By Mark R. Smith, Contributing Writer
Dr. Perc Pineda, chief economist of the Plastics Industry Association (PLASTICS), recently summarized the general state of the industry in the association’s flagship annual analysis, known colloquially as “The Perc Report.”
The report’s highlights included that the industry accounted for just more than one million jobs and $519.1 billion in shipments in 2023, deeming it “a success story for the U.S. economy.”
The Perc Report also revealed that plastics manufacturing employment grew 1.1% per year from 2013 to 2023, outpacing total manufacturing, which saw employment grow by just 0.7% per year during that span. When suppliers to the plastics industry are considered, plastics-related U.S. jobs grow to 1.55 million, and total shipments grow to $658.2 billion.
While the various numbers and measures are looking up, sustainability and the timing necessary for such efforts under the new administration remain wild cards.
The Threshold
As for its overall rank in The Perc Report as measured by gross output, the plastic products portion of the industry was the eighth largest in the U.S. in 2022, the most recent year for which data are available. As for 2024, the numbers weren’t great, but could well improve.
“In terms of production, 2024 was a slow year,” said Pineda, of Washington, D.C.-based PLASTICS, “but this year will probably be better, which would mark a gradual improvement in the last two years.”
Noting that “Everyone was affected by high interest rates” last year, Pineda said in the plastics industry “demand continued to be stable, inventories high and the capacity utilization rate low compared to historic numbers of 80%. That number has decreased since there is enough inventory for the stable demand.
“But I think this year,” he said, “will mark the return to normal production, [particularly with] lower interest rates.”
Pineda also pointed to the 2022-23 capital expenditure data, which indicated a 12.1% decrease in the production of plastics. “When interest rates hit 4%, it encumbered growth,” he said, but the expected lower rates should spur productive activity. “There will be an increase in risk-taking, so we’ll have new products, new revenues and more interaction in the market.”
While Pineda said the overall economy “has still been strong, no doubt,” he pointed out some pockets that underperformed. “Some key sectors, such as housing, have been down for some time, so all of the plastics going to the sector has slowed; and manufacturing, which is the main customer of the U.S. plastics industry, slowed, too. So they have been no-growth zones.”
Overall, “Whatever uptick we saw in the first half of last year peaked around mid-spring,” said Pineda, “and was the end of the growth in 2024.”
The better news is that material costs “only fluctuated by 2% last year and the supply chain was O.K., so those were not issues,” he said. “Buyers are getting what they need at a decent price.”
Today, the bigger issue is “very high government debt” that was accrued as a result of the COVID-19 pandemic. “The economy was supported by the government in recent years,” Pineda said. “While we look poised for another growth spurt, with consumer debt being high the economy may not reach the heights it did in the late teens.”
Training Available
As is the case in many industries, another challenge will be finding, perhaps training and hopefully maintaining the workforce. Pineda said this “will always be a supply-side issue, meaning a challenge for plastics and the entire manufacturing sector.”
Interesting, though, is that “One of the explanations from policymakers is that recent economic growth has been mainly due to immigration,” he said. “That may be, but that benefits the service sectors more than the manufacturing sector because the skill sets are different.”
A vast number of immigrants who come to the U.S. work in service jobs, with the wild card being their seeking training to enhance their skills. Or not.
“The training is available, but they often need jobs immediately and don’t often seek that training,” Pineda said, “and there is no mechanism to connect immigrants to these opportunities. If we don’t address the fact that manufacturers are getting more technical, the workforce issue will continue.”
All told, high points for 2025 “will be shaded by the macroeconomic conditions of the day,” Pineda said. “We can’t ignore how changing policies involving taxes, trades and whatever the new administration does will affect the industry. And the labor force will be continue to be an issue.”
Carl Livesay is the general manager of Baltimore-based Mercury Plastics, a contract manufacturer of plastic products and components. From his ground-level observation point, he said his company is in a similar spot to many companies.
“Much like other manufacturers, revenue is down for the second year in a row,” Livesay said, “after 2022 saw a rebound and rebuild of pent-up demand as we recovered from the pandemic.”
But then came 2023, and “the business returned to pre-pandemic levels, with 2024 was materially unchanged from 2023. This trend is not unique to plastic companies and is more of a statement about economic confidence than capability,” he said. “We’re hopeful, but not confident, that 2025 will show an increase in top-line revenue.
Dr. Perc Pineda, chief economist of the Plastics Industry Association (PLASTICS), recently summarized the general state of the industry in the association’s flagship annual analysis, known colloquially as “The Perc Report.”
The report’s highlights included that the industry accounted for just more than one million jobs and $519.1 billion in shipments in 2023, deeming it “a success story for the U.S. economy.”
The Perc Report also revealed that plastics manufacturing employment grew 1.1% per year from 2013 to 2023, outpacing total manufacturing, which saw employment grow by just 0.7% per year during that span. When suppliers to the plastics industry are considered, plastics-related U.S. jobs grow to 1.55 million, and total shipments grow to $658.2 billion.
While the various numbers and measures are looking up, sustainability and the timing necessary for such efforts under the new administration remain wild cards.
The Threshold
As for its overall rank in The Perc Report as measured by gross output, the plastic products portion of the industry was the eighth largest in the U.S. in 2022, the most recent year for which data are available. As for 2024, the numbers weren’t great, but could well improve.
“In terms of production, 2024 was a slow year,” said Pineda, of Washington, D.C.-based PLASTICS, “but this year will probably be better, which would mark a gradual improvement in the last two years.”
