6.6 21 19 19 35 35 34 33 26 27

New Hampshire 4.4 668.3 6.6 22 22 22 19 17 17 19 10 12

Texas 74.8 12,028.4 6.2 23 23 21 22 22 22 21 22 23

Missouri 17.5 2,842.3 6.2 24 24 23 23 23 24 23 18 18

Connecticut 10.0 1,679.1 5.9 25 25 24 16 16 15 16 23 21

South Dakota 2.5 432.7 5.8 26 26 25 36 36 36 36 31 31

Nebraska 5.7 1,015.0 5.6 27 28 27 27 27 27 29 33 32

All Other 267.9 70,338.2 3.8 – – – – – – – – –


Figure 13 displays these concentrations on a map of the U.S. States with the darker shades have higher plastics concentrations, which are mostly located around the Midwest manufacturing belt. New concentrations have shown up in the emerging manufacturing zones in the South—especially Kentucky, Alabama and South Carolina.

FIGURE 13

PLASTICS EMPLOYEES PER 1,000 NON-FARM EMPLOYEES, 2016

1.5 3.1

0.83.3

3.0

3.1

0.5

0.7

1.7

1.76.6

5.25.9 7.8

5.56.6

3.3

4.4

4.2

4.7

3.74.8

5.8

5.6

7.7

7.54.2

6.2

7.4

8.5

6.2

8.4

13.6

16.5

16.3

13.7

14.2

9.48.8

12.4

5.27.1 10.8 6.6

2.5

4.47.1

8.1

6.8 4.9

13.2–16.6 (5)

9.9–13.2 (2)

6.6–9.9 (14)

3.3–6.6 (17)

0–3.3 (13)U.S. Average=6.7


E. Upstream (Supplier) Impacts


Jobs are not only created in the plastics industry, but also in industries that supply goods and services to the industry, such as fuel, spare parts, office supplies and transportation services.

Probe Economics LLC quantified the jobs and shipments created in these upstream industries by using the input-output model developed by the INFORUM Program at the University of Maryland. The results are shown in detail in Tables 8 and 9.

TABLE 8

DOMESTIC JOBS RELATED, DIRECTLY OR INDIRECTLY, TO THE US. PLASTICS INDUSTRY (Thousands of Jobs, 2016)

Industry Direct Jobs Indirect Jobs Other Jobs* Subtotal Captive Jobs Total Jobs

Agriculture 0 12 0 12 4 16 Oil, Gas and Coal Extraction 0 6 0 7 2 9 Other Minerals 0 3 0 4 1 5 Construction 7 10 5 22 6 28 Manufacturing 110 78 18 206 64 270 Non-Durables 56 38 1 94 32 126 Food, Tobacco & Spirits 0 1 0 1 0 1 Apparel, Textiles, Leather 1 1 0 2 1 3 Paper 12 5 0 17 6 23 Printing 0 2 0 2 1 3 Chemicals 43 27 0 70 24 93 Petroleum and Coal Products 0 1 0 1 0 1 Rubber Products 0 1 0 1 0 1 Plastic Products 0 0 0 0 0 0 Durables 54 40 17 112 32 144 Wood Products 5 3 0 8 3 11 Stone, Clay, Glass 5 2 0 7 2 9 Primary Metals 0 3 0 4 1 5 Fabricated Metal Products 23 19 3 45 14 59 Machinery 13 4 12 29 6 35 Computer & Electronic Products 3 4 0 7 2 10 Electrical Equipt & Appliances 2 2 1 4 1 5 Transportation Equipment 0 1 0 2 1 3 Furniture & Related 2 0 0 3 1 3 Misc. Manufacturing 1 2 0 4 1 5 Services 171 297 24 491 159 650 Transportation & Warehousing 22 36 2 60 20 80 Wholesale & Retail Trade 42 52 5 100 32 132 Finance, Insurance, Real Estate 8 30 1 40 13 53 Utilities 3 5 0 8 3 11 Information 2 6 1 9 3 12 Prof, Tech, Scientific Services 24 41 8 73 22 95 Management Services 21 30 1 52 17 69 Admin, Support, Waste Services 26 57 3 85 28 113 Other 22 40 2 65 21 86 Total (all industries) 289 406 47 742 236 977 Plastic Products Jobs 588 199 787 Total Jobs 1,330 435 1,765 * “Other Jobs” are certain plant and equipment jobs that are not otherwise included. (Rounded to zero)


