Plastics Materials, Synthetic and Resins, and Nonvulcanizable Elastomers

SIC 2821

Companies in this industry

Industry report:

The plastic materials and resins industry is comprised of companies primarily engaged in manufacturing various resins and plastics for sale to other industries that create plastic sheets, rods, films, and other products. Information on related products can be found under SIC 2822: Synthetic Rubber, SIC 2823: Cellulose Manmade Fibers, and SIC 2824: Organic Fibers--Noncellulosic.

Industry Snapshot

Synthetic plastic was invented late in the eighteenth century but did not reach widespread use in the United States until the 1900s. Swift advances in chemical and manufacturing technologies during the twentieth century, however, made plastic one of the most important manufacturing materials in the United States. The most important uses of plastics included packaging, building and construction, transportation, and consumer and institutional uses.

According to the Society of the Plastics Industry Inc. (SPI), plastics products was the third-largest manufacturing segment in the United States in 2009. The specific category of resins, synthetic material, and rubber production ranked fifteenth among U.S. manufacturing industries. Other figures from SPI showed that approximately 18,500 companies manufactured plastic products or plastics raw materials in the United States in the late 2000s, and 1.1 million people were employed by the industry. Production facilities were located predominately in California, Texas, and the Midwest (Ohio, Michigan, Illinois, and Indiana), with the top 10 states accounting for 60 percent of all plastics employment. The value of annual shipments reached $379 billion in 2008.

Organization and Structure

Plastics provide an important alternative to natural materials for a plethora of applications. One of the most important distinguishing factors between plastic and other materials is plastic's ability to "creep" under load, or gradually stretch or flow when subjected to stress. While metals and ceramics exhibit this property as well, they do so only at much higher temperatures. Plastics also resist erosion and do not require a coating to protect them against inorganic acids, bases, and water or salt solutions. Perhaps the greatest advantage that plastics offer, however, is their ability to be molded into any shape and to be processed to exhibit any of a massive number of physical characteristics.

Market Structure.
The synthetic materials industry represents about 20 percent of the overall chemical industry synthetic materials manufacturers. The plastics industry comprises about 70 percent of the entire synthetic materials industry, which also encompasses rubber and manmade fibers. Manufacturers produce about 500 different types of resins and compounds. Each of these products is available from various suppliers in multiple grades, with each grade offering varying physical properties and prices.

Plastics are giant polymers, or long-chain molecules that contain thousands of repeating molecular units. When combined with other ingredients called additives, the polymers can be shaped and molded under heat and pressure into a resin. Resins are produced through chemical processes that combine carbon with other elements such as oxygen, nitrogen, and hydrogen. Resin usually takes the form of pellets, flakes, granules, powder, or a syrupy liquid. Most resins are not used in their natural state, but are instead combined with other materials by mixing or melt-state blending. The end result is a plastic compound that is still in the form of pellets, granules, or powder and is ready to be delivered to a processor. There are two basic kinds of plastics: thermoplastics, which can be re-softened to their original condition by the application of heat; and thermosets, which cannot be resoftened. The production of thermoplastic resins surpasses the production of thermosetting resins by a ratio of about 8 or 9 to 1. Thermosetting resins include epoxy and polyester; thermoplastic resins include polyethylene and polyvinyl chloride, more commonly known as PVC.

The physical properties of the final plastic product can be altered at various stages of the polymerization and production process. The most versatile method of varying properties is by compounding. With this method, additives, such as colorants, flame retardants, heat or light stabilizers, or lubricants, may be added to the resin to achieve a desired result. Fillers or reinforcement, such as glass fibers, particulate materials, or hollow glass spheres, may instead be added to the resin, as may other polymers, which form a polymer blend or alloy.

Plasticizers are the most common additives used to alter plastic resins. Plasticizers increase a resin's flexibility and are often used to make polyvinyl chloride resins used in construction products. Impact modifiers are an additive used to boost a plastic's resistance to stress. Similarly, antidixodiants retard the oxidation and breakdown of plastics, and heat stabilizing additives help resins to maintain their physical structure during processing. Light stabilizers filter out radiation that can cause a plastic to deteriorate as a result of exposure to sunlight, and flame retardants enable resins to resist combustion. Colorants are another major additive used in the compounding process.

Four major commercial divisions of plastic resins are manufactured. Commodity resins, which represent the bulk of industry production, are low-tech plastics available in standardized formulas from many companies throughout the world. Intermediate resins are generally considered more advanced and somewhat specialized in comparison to commodity resins. Similarly, engineering resins generally exhibit more advanced performance characteristics and are produced on a smaller scale than other types of resin. Finally, advanced resins are generally those most capable of withstanding impact and high heat, carrying loads, and resisting attacks by chemicals and solvents.

