U.S. Plastics Industry Remains Vital Despite External Challenges

March 8, 2007

Tracy Cullen
(202) 974-5282

Demand Grows for Industry's Products, But High Energy Costs and China's Undervalued Currency Stymie U.S. Competitiveness

WASHINGTON, D.C. (March 8, 2007)—Despite pressures from external challenges, the U.S. plastics industry remains one of the largest manufacturing sectors in the U.S., demand for plastics remains strong and the industry remains vital to the U.S. economy. That is the state of the industry according to two new reports released today by SPI: The Plastics Industry Trade Association.

SPI's 2005 Global Business Trends and Size and Impact of the Plastics Industry on the U.S. Economy reports uncover some bright spots, including a 9.7 percent growth in demand in 2005 and an increase in the overall value of shipments. American produced plastic goods still hold significant market share over imports and imports have not rapidly overtaken market share (when measured on industry-wide basis). Additionally, certain plastics industry sectors are performing exceptionally well, including construction materials (plastic pipe and fittings, profile shapes, foam products), packaging (film and sheet, plastic bags) and medical products.

"After 25 years of growth, we started to observe declines in jobs, number of facilities and capital expenditures in 2000," said SPI President and CEO William Carteaux. "The 2005 data show that those declines remain with us. Now that the new Congress is established and has their sleeves rolled up, we have been seeking commitments from key committee leaders to do all that they can to bring down natural gas prices and level the playing field for U.S. manufacturers with China and other trading partners."

The U.S. plastics industry continues to face challenges in the global marketplace that place it at a disadvantage to foreign competitors, according to Eugenia Ross, SPI's director for international trade. "The high price of natural gas and the price advantage Chinese companies enjoy due to that country's artificially undervalued currency make it tough for American-based companies to compete," Ross noted. "Costs are rising at a much faster rate than the value of shipments and companies have not been able to pass them on through price increases."

SPI reports that the industry has lost 271,100 jobs (a 19 percent decrease) since 2002. The majority of these losses occurred between 2002 and 2004, when natural gas prices began to climb to record highs. In addition, there has been a loss of 1,713 facilities since 2002.

SPI's 2005 Global Business Trends and Size and Impact of the Plastics Industry on the U.S. Economy reports are available for purchase at www.plasticsdatasource.org.

"The 2005 data in these reports reiterate the fact that plastics remain a large and dynamic industry that is critical to the economy and manufactures the products that make modern life possible," said Carteaux. "I am optimistic that we will see significant growth in the future if our congressional leaders put in place much-needed legislation that will strengthen our manufacturing sector."

Founded in 1937, SPI: The Plastics Industry Trade Association promotes growth in the $427 billion U.S. plastics industry. Representing nearly one million American workers in the third largest U.S. manufacturing industry, SPI delivers legislative and regulatory advocacy, market research, industry promotion and the fostering of business relationships and zero waste strategies. SPI also owns and produces the international NPE trade show. All profits from NPE are reinvested into SPI’s industry services. Find SPI online at www.plasticsindustry.org and www.inthehopper.org.

"From resin suppliers and equipment makers to processors and brand owners, SPI is proud to represent all facets of the U.S. plastics industry," said William R. Carteaux, president and CEO, SPI. "Our most recent economic reports show that the plastics industry as a whole is resilient, and has come through the recession significantly better than other U.S. manufacturing sectors."

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