Table 8 shows jobs created in the various industries that supply goods and services directly or indirectly to the plastics industry. Supplying “directly” means that the industry delivers its goods and services directly to a plastics industry establishment, whether that establishment is in the business of making plastic materials and resins, plastics machinery, plastic molds or plastic products, or in the business of plastics wholesale trade. An example of an “indirect” job would be a worker supplying services to an industry that subsequently delivers goods and services to the plastics industry, or to another industry, which has its goods eventually reaching the plastics industry after a number of transactions. Input-output models track all of these transactions.

As Table 8 indicates, in addition to 588,000 jobs in plastic products,5 there were 289,000 direct jobs in industries supporting plastic products, 406,000 indirect jobs and 47,000 “other” jobs, for a total of 742,000 jobs in support industries. “Other” jobs are in certain plant and equipment sectors that are not otherwise accounted for by the INFORUM model. A total of 1.33 million employees work in the plastic products industry or in support of it. To those jobs, the authors added 435,000 captive jobs, thus bringing the total number of jobs to 1.76 million. This amounted to 1.2 percent of U.S. non-farm employees.

Analogous to Table 8, the shipments in Table 9 are divided among direct shipments, indirect shipments and “other” shipments, depending on whether the goods and services were delivered directly to a plastics establishment; provided to other establishments that eventually supplied plastics establishments; or related to certain plant and equipment activities that would not otherwise be counted. This report is concerned only with domestic jobs and shipments, so column 4 of Table 9 deducts the import content of the shipments on the left, to provide a domestic subtotal. After deducting the effect of imports, Table 9 shows that $241 billion of domestic shipments were generated by establishments supplying the plastic products industry directly or indirectly (the domestic subtotal). To this subtotal is added the $173 billion in shipments by the plastic products industry itself, resulting in the subtotal of $414 billion. Shipments by captive plastic products producers and their direct and indirect suppliers added another $139 billion, yielding the grand total of $552 billion in shipments generated directly or indirectly by the plastics industry.6

5 The employment data from the INFORUM model are from the U.S. Bureau of Labor Statistics (BLS) and do not match exactly with the U.S. Bureau of the Census data found in Table 2. The two agencies treat auxiliary, non-producing locations differently. The data in Table 8 include central offices, sales offices, technical service centers, research labs, etc.

6 The shipment figures in Table 9 are a good measure of the value of goods and services being shipped around, but they do involve double counting. For instance, shipments of plastic products include the value of the plastic resins that were purchased from others to make those products, but the value of that resin is also reported in the “Chemicals” line higher up in the table. Table 8 does not involve double counting.


TABLE 9

DOMESTIC SHIPMENTS RELATED, DIRECTLY OR INDIRECTLY, TO THE U.S. PLASTICS INDUSTRY (Millions of Dollars, 2016)