Thermoplastics account for the majority of industry output. They solidify by cooling and may be re-melted repeatedly to form new shapes. Examples of thermoplastic resins are polyethylene, polypropylene, and polystyrene. Polyethylene is the highest volume plastic, accounting for about 40 percent of thermoplastic production, and is used primarily to create packaging, though many consumer and institutional products are made from it as well. Major manufacturers of this resin include Quantum Chemical, Union Carbide, and Dow Chemical Co.

Polyvinyl chloride (PVC) makes up the second-largest share of the thermoplastics segment. It is used primarily to make gutters, pipes, siding, windows, and other products used by construction and building industries. About 14.9 billion pounds of PVC were shipped in 2006. Major producers include Occidental Petroleum, Shintech, and Formosa Plastics. Polypropylene, another thermoplastic, accounted for about 18.4 billion pounds of production in 2006. This resin is used mainly in the creation of fiber and filaments, as well as in the production of packaging and molded consumer products.

Polystyrene is used to make disposable packaging, furniture finishings, and miscellaneous consumer products. Other thermoplastics segments include polyamide resins, styrene-butadiene, and some polyesters.

Thermosets, the other division of the plastics industry, account for about 12 percent of output. Unlike thermoplastics, thermosets harden by chemical reaction and cannot be melted and shaped after they are created. Thermosets are also considered the more mature and less dynamic segment of the industry. Typical thermosets include phenolics, urea-formaldehyde resins, epoxies, and polyester. Phenolics, which account for more than 50 percent of all thermoset production, are used principally for construction products. Such materials include plywood adhesives, insulation, laminates, moldings, and abrasives. Urea, the second-largest segment of the thermoset division, is also used as an adhesive for plywood and particle board. Other uses of this resin include protective coatings and textile and paper treating and coating.

Thermoset polyesters are used to create plastics that are reinforced with glass fiber and other materials. They also are used to make various construction supplies such as boat and marine equipment, transportation products, and electronics. Epoxy is primarily used as a protective coating for metal goods, but is also used in multiple construction applications.

Background and Development

The first plastic used in the United States was a natural material known as keratin, which was made from animal hooves, horns, feathers, and hair. Keratin was used as a fabricating material to make lantern windows and other items as early as 1740. In the late 1800s, Americans copied a technique observed among Malayan natives, who molded a plastic made from gutta percha, or gum elastic, into knife handles and other articles. This technique had a variety of applications in the United States, from ocean cable insulation to billiard balls. Samuel Speck, regarded as the first American to mold plastics, helped to introduce shellac plastics in the 1850s. By then, different types of natural plastics were being used to produce such items as checkers, buttons, picture frames, and insulators.

"Parkesine," the first synthetic plastic, was invented in 1862 by Alexander Parkes, an Englishman. Recognizing the important plasticizing effect in the parkesine production process, American John Wyatt renamed the substance celluloid in 1870 and was credited with originating the production of synthetic plastics in the United States. Celluloid, despite its inflammability, was used to make carriage and automobile windshields and motion picture film.

Dr. Baekland, also an American, invented the world's first moldable plastic material in 1909. Baekland's thermosetting phenolformaldehyde resin provided a tremendous impetus for other inventors, who began developing molding techniques and adding resins to paints and varnishes. Baekland's resin, later called "bakelite," was also used in the electrical industry to make some of the first molded synthetic plastic components. The first colorless resin, urea-formaldehyde, was invented in 1918 and sold commercially in 1928.

Plastics research and development began to proliferate in the 1920s and 1930s. The Germans pioneered the creation of many new thermosetting resins, while Americans and several Europeans made significant contributions in the area of plastic molding and extrusion machines, and later in the advancement of thermoplastics. During World War II, the plastics industry realized significant advances, as warring nations hurried to develop new and better materials for their war machines.

Postwar economic expansion augmented the development of the plastics industry. As demand for all types of consumer, commercial, and institutional products soared, plastics producers scrambled to keep pace with expanding markets. Successive breakthroughs in chemical technology and production techniques opened up vast new markets for manufacturers. Most importantly, however, producers in other industries began to realize the advantages of substituting plastics for more expensive, less flexible, natural materials. By the 1970s, the plastics industry was shipping more than $10 billion worth of resins per year. U.S. producers also controlled a major share of aggregate world exports.

