Plastics Materials and Basic Forms and Shapes

SIC 5162

Companies in this industry

Industry report:

This industry includes companies engaged in the wholesale distribution of plastics materials and basic forms and shapes. Industry products include unsupported plastic film, sheeting, rods, tubes, and synthetic resins.

According to industry statistics, there were 2,846 establishments involved in the plastics and basic forms and shapes industry in 2009 with a total of 23,954 employees. Both figures had declined since 2001, when there were 3,908 establishments employing 43,116 workers.

In 2009, the plastics materials and basic shapes sector controlled about one-third of the industry in terms of market share. The plastics products not elsewhere classified segment made up one-quarter of the market. The plastics material not elsewhere classified segment made up about 15 percent. Plastic resins accounted for 7 percent; plastics film, 6 percent; and plastics sheets and rods, 6 percent.

A panel of 67 journalists gathered by the Newseum, a journalism museum, ranked the invention of plastic number 46 on its list of the 100 most significant news events of the twentieth century, according to a February 1999 American Plastics Council (APC) press release. Newsweek magazine seconded this opinion. As the APC reported in November 1999, the year-to-date plastic resin production by August 1999 amounted to 52.1 billion pounds, a 5.3 percent increase over production for the same eight-month period in 1998. August 1999 production reached 6.6 billion pounds, a 0.7 percent decrease from July 1999 production but a 4.1 percent increase over August 1998 production.

Both shipments and employment in plastics rose over the 1990s. Employment continued its annual growth rate of 3 percent since 1974, reaching 1,337,700 jobs by 1996, and shipment values continued their two-and-a-half decade growth rate of 4.1 percent, and between 1991 and 1996 alone shipment values rose 55 percent, reaching a value of $274.5 billion in 1996, according to APC statistics.

The 1992 Census of Wholesale Trade listed 3,490 companies as wholesale distributors of plastic materials and basic forms and shapes. Their combined sales totaled $28.5 billion. At least 160 of these companies reported annual sales of $25 million or higher. The industry employed 25,504 workers and posted an annual payroll of $803.6 million. These figures can be compared to those of the 1980s, where the 1987 Census of Wholesale Trade listed 2,744 companies in this group, with combined sales of $20.3 billion, 28,453 workers, and an annual payroll of $788.4 million.

Between 1988 and 1992, the average return on assets for the nation's plastic distributors dropped 45 percent, from 8.1 percent to 4.6 percent, although individual distributors had varying success. As Mark Bogin, of Roechling Engineered Plastics in Gastonia, North Carolina, observed in IAPD Magazine, "plastic distributors serve a cross-section of industry, and no two distributors serve the same market and industries in the same way." Bogin also said "there is hardly any industry that does not use our products, and regardless of general economic conditions there are always industries which are growing."

According to a report issued by the APC in 2003, the overall industry had remained flat. The economy had weakened by the war in Iraq and the workforce continued to decline. The plastics industry being dependent upon other industry's needs for their products, felt the rippling effect of the downturn in the overall economy.

In 2004, the plastics market began to recover from the downturn and production of plastic resin rose to 6.9 billion pounds in January of 2004, up 2.4 percent from the same time period a year before. The following month the production increased 5.1 percent.

The industry experienced a downturn in 2008. Production of major plastic resins in August that year totaled 6.6 billion pounds, a decline of 8.1 percent from August 2007, according to the American Chemistry Council (ACC). Production from January through August 2008 dropped 4.8 percent from the previous year to 53.4 billion pounds. The sales and use of major plastic resins showed a more dramatic drop, with the 5.9 billion pounds in August 2008 representing a fall-off of more than 19 percent from August 2007.

The global recession continued to negatively impact the industry through most of 2009, causing resin production to drop below 100 billion pounds for the first time in 10 years. Total resin production in 2009 was 98.7 billion pounds, down 2.8 percent from 2008. Sales of resin totaled 100 billion pounds, a drop of 4 percent from the previous year. The industry experienced much of the decline during the first half of 2009, with some significant recovery during the latter part of 2009, but it was not sufficient to offset the losses experienced earlier in the year. Not only was the industry combating decreasing consumer demand for plastics, but resin customers were attempting to cut costs by drawing down stocks from their inventories. Specifically, according to data from the ACC, during the fourth quarter of 2008, customers were using 5.35 billion pounds of thermoplastics per month but only purchasing 4.44 billion pounds a month, suggesting that they were drawing from stocks on hand. By the end of 2009, these customers had begun to restock their now-depleted inventories, thus driving up demand.

The packaging industry, resins ' largest customer sector, was affected by the recession in terms of declining retail sales. The packaging industry fell off by 3.8 percent in 2008 and dropped another 9.3 percent in 2009. Housing, another important sector for resins, fell off dramatics during the second half of the 2000s. In 2005 new housing starts reached a record high of over 2 million; in 2009, new house starts totaled just 553,000--representing a 73 percent decline. Transportation, another key market for plastics, also experience substantial losses in the late 2000s, falling off by nearly 28 percent in 2008, after experiencing smaller declines in 2006 and 2007. Similarly, the electrical and electronics market suffered from poor demand: the sale of appliances was done by 17 percent and 5 percent in 2008 and 2009 and computers and electronic products fell by nearly 10 percent in 2009. Although volatility remained, by mid-2010 the economy had shifted, returning to slow growth. Year-to-date growth of resins through September 2010 was 56.9 billion pounds, a 4.5 percent increase over 2009.

Cadillac Plastic and Chemical Company once was an innovator in the industry. The company, founded in 1945, began as a reseller of surplus canopies from U.S. fighter planes. By the mid-1990s, Cadillac Plastic operated in more than 147 locations around the world. Sheet products, such as Lexan and Plexiglas, were some of the company's best-known products. Lexan, made by GE Plastics, was used in safety glazing, outdoor signage, machine guards, skylights, and windows. Plexiglas, the nation's first commercially available acrylic sheet, was used in display cases and bar-code readers. M.A. Hanna Co. of Cleveland, Ohio, an international specialty plastics company, bought Cadillac Plastic in 1987.

Cadillac Plastic's line of engineering plastics included Nylon, Acetal, Teflon, CastAcrylic, UHMW-PE, and High Performance Polymers (HPP). The company also sold tubing, lighting, adhesives, and silicones. Within the specialty film category, Cadillac Plastic provided materials used in automobile instrument panels, membrane switches, and graphic arts products. The company's Aircraft Products group marketed specialty products meeting FAA standards for commercial aircraft builders.

The 2000 merger of M.A. Hanna and Geon created PolyOne of Avon Lake, Ohio. PolyOne, among the leading plastics compounders and resins distributors in the United States, had 2009 sales of more than $2.06 billion.

The largest distributor of plastics in North America in the late 2000s was the Ashland Distribution Company of Dublin, Ohio, a division of Ashland Inc. of Covington, Kentucky. Ashland Inc. 's overall sales in 2009 totaled $9 billion. In 2010 Ashland Inc. sold Ashland Distribution to TPG Capital, a private equity firm, for $930 million.

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