Industry Direct Shipments

Indirect Shipments

Other Shipments*

Less Import Content

Domestic Subtotal

Captive Shipments

Total Shipments

Agriculture 34 2,808 8 218 2,632 890 3,522Oil, Gas and Coal Extraction 128 15,393 45 7,089 8,477 2,860 11,337Other Minerals 16 1,132 25 -65 1,238 411 1,650Construction 1,135 1,498 410 4 3,038 891 3,929Manufacturing 78,133 79,509 2,570 30,417 129,796 43,145 172,940 Non-Durables 61,112 62,918 193 21,191 103,032 34,875 137,907 Food, Tobacco & Spirits 101 879 5 94 891 300 1,192 Apparel, Textiles, Leather 347 295 4 212 434 146 580 Paper 4,638 3,029 27 885 6,808 2,300 9,108 Printing 8 237 6 10 241 80 321 Chemicals 54,565 51,365 87 18,718 87,299 29,575 116,874 Petroleum and Coal Products 1,294 6,863 58 1,145 7,071 2,378 9,449 Rubber Products 159 250 6 128 287 96 383 Plastic Products 0 0 0 0 0 0 0 Durables 17,021 16,590 2,377 9,226 26,763 8,270 35,033 Wood Products 1,197 919 10 383 1,744 588 2,332 Stone, Clay, Glass 1,300 610 26 395 1,541 514 2,054 Primary Metals 395 3,343 154 1,076 2,816 903 3,719 Fabricated Metal Products 5,170 5,484 342 1,337 9,659 3,160 12,819 Machinery 5,460 1,873 1,544 2,723 6,154 1,563 7,718 Computer & Electronic Products 1,359 1,890 65 1,378 1,936 635 2,570 Electrical Equipt & Appliances 922 931 72 936 989 311 1,300 Transportation Equipment 391 733 76 439 761 232 994 Furniture & Related 273 59 17 33 317 102 418 Misc. Manufacturing 553 749 71 526 847 263 1,110Services 34,525 61,929 2,251 2,831 95,874 31,750 127,623 Transportation & Warehousing 4,709 7,748 186 288 12,355 4,127 16,482 Wholesale & Retail Trade 8,880 9,942 565 -418 19,805 6,524 26,329 Finance, Insurance, Real Estate 2,937 11,332 258 169 14,358 4,781 19,139 Utilities 2,463 4,288 44 39 6,756 2,276 9,032 Information 1,157 2,554 137 29 3,818 1,248 5,067 Prof, Tech, Scientific Services 4,983 8,879 713 661 13,913 4,477 18,390 Management Services 4,901 7,214 148 23 12,240 4,101 16,340 Admin, Support, Waste Services 1,918 4,606 110 34 6,601 2,201 8,802 Other 2,578 5,367 89 2,006 6,028 2,014 8,042Total (all industries) 113,971 162,270 5,308 40,493 241,055 79,947 321,002Plastic Products Shipments 172,787 58,596 231,382Total Shipments 413,842 138,542 552,384* “Other Shipments” are certain plant and equipment Shipments that are not otherwise included.


Figure 14 shows how these jobs and shipments are distributed among the various industry components. The authors’ input-output modeling method has added 800,000 jobs and $148.0 billion in shipments in the upstream industries, giving the totals of 1.76 million jobs and $552.4 billion in shipments.

FIGURE 14

PLASTICS-RELATED GOODS AND SERVICES: Impacts of Plastics Quantified, 2016

Upstream Goods

and Services800,000 J$148.0 Bil

Plastic Materials

and Resins67,600 J$83.1 Bil

Plastics Machinery

11,600 J$4.1 Bil

Molds for Plastics15,800 J$2.9 Bil

Plastic Products

Gov’t Documented

Plastic Products624,300 J$203.5 Bil

Captive Plastic

Products211,200 J$69.1 Bil

Plastic Materials

and Products Wholesaling

34,000 J$418 Bil

Down-stream Using

IndustriesEnd Users, Including

Consumers, Businesses

and Government

Agencies

Plastic Industry

Sectors QuantifiedJobs (J) and Shipments ($)Given for Each Sector:Total Jobs=1,764,600Total Shipments=$552.4 BilUpstream

Impacts


F. Where Plastics End Up: How Downstream (Using) Industries are Affected


So far, this report has addressed the left-hand two-thirds of Figure 1, covering the plastics industry and its upstream impacts. This section will focus on where plastic products go and how they affect end users. Much of this data was previously published in the 2016 Size & Impact report, although Figure 15, which depicts final consumption of plastic products is updated from last year’s report.

Some plastic products are shipped to final users, but most are delivered to industrial or service establishments that utilize them in further processing and developing services. Ultimately, all of those plastic products wind up in some form of final good or service. This section uses the INFORUM input-output model, which traces plastic products to the final user, be it a household buying food wrap, a business buying machinery, a government agency buying computers, or a hospital providing services.

