SPI Economic Report Looks at Climate for Moldmaking

The U.S. Plastics Industry

Overall, the report shows plastics to be one of the largest manufacturing industries in the United States - contributing significantly to the nation's economy and far outpacing growth in other manufacturing sectors.

According to SPIER, the plastics industry provided 1.5 million U.S. jobs and nearly $304 billion in annual shipments in 1999. Plastics industry shipments grew at a rate of 6.2 percent per year between 1994 and 1999, the report says, while plastics industry employment grew at a rate of 4.4 percent per year. Presently, international trade is responsible for 15 percent of plastics industry jobs in the U.S., the report notes. Since 1974, plastics manufacturing industry employment has grown at an average annual rate of 2.6 percent, according to the report, compared with -0.3 percent for all manufacturing industries. Over the past two and a half decades, real plastics manufacturing industry shipments, corrected for inflation, have grown at an average rate of 3.7 percent per year, compared with 1.6 percent per year for all manufacturing.

The research, which was conducted for SPI by Probe Economics (Millwood, NY), relies on thorough analysis of government and other industry data for 1999 to determine the most accurate and defensible measurements of the U.S. plastics industry.

SPIER focuses on four key areas: employment, shipments, productivity and international trade. It also puts a spotlight on various industry segments - including moldmaking.

A Snapshot of Moldmaking

As we look at what SPIER says about U.S. moldmaking, it is important to note that the mold information in the study reflects statistical data collected under North American Industry Classification System No. 33351103, "Industrial Injection-Type Molds Made of Metals for Plastics." Other plastics molds are incorporated into other industry classification segments and cannot be separated out for purposes such as this. Therefore the mold data in the report is limited to injection molds.

That point made, the mold data collected in the SPIER report reveals the following:

• There were 1,534 moldmaking establishments in the United States in 1999, with 28,200 employees and $1.25 billion in annual payroll. Production workers number 22,300, with wages of $907 million.
• Shipments of molds in 1999 totaled nearly $3.2 billion. A labor-intensive industry, moldmaking registered $112,175 in shipments per employee for that year, as compared with $156,406 for plastics processors and $213,780 for the plastics machinery and auxiliaries industry.
• From 1989-1999, mold shipments grew 1.4 percent, which amounts to a decline of 1.2 percent per year in real terms, assuming that the prices of injection molds for plastics rose at the same rate as the prices for other dies, tools and molds.
• Employment in this sector fell 1.4 percent per year from 1989-1999, which implies that productivity in the Molds for Plastics Industry grew only 0.3 percent per year, compared with 2.1 percent per year for plastics products manufacturing and 2.9 percent for the plastics equipment sector. (Depending on the measure, resin industry productivity grew between 3.1 and 6.6 percent per year during that period.)
• From 1989-1999, the mold industry increased capital expenditures considerably, by 13.7 percent per year. By comparison, the U.S. plastics processor industry increased capital expenditures by 6.2 percent per year over the same 10-year period and the plastics machinery industry 12.9 percent per year.
• While the United States enjoys a significant trade surplus in plastic resins of some $6 billion to $7 billion and runs a surplus in plastics products of about $0.5 billion to $1.5 billion per year, it consistently runs deficits of around $0.5 billion per year in molds for plastics and $0.9 billion per year in plastics machinery. Netting these balances out, the United States runs an export surplus of $5 billion to $6 billion for all plastics industry components segments.
• The top three countries for exporting molds to the United States are Canada, Japan and Germany, in that order. The top three countries purchasing U.S. molds are Canada, Mexico and Hong Kong.

What Does It All Mean?

As indicated, the U.S. plastics mold industry lags behind other plastics segments in shipment growth, employment growth, productivity and balance of trade. The industry also is investing in capital investment and technology at a higher rate than other industry segments, with fewer sales to show for it. Does that mean the industry is in trouble? Not necessarily. But it does provide a reality check for those in the industry who may feel they can continue to do "business as usual."

The data in the SPI Economic Report also validates many moldmakers' feelings that they are falling two steps backwards for every three steps forward they take these days. The machine tool industry in the United States has been under pressure from the new global and information-age economy for years, and the moldmaking industry is no exception. From increased imports to customer "voluntary" rebate schemes to significant high-skill labor shortages, the mold industry feels as though it is getting hit from every direction. That, however, is the pessimist's view. From the optimist's perspective, where there are challenges, there are opportunities.

What Can Be Done?

Moldmakers need to learn from other industry segments that already have gone through this cycle in the U.S. economy. As the moldmakers who went on the recent SPI-sponsored trade mission to Asia found, the U.S. industry may be facing obstacles, but companies should not be giving up.

It is clear that business cannot continue to be conducted as it was 15, 10 or even five years ago. Those who will profit from today's marketplace must learn from industry leaders who have gained from increased global awareness, improved quality and, perhaps most importantly, consistently shortened leadtimes.

SPI has this advice for moldmakers: If you are concerned about international competition, get on a plane and learn about it firsthand. If worker training is an issue, get involved with organizations such as SPI that are providing training guidance. If other business-driven issues such as quality control or leadtime improvements are concerns, learn from colleagues in industry forums sponsored by U.S. mold and plastics associations.

Prior to participating in the January 2000 trade mission to Asia, one U.S. moldmaker was so concerned about international competition that he feared for his company's future. After meeting some of his Asian competitors and learning first-hand about the international market, he came back to the U.S. ready to make needed improvements in his plant and grow into the next century. "We will compete and win," he said.

That is the attitude SPI suggests that all its moldmaker members take forward as the challenges - and opportunities - for the U.S. moldmaking industry continue to grow.