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The future could be in plastics

Nov. 8, 2021
USMCA brings Mexico, Canada and U.S. closer than ever, amidst supply-chain woes

The Plastics Industry Association (PIA) released its annual report on global trends, which analyzes trade data from all of 2020 and the first six months of 2021. It paints a complex but promising portrait of the U.S. plastics industry in the international market. And it just may give some insight into the U.S. manufacturing community at large.

There is a great future in plastics. Think about it. Will you think about it?

These words, of course, were uttered by Mr. Maguire in the 1967 film classic, “The Graduate.” While he was encouraging young Benjamin Braddock to pursue a career in plastics, the industry itself might be a bellwether for the economy as a whole.

The report and its accompanying dataset provide a comprehensive account of U.S. imports and exports in four categories, which include resin, products, machinery and molds.

Mexico and Canada remain the U.S. plastics industry’s largest export markets, according to the report. In 2020, the industry exported $13.7 billion to Mexico and $11.7 billion to Canada.

“The 2021 Global Trends report shows that the U.S. plastics industry remains a major player in world trade, due to the versatility of the material and high demand for it,” said PIA President and CEO Tony Radoszewski. “Exports generate jobs, and the U.S. plastics industry continues to create jobs for the U.S. economy.”

The coronavirus pandemic caused the merchandise trade to decline. In 2020, total U.S. plastics industry exports fell 8.2%, and imports were 1.8% above 2019.

Canada and Mexico will continue to be the two largest export markets and are also the top sources of U.S. plastics imports. Proximity matters. The manufacturing sector’s supply chain in these countries was strengthened with the passage of the North American Free Trade Agreement (NAFTA), as well as its updated free trade pact, United States Mexico Canada Agreement (USMCA). This is important particularly as global manufacturing is experiencing supply-chain difficulties.

The United States moved ahead of Germany and behind China in the PIA’s Global Plastics Ranking. Why is all of this talk of the plastics industry important? Considering that plastics is a mature industry, its growth will track economic output growth measured in gross domestic product (GDP). For this reason, it is not unusual to see the world's strongest economies as key players in the global plastics trade.

As China's economy expanded so did its industrial sector, which includes plastics. China's GDP growth averaged 8.7% from 2001 to 2020. With a growing middle class, it is expected that consumption would be a higher share of China's GDP in the coming years. This means higher growth for production and imports of plastics. China's share of world imports of plastics has increased from 8% in 2001 to 11% in 2020.

Germany's role in the global plastics industry is anchored on innovations in plastics machinery and engineered resins. Its manufacturing sector is replete with opportunities for new products and new applications for plastics. For this reason, alongside a growing economy, Germany's role in the global plastics trade will remain significant. The equipment and raw-materials innovations will keep the German economy flourishing, much like the shovel and pan makers profited during the California gold rush.

In the global plastics trade, trade agreements matter. All three economies have benefited from U.S.-Mexico-Canada trade agreements, beginning in 1992 with NAFTA and now with the USMCA. Because of this and the supply-chain difficulties, Mexico and Canada were up a notch from 2019 in the Global Plastics Ranking. Both countries made it into the Top 10 with Mexico ninth and Canada in the 10th position. The economies of USMCA partners are projected to improve this year and the next. Considering that the manufacturing value chains of these countries are linked, it can be expected that the plastics trade among the three free trade partners will rise.

Just one word: plastics.

About the author: Mike Bacidore
About the Author

Mike Bacidore | Editor in Chief

Mike Bacidore is chief editor of Control Design and has been an integral part of the Endeavor Business Media editorial team since 2007. Previously, he was editorial director at Hughes Communications and a portfolio manager of the human resources and labor law areas at Wolters Kluwer. Bacidore holds a BA from the University of Illinois and an MBA from Lake Forest Graduate School of Management. He is an award-winning columnist, earning multiple regional and national awards from the American Society of Business Publication Editors. He may be reached at [email protected] 

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