Tuesday, January 07 2020
By Jim Damicis, Senior Vice President, Camoin 310
Stop. Look around you. Somewhere very near you right now is plastic. It could be a piece in your computer or phone, on your desk or chair, or within your flooring. Simply said, plastic is part of the many products we see and use every day and therefore critical to our economy.
In this article we examine plastics and plastic-related industries. First, we provide an overview of key economic performance data and trends for the industries and examine how plastics connects with and impact other industries through supply chains. We then present key factors that impact growth and investment in plastics. Finally using a case example in Northwest Pennsylvania, we provide guidance to business and economic developers on how they can support and attract investment, businesses, and employment in their region.
Plastic industries include the manufacturing of plastic and resin materials as well of the manufacturing of products made from plastic and resin materials. They include the following industry sectors:
In 2018, plastics industries employed 653,383 people, representing 0.4 percent of all jobs in the U.S. The 2018 level of jobs in plastics was an increase of two percent from 2008. During this same period, all jobs in the U.S. grew eight percent. Jobs in plastics industries are projected to grow a total of one percent in 2028, while overall jobs in the U.S are projected to grow nine percent (EMSI). Slower growth in plastics is related to several factors including foreign competition with less exporting and more importing occurring, a projected slowdown in construction, and automation reducing the need for workers.
Though plastics industries combined have not grown and are not projected to grow as much as the employment overall in the U.S, they are significant to the U.S economy. In 2019, the plastics industries generated $307 billion in sales and $65 billion in exports with the largest amount of exports being to Canada, Mexico, U.K., Belgium, and China (IBISWorld).
Additionally, they provide an important component for the manufacturing of goods in multiple sectors particularly packaging for food products, motor vehicles and aerospace, construction, electronics, and medical devices. In 2018, leading the pack in terms of purchases of plastics by manufacturing subsectors are vehicle related manufacturing, soft drinks, and medical and surgical instrument, together accounting for more than $18 billion in plastic purchases. Construction industries are also major plastics purchasing sectors.
Driven by the need for advanced skills and experience needed for the plastics workforce, average earnings per job are also higher in plastics industries than for jobs overall in the U.S., $70,512 for plastics compared to $66,686 for all jobs in 2018.
While plastics industries exist in every state and region in the U.S., they are most highly concentrated in the Midwest, Texas, and California (EMSI).
There are several factors that strongly impact the performance of the plastics industry as well as investment location decisions. These include:
Takeaways for Economic and Business Developers - The Case of Northwest Pennsylvania
The region retained Camoin 310 and its engineering partner, CEC PLANNING, to conduct a supply chain opportunity analysis to determine targeted opportunities for attraction and to assess and prioritize areas for site development. For this latter task, a GIS model was developed to identify and prioritize geographic “hot spots” based on critical factors including land availability and quality, infrastructure assets needed, incentive zones, and land use regulation. The analysis and GIS modeling revealed several findings about market potential for plastics.
As a result of falling production costs and the abundance of natural gas in the Marcellus Shale and Utica Shale, the states of Pennsylvania, Ohio and West Virginia have seen a boom in economic activity related to petrochemical production. Further driving this boom is the fact that up to 40 percent of natural gas produced in the region is rich in natural gas liquid, a valuable commodity that can be refined into ethane, propane, and other raw materials, known as feedstocks, which are critical to downstream plastics manufacturing.
The relatively low cost of producing these feedstocks in the Appalachia region compared to the Gulf Coast, which has until recently been the sole hub of petrochemical production within the U.S., creates a key advantage for producers and has led to soaring investment in the region.
By 2030, the region is expected to account for over 40 percent of U.S. natural gas production, compared to 27 percent in 2017, and just two percent in 2008.
With its strong manufacturing history, existing concentration of plastics manufacturers, training programs in plastics, proximity to production facilities across the petrochemical supply chain, and transportation access via road, rail, and water, Northwest Pennsylvania has the foundation of critical assets needed to capture the growing economic activity associated with petrochemicals including plastics.
Based on the analysis the Northwest Commission and its partners are engaging to prepare the region for attracting investment from petrochemicals related industries including plastics and grow its employment and tax base. Through the process they learned several keys to success for business and investment development related to plastics.
Keys to Success - Multistate Collaboration
Site Assessment and Readiness
Bio: Jim Damicis: Jim is Camoin 310’ Senior Vice President. He has more than 25 years of experience in public policy research and analysis. Jim brings a holistic, innovative approach to Camoin’s data-driven economic development planning efforts. Through his work with the Communities of the Future and World Future Society, he is a national leader in preparing the profession, communities and regions for an emerging economic future.