The model traces plastic products to their final disposition by National Income and Product Account (NIPA) category. These are the components of gross domestic product (GDP) that are frequently discussed in the press. The model runs show that 74.0 percent of plastics products in 2014 wound up in some sort of personal consumption. This means toys, eating utensils, detergent bottles, motor vehicles, refrigerators, etc. The next largest share of plastics products, 28.3 percent, ended up in private fixed investment, which means residential and non-residential equipment, software and structures, plus inventories. State, local and federal government purchases of final goods and services accounted for another 12.5 percent of plastics products final demand. Some plastics products were imported, net of exports, so 14.9 percent of it is deducted in order to show just the domestic effect. This is analogous to how GDP is computed:

GDP = Consumption + Investment + Government Spending + Net Exports

The model also traces plastics products to their final disposition broken down by the classes of products and services that embody the plastics. As shown in Figure 15, most plastic products go into manufactured goods, but manufacturing is accounting for a shrinking share of the U.S. economy. Manufacturing employment accounted for only 8.7 percent of total non-farm employment in 2014. It should not be surprising, therefore, that 33.7 percent of plastic products went into services—wholesale and retail trade, health services, food services & drinking places, and other services. The kinds of plastic products that get consumed as part of services could include, for instance, bags, sterile packaging, intravenous tubing, signage, drink containers, other food service items, and automotive repair parts. Construction accounted for 9.0 percent of the plastic products that made it into final demand. The remaining plastic products went into durable and, especially, non-durable goods. Among the durables, transportation equipment accounted for 12.5 percent of the total, furniture and related accounted for 2.4 percent, and other durables accounted for 11.9 percent. Among the non-durables, food, tobacco & spirits accounted for 9.1 percent of the total, plastic products accounted for 15.1 percent, and other non-durables accounted for 6.4 percent.

What does it mean that plastic products are part of the final consumption of plastic products? Most plastic products are ultimately consumed as part of some other product or service, but some plastic products—15.1 percent of them by value—are final goods in their own right. These are things like toys, plastic cups, shower curtains, and plastic ice scrapers for cars.


FIGURE 15

FINAL CONSUMPTION OF PLASTIC PRODUCTS, 2014: Products and Services Containing Plastics

�� Wholesale and Retail Trade

Health Services

Food Service & Drinking Places

Other Services

Construction

Food, Tobacco & Spirits

Plastic Products

Other Non-Durables

Transportation Equipment

Furniture & Related

Other Durables

9.1%

7.4%

16.8%

15.1%

2.4%

12.5%

6.4%

11.9% 5.6%3.9%

9.0%

U.S. TOTAL: $260.8 BILLION

The reader now knows that plastic products are incorporated into many different goods and services. Could some of those goods and services be more important to the plastic products industry than others, in terms of the total value of plastic products involved? Conversely, could plastic products be more important to some user industries than others, based on how much of the total value of its product or service that is accounted for by plastic products? To answer these two questions, the INFORUM model made it possible for the authors to prepare Tables 10 and 11 below.

Table 10 shows the final demand of industries most important to plastics in terms of the value of plastic products involved in 2014. The first column of numbers shows the total amount of final demand produced by each industry. The plastic products industry, for instance, produced $37.3 billion of final goods in 2014.

The second column in Table 10 gives the plastic products content for each industry. It shows that the plastic products content of final plastic products produced in 2014 was $39.4 billion. One expects plastic products to contain a lot of plastics, because they are, by definition, made of plastics.

The third column of numbers gives the cents worth of plastic products contained in a dollar’s worth of final goods and services produced by each industry. The plastic products content of plastic products is shown to be 105.5 percent, which is greater than the value of the products produced. This seemingly nonsensical result occurs because significant amounts of plastic products are also exported and are not included in the denominator, found in the first column.