Sales of all types of plastic resins continued to multiply throughout much of the 1980s. A variety of factors, such as excess capacity and high petroleum costs, contributed to brief periods of slow production or decreased profits. In general, however, industry participants benefited from several factors. Growth in exports, for example, contributed to the industry's success. Although U.S. chemical firms lost world market share, exports grew from $7 billion in 1992 to nearly $14 billion in 1999. Imports also grew during these years, from $2 billion to $5.6 billion, respectively.

New additives and plastic alloys increased in demand, opening entirely new markets for resins and prompting other industries to substitute plastic for more expensive, less flexible organic products. Furthermore, as many segments of the industry matured and became more competitive, falling prices allowed plastics to penetrate a number of metal, glass, and wood markets. Reinforcing downward pricing pressures were massive industry investments in research, development, and more efficient production facilities, enabling producers to remain extremely competitive domestically.

Between 1992 and 1999, plastic industry shipments grew at a slow but steady pace from $31.6 billion to $47.7 billion. Industry employment also grew at a slow but steady pace from 54,000 in 1982 to almost 70,000 in 1995. In 1996, however, employment had sunk to 58,600, a decade low.

Much of the demand for plastics comes from the packaging and consumer markets, two sectors that, according to Standard & Poor's, are fairly resistant to recessionary pressures. In fact, in 1997 the largest single market for plastics was packaging products such as bags, bottles, and food containers. These products alone consumed 26 percent of all plastics, according to the Society of the Plastics Industry (SPI). Building and construction was the second largest market, with structural materials, pipes, conduits, and fittings accounting for 21 percent of 1997 plastics production. Consumer and institutional goods such as kitchen wares, toys, sporting goods, and medical products accounted for 13 percent; transportation for 5 percent; furniture and furnishings and electronic appliances and components each accounted for 4 percent; exports for 12 percent; adhesives, inks, and coatings for 2 percent; and all other uses for 13 percent.

During the 1990s there was compression and consolidation in the U.S. plastics industry. Standard & Poor's quoted Impact Marketing Consultants as estimating that there were only 17 large U.S. producers of polyethylene and 14 large U.S. producers of polypropylene in 1995. They also noted that in 1996, the number of U.S. polystyrene producers dropped from eight to six when two producers sold out to competitors. There also were other important mergers and buyouts. These included the formation of the Equistar Chemical partnership following the partial merger of Lyondell Chemical and Millennium Chemicals Inc., which made Equistar the largest producer of ethylene and polyethylene in North America. Other deals included the acquisition of Rexene Corp. by Huntsman for $60 million in 1997; the partial merger of Geon Co. and Occidental Petroleum in 1999, which formed Oxy Vinyls L.P.; the merger of Amoco Corp. with British Petroleum, which formed BP; and the merger of Exxon Corp. and Mobil Corp., which formed ExxonMobil.

The volatility of natural gas prices wreaked havoc on the plastics industry in the early 2000s. Prices soared in early 2003, sending waves of panic throughout the industry. When natural gas prices spiked to $9.00 per million British thermal units (mmbtu) compared to $2.40 mmbtu a year earlier, a Huntsman Corp. official lamented to Chemical Market Reporter, "The problem facing the polymers and petrochemicals industry in the U.S. is unprecedented. Rome is burning."

At the same time that production costs increased, demand slackened. However, orders picked up again as customers began restocking to prepare for the return of consumer activity, which occurred in the mid-2000s once the economy recovered more fully and natural gas prices stabilized. In fact, by 2004 the industry reported tremendous gains in production, with an 8 percent one-year growth to 115.1 billion pounds, an industry record, and sales were at the highest increase since 1996. Packaging remained the largest end-user market for products from this industry, and the building and construction markets were still strong with an increase in housing starts.

The housing market flourished in the early 2000s, but when supply surpassed demand, the residential construction stalled. Housing starts numbered 2.07 million in 2005, but dropped to 1.82 million units in 2006. Because the building and construction industry represents one of the largest consumers of plastic resins, the demand for such products as polyvinyl chloride (PVC) fell. According to the Plastics Industry Producers' Statistics (PIPS) Group of the American Chemistry Council, domestic production of PVC dropped 2.2 percent to 14.9 billion pounds in 2006.

Despite this downturn in residential construction, the U.S. plastic resins industry as a whole showed improvement, in large part because the global economy rebounded. Resin production by U.S. manufacturers increased 3.1 percent in 2006 to reach 113.2 billion pounds. Production of resins, synthetic materials, and rubber was the fifteenth largest manufacturing industry in the United States, according to the Society of the Plastics Industry.

Growth in the largest market for plastics, which was packaging and consumer products, was strong in the mid-2000s. Retail sales in this segment increased 3 percent in 2006. The electrical and electronics segment experienced even greater gains during the year. Although the appliances subcategory was affected by a softened housing market, production of computers and other electronic products skyrocketed 20.5 percent in 2006, on the heels of an 11.7 percent gain in 2005.