The next largest destination for plastic products in final goods was automobiles, followed by state and local government, and then hospitals. Prior to the home building downturn that started in 2007, the single-family residential structures category—10th in 2014—was much further up the list. State and local governments consume a wide variety of goods and services. Hospitals use plastic products like oxygen masks, sharp containers, intravenous fluid bags and tubing. Even though these products are generally not heavy and may not represent large volume, their values per ton are relatively high.

TABLE 10

PLASTIC PRODUCTS CONTENT OF FINAL DEMAND BY INDUSTRY, 2014 (Ranked by Value of Plastic Products Content)

RankMillions of Dollars Cents Per $ of

Final DemandFinal Demand Plastics Content1 All Plastic Products 37,284 39,353 105.52 Automobiles 519,517 23,046 4.43 State and local general government 1,620,400 10,017 0.64 Hospitals 911,030 7,131 0.85 Other residential structures 175,664 7,086 4.06 Soft drinks and ice 41,939 6,124 14.67 Wholesale trade 831,679 5,659 0.78 Limited-service restaurants 313,446 5,602 1.89 Other retail 724,329 4,955 0.710 Single-family residential structures 189,585 4,771 2.511 Offices of physicians 450,582 4,600 1.012 Automotive repair and maintenance 171,645 3,936 2.313 Snack foods 30,297 3,603 11.914 Household and institutional furniture 46,294 3,470 7.515 Full-service restaurants 219,701 3,365 1.516 Pharmaceuticals and medicines 253,015 2,885 1.117 Federal general government (defense) 618,900 2,783 0.418 Toilet preparations 37,695 2,595 6.919 Motor vehicle parts 72,742 2,542 3.520 Other nonresidential structures 140,201 2,337 1.721 Educational and vocational structures 93,419 2,326 2.522 Aircraft 116,096 2,305 2.023 Food and beverage stores 191,734 2,296 1.224 Soap and cleaning compounds 38,012 2,241 5.925 Housing services 1,848,189 2,041 0.1

All Other Industries 10,600,702 103,702 1.0Total 20,294,098 260,770.8 1.3

Some of the industries identified in Table 10 contain a relatively large value of plastic products per dollar of final value. To pursue this line of thinking, Table 11 ranks final demand industries by cents worth of plastic products contained per dollars worth of final product—called “plastics intensity.” Some industries have over 10 cents worth of plastic products per dollar of value, and some have much less. The average across all industries is 1.3 cents per dollar of value.


Looking at individual industries, we have already discussed the first-ranked industry—all plastic products. The next four highest-ranked industries in terms of plastics intensity are soft drinks and ice; mattresses, blinds and shades; snack foods; and seasonings and dressings. The second industry—mattresses, blinds and shades—probably uses a lot of plastics products, like foam, film and sheet, in its actual products. The other three likely spend a lot on plastic packaging. Considering that these industries spend so much per dollar of output on plastics, they are most interested in what is happening in the plastics industry, in terms of product development, supply, demand and price.

TABLE 11

PLASTIC PRODUCTS CONTENT OF FINAL DEMAND BY INDUSTRY, 2014 (Ranked by Plastics Intensity—Cents Per Dollar of Final Demand)

RankMillions of Dollars Cents Per $ of

Final DemandFinal Demand Plastics Content1 All Plastic Products 37,284 39,353 105.52 Soft drinks and ice 41,939 6,124 14.63 Mattresses, blinds and shades 11,743 1,630 13.94 Snack foods 30,297 3,603 11.95 Seasonings and dressings 13,944 1,466 10.56 Coffee and tea 12,042 1,164 9.77 Ophthalmic goods 9,611 888 9.28 Sign manufacturing 7,854 663 8.49 Household and institutional furniture 46,294 3,470 7.510 All other transportation equipment 4,589 333 7.311 Power-driven handtool manufacturing 7,993 568 7.112 Toilet preparations 37,695 2,595 6.9

13 Manufacturing and reproducing magnetic and optical media and software 2,022 126 6.2

14 Soap and cleaning compounds 38,012 2,241 5.915 Household refrigerators and home freezers 8,190 476 5.816 Paper bag and coated and treated paper 6,220 350 5.6

17 Computer terminals and other computer peripherals 28,381 1,559 5.5

18 Office supplies (except paper) 3,415 187 5.519 Office furniture (including fixtures) 19,624 1,047 5.320 Household laundry equipment 6,055 315 5.221 Other major household appliances 3,318 161 4.922 Lawn and garden equipment 6,958 335 4.823 Surgical and medical instruments 33,546 1,606 4.824 Wood kitchen cabinet and countertops 1,020 49 4.825 Totalizing fluid meters and counting devices 3,144 145 4.6

All Other Industries 19,872,907 190,318 1.0Total 20,294,098 260,771 1.3


G. Outlook for the Plastics Industry


This report describes an industry that is prospering, is growing faster than manufacturing as a whole, has gained a competitive advantage from low-cost hydrocarbon feedstocks, is creating jobs in the economy as a whole, and is moving around a bit geographically. Will these patterns continue? To answer this question, PLASTICS developed a general outlook for the plastics industry, as well as numerical forecasts for employment and shipments:

(1) Overseas growth in plastics is accelerating, as manufacturing moves on to new countries, where labor is cheap and the demand for consumer goods is seemingly insatiable. U.S. firms are participating directly in those countries and/or are exporting goods and services to them.

(2) The U.S. domestic plastics market will thrive as well, helped by a stable economy and political system, a hydrocarbon feedstock advantage, and a likely improvement in the country’s merchandise trade balance. Other countries are starting to feel the pressure, like they did under President Reagan, to build production capacity in the U.S. (or lose some access to the U.S. market). Illustrative of this, Taiwanese tech giant Foxconn (famous for assembling Apple’s iPhones in China) recently announced a huge new LCD panel factory in Wisconsin that will employ 13,000 people.

(3) The plastics industry primarily supports the manufacturing sector, which needs resin, plastic products, molds and machinery to make its products. That sector is heavily concentrated in the upper Midwest, so that is where a lot of plastics operations are located. However, there is some shifting around, especially to selected southern and southeastern states. The drivers of change appear to be the location of resin facilities near sources of low-cost feedstocks, and the building of plastic product plants near new auto and light truck plants, many of them foreign-owned—Mercedes, Honda, etc. Huge shale gas discoveries in the Marcellus region—Ohio, West Virginia and Pennsylvania in particular—will likely lead to new petrochemical and plastics developments in the region.

What are key drivers for growth? The plastics industry primarily supports the manufacturing sector, so one would expect to see a correlation between real plastics industry shipments and real shipments for all manufacturing. Figure 16 shows such a relationship. There is a strong correlation between the two data series, although the fit between two plot lines is not perfect. Some other drivers could be involved, especially those that can add some cyclicality to plastics shipments.

FIGURE 16

REAL PLASTICS INDUSTRY SHIPMENTS VERSUS ALL MANUFACTURING SHIPMENTS (Indexes, 2012=100)

1501401301201101009080706050

Real Manufacturing ShipmentsReal Plastics Shipments

19971998

19992000

20012002

20032004

20052006

20072008

20092010 2011 2012 2013 2014 2015 2016

Source: Probe Economics and U.S. Bureau of the Census


A lot of plastics go into the production of cars and light trucks, and the production of these vehicles tends to be cyclical. Figure 17 shows the correlation between real plastics industry shipments and the number of cars and trucks that are produced each year in the U.S.

FIGURE 17

REAL PLASTICS INDUSTRY SHIPMENTS VERSUS CAR AND TRUCK PRODUCTION (Indexes, 2012=100)

1501401301201101009080706050

Index of Cars and TrucksReal Plastics Shipments

19971998

19992000

20012002

20032004

20052006

20072008

20092010 2011 2012 2013 2014 2015 2016

Car and truck production took a big dip during the 2008–09 recession and may have contributed to the dip experienced by real plastics shipments during that period. So, the motor vehicle industry may hold some of the secrets to predicting plastics shipments. U.S. car and light truck production has been at very high levels, as gasoline has been relatively cheap, the fleet of vehicles on the road has been old and interest rates have been very low. That replacement cycle has now peaked so that motor vehicle production is flattening out. This headwind for the plastics industry needs to be reflected in any forecast.