The transportation and furnishings markets both declined in 2006. Increasing gasoline prices dampened demand for motor vehicles and parts, and production declined 1.4 percent to 16.3 million vehicles. Fewer housing starts meant reduced demand for carpeting and other textile furnishings, and this subsegment declined 1.2 percent. Further contracting domestic production was an influx of imported furniture, causing the U.S. furniture industry to experience a slight decline.

Overall, however, U.S. plastic material and resin manufacturers enjoyed a surplus in trade balance. In 2006, import and export levels both reached record volume. Exports of plastic resins grew 13.3 percent to $32.5 billion, while imports increased 8.2 percent to $18.8 billion. Canada and Mexico were the largest trading partners, together accounting for approximately half of all U.S. imports and exports.

Current Conditions

Like many other U.S. industries, plastics manufacturing was impacted by the economic downturn of the late 2000s. According to the American Chemistry Council's Plastics Industry Producers' Statistics Group (PIPS), U.S. resin production fell 12.3 percent to 101.5 billion pounds in 2008. Sales decreased 10.1 percent, to 104.2 billion pounds, the lowest since 2001. PIPS attributed the negative growth in the industry to a decline in economic activity, including a slowdown in the U.S. housing market, high energy prices, inflation, and reduced production and demand in the auto industry. In addition, the North American trade deficit in plastic products increased from a $1.21 billion deficit in 2007 to a $2.36 billion deficit in 2008.

Packaging remained the largest market for plastic resins in the late 2000s. However, the 4.3 percent decline in retail sales in 2008 negatively impacted that sector. The building and construction market for plastics also decreased, as housing starts fell from 1.36 million units in 2007 to 893,000 units in 2008. In addition, the industry felt the effects of the decline in auto sales, which reached only 13.1 million units in 2008, and auto production, which decreased 15.1 percent. Other important plastics markets that experienced downturns in 2008 included electronics (especially appliances), furniture, and industrial machinery.

Industry Leaders

The largest U.S. company actively producing chemicals, plastics, hydrocarbons, and agricultural and specialty products is the Dow Chemical Co. Headquartered in Midland, Michigan, this diversified company is the second largest chemical company in the world behind BASF AG and generated more than $57.5 billion in sales in 2008. Ranked second in the United States is Houston, Texas-based ExxonMobil Chemical Co., a subsidiary of ExxonMobil Corp., the world's largest oil company. E.I. duPont de Nemours and Co. ranks third among U.S. plastics producers. This company, based in Wilmington, Delaware, reported 2008 revenues of $31.8 billion.


In 2007, according to the U.S. Census Bureau, approximately 71,200 workers were employed in the plastics material and resin manufacturing industry. The plastics industry was expected to offer steady opportunities for highly trained individuals, especially in technical fields, since the industry continues to be a major supplier of high-paying jobs for those specializing in technical fields, particularly chemists, chemical engineers, and plastics engineers.

The first production step in making plastic products is the preparing and mixing of resins with other ingredients to form powders. These tasks are usually performed by drier operators, blenders, and oven tenders. Molding machine operators are then responsible for setting and monitoring heat and pressure gauges on the molding machinery and pouring the powder into the machines. The operators then remove the molded plastic products from the machines and send them to finishing rooms where drill press operators, grinders, and buffers finish the products. Plastics regrinders are responsible for grinding scrap plastic for recycling.

America and the World

The U.S. plastics industry, by far the largest and most advanced in the world, was expected to continue with Japan and western Europe as the dominant producer and the consumer of plastics materials and products, although the markets in Latin America and Asia were expected to grow at a faster rate, especially in Brazil, China, and Mexico. Growth was also expected in Thailand, South Korea, and other fast-developing areas of Southeast Asia. Many Asian countries, especially South Korea and China, were expanding their plastics manufacturing capacity, which will lessen their demands for imports while creating global competition for U.S. firms.

Western Europe and the United States each account for the consumption of about 30 million metric tons a year of plastics in solid form. Japan consumes less than 15 million metric tons a year. These three regions/countries thus account for about two-thirds of worldwide plastics consumption. The most vigorous rate of growth of plastics consumption occurred in Asia. Some predictions claimed that by 2020 western Europe, Japan, and the United States will account for 40 percent of global plastic consumption as compared to 75 percent in 1974, 70 percent in 1985, 62 percent in 1997, and an estimated 52 percent in 2007.

The global market for solid polymers is projected to reach 400 million metric tons by 2020. This figure reflects a 5 percent annual growth rate between 1997 and 2020.

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