Construction also affects the plastics industry. Construction consumes a lot of plastics industry products and has been a big source of volatility. As Figure 18 shows, U.S. housing starts, converted to a 2012=100 index basis, shot way up to unsustainable levels in the years up to 2006. Mortgages were easy to get, and interest rates were attractive. People bought homes that they couldn’t afford and maybe didn’t even plan to occupy. Homes were viewed as good investments and a way of storing value. As we all now know, that didn’t work out. Housing prices crashed and housing starts dropped to one-fourth of peak levels.

Source: Probe Economics and Automotive News


FIGURE 18

REAL PLASTICS INDUSTRY SHIPMENTS VERSUS HOUSING STARTS (Indexes, 2012=100)

300

275

250

225

200

175

150

125

100

75

50

Index of Housing StartsReal Plastics Shipments

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Housing contributed to the decline in real plastics industry shipments in 2008–09. Housing also slowed the recovery, and helped prevent those shipments from getting back to pre-recession levels. Housing starts are now growing slowly toward a level that is more sustainable and more in tune with the country’s rate of household formation. Housing will continue to boost plastics industry shipments, but slowly.

Housing starts are now growing slowly toward a level that is more sustainable

and more in tune with the country’s rate of household formation. Housing

will continue to boost plastics industry shipments, but slowly.

Source: Probe Economics and U.S. Bureau of the Census


The Numerical Forecasts. The factors discussed above are converted into numerical forecasts of plastics manufacturing employment and real shipments in Table 12.

TABLE 12

GROWTH IN THE PLASTICS MANUFACTURING (With Forecasts, Not Including Captives)

Employment (Thousands) Change Real Shipments

(Mil. $ 2016) Change

2010 642 -1.0% 263,834 10.4%2011 649 1.0% 263,427 -0.2%2012 681 5.0% 277,320 5.3%2013 684 0.4% 282,134 1.7%2014 694 1.4% 286,337 1.5%2015 712 2.6% 284,520 -0.6%2016 719 1.0% 293,509 3.2%2017 726 0.9% 299,380 2.0%2018 731 0.7% 305,966 2.2%

2019 735 0.6% 313,676 2.5% Source: Plastics Industry Association

Employment growth slows as the supply of labor starts to dry up. The U.S. labor force is now almost fully employed, so finding more qualified people is becoming increasingly difficult. “Help wanted” advertising has been at a high level for a few years now. Wage rates are likely to start rising faster. The logical reaction of the plastics industry, or any other industry, will be to boost productivity through labor-saving investments. The expected boost in such investments will boost productivity growth, which has been lagging lately (see Table S-2).

Real plastics industry shipment levels (adjusted for inflation) continue to grow in our forecasts, but are slowed by the maturing of the motor vehicle replacement cycle. The U.S. economy is assumed to continue growing at a modest pace. Almost no one is forecasting a recession right now, and higher growth will be hindered by labor shortages. Housing has already made a significant recovery and does not have a lot further to go. Given today’s demographics, an annual housing start rate of around 1.4 million is all that is needed. The “bubble” levels of 2.0 million plus are not likely to return soon—at least, let’s hope not.

In our forecasts, shipments start to be boosted by the large amount of new resin capacity that is now coming online, mostly on the Gulf Coast. Later, capacity will start showing up in the upper Midwest and Appalachian regions. Shell has committed to a new petrochemical facility in Pennsylvania. Stimulated by the availability of new low-cost feedstock sources, much of this new resin output is destined for export—assuming that trade relations remain friendly.

To summarize, the forecasts in Table 12 show continued growth in plastics industry employment and real shipments. The forecasts assume a steady but slow-growing economy, further maturing of the motor vehicle replacement cycle, the unlikelihood that housing starts will revisit former peak levels any time soon and an expected boost from the abundance of low cost hydrocarbon raw materials in the U.S.


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