Noting that “Everyone was affected by high interest rates” last year, Pineda said in the plastics industry “demand continued to be stable, inventories high and the capacity utilization rate low compared to historic numbers of 80%. That number has decreased since there is enough inventory for the stable demand.
“But I think this year,” he said, “will mark the return to normal production, [particularly with] lower interest rates.”
Pineda also pointed to the 2022-23 capital expenditure data, which indicated a 12.1% decrease in the production of plastics. “When interest rates hit 4%, it encumbered growth,” he said, but the expected lower rates should spur productive activity. “There will be an increase in risk-taking, so we’ll have new products, new revenues and more interaction in the market.”
While Pineda said the overall economy “has still been strong, no doubt,” he pointed out some pockets that underperformed. “Some key sectors, such as housing, have been down for some time, so all of the plastics going to the sector has slowed; and manufacturing, which is the main customer of the U.S. plastics industry, slowed, too. So they have been no-growth zones.”
Overall, “Whatever uptick we saw in the first half of last year peaked around mid-spring,” said Pineda, “and was the end of the growth in 2024.”
The better news is that material costs “only fluctuated by 2% last year and the supply chain was O.K., so those were not issues,” he said. “Buyers are getting what they need at a decent price.”
Today, the bigger issue is “very high government debt” that was accrued as a result of the COVID-19 pandemic. “The economy was supported by the government in recent years,” Pineda said. “While we look poised for another growth spurt, with consumer debt being high the economy may not reach the heights it did in the late teens.”
Training Available
As is the case in many industries, another challenge will be finding, perhaps training and hopefully maintaining the workforce. Pineda said this “will always be a supply-side issue, meaning a challenge for plastics and the entire manufacturing sector.”
Interesting, though, is that “One of the explanations from policymakers is that recent economic growth has been mainly due to immigration,” he said. “That may be, but that benefits the service sectors more than the manufacturing sector because the skill sets are different.”
A vast number of immigrants who come to the U.S. work in service jobs, with the wild card being their seeking training to enhance their skills. Or not.
“The training is available, but they often need jobs immediately and don’t often seek that training,” Pineda said, “and there is no mechanism to connect immigrants to these opportunities. If we don’t address the fact that manufacturers are getting more technical, the workforce issue will continue.”
All told, high points for 2025 “will be shaded by the macroeconomic conditions of the day,” Pineda said. “We can’t ignore how changing policies involving taxes, trades and whatever the new administration does will affect the industry. And the labor force will be continue to be an issue.”
Carl Livesay is the general manager of Baltimore-based Mercury Plastics, a contract manufacturer of plastic products and components. From his ground-level observation point, he said his company is in a similar spot to many companies.
“Much like other manufacturers, revenue is down for the second year in a row,” Livesay said, “after 2022 saw a rebound and rebuild of pent-up demand as we recovered from the pandemic.”
But then came 2023, and “the business returned to pre-pandemic levels, with 2024 was materially unchanged from 2023. This trend is not unique to plastic companies and is more of a statement about economic confidence than capability,” he said. “We’re hopeful, but not confident, that 2025 will show an increase in top-line revenue.
“Sales are stable with last year and everyone believes it will remain the same this year,” said Livesay. “That said, we are using this lull in sales to train our team, develop new products, and grow relationships with our customers and partners.”
As for its employee roster, Mercury is largely stable. “We’re fortunate to have a positive corporate culture,” he said, “with excellent benefits and fair market value wages. We’re doing everything we can.”
So Livesay is hoping for the best. “We’re hoping that the cost of living gets under control quickly. People are suffering at grocery stores and gas stations. Markets don’t support increased prices to customers, so there is a lot of pressure on the workforce.”
During his 52 years with Precision Plastics, in Beltsville, Md., Dave Perry has seen a business cycle or three. He said that “having a wide customer base” works in the company’s favor: that means doing anything from cutting a piece of plastic to size to making custom scientific equipment for government entities like NIH and NIST, universities, private industry, etc., has kept his staff of a dozen busy.
“Business can always be better, but it seems fine,” Perry said. “We started slowly in 2024, but business picked up. We’re not getting the biggest jobs, but our work comes from all directions, so that’s a good sign. That’s enabled us to see the effects of government shutdowns and businesses cutting back more quickly than other companies.
“But,” Perry queried, “who knows what will come in 2025?”
Sustainability
Then comes the ubiquitous topic that imminently hovers above any industry discussion, which is sustainability. Along that avenue, Mercury has been a model of proactivity.
“We recycle everything except lunchroom waste,” said Livesay. “Beginning with our closed-loop recycling program, plastic is ground and returned to our facilities in Illinois and blended, often with Post-Consumer Resin (or Recycled), and extruded. The finished rolls are then returned to us as part of new product.
Plastic not used for Mercury’s extruders are sold to its recycling partners in Illinois; aluminum, steel, wood, cardboard and paper are all recycled, too. The company also uses solar energy generated on-site, which he said “offsets our electric consumption by approximately 35%.
“We even recycle the heat from our equipment by recirculating it into other areas of the building,” said Livesay, while the company has also “increased community outreach efforts.”
Acting Locally
While a global issue, sustainability “is dependent on geography and local rules. We’ll learn more about where this sector goes with the new administration,” said Nima Farshchi, director of the Center for Social Value Creation at the University of Maryland College Park.
Farshchi pointed out that companies like Mercury “are choosing to self-regulate, and they can alter what they do on the spot.” However, the approach overseas is different.
“In the European Union, for instance, they’re much more about the regulation of mandatory requirements,” he said, “and plastic packaging has to be down” by 5% by 2030 and 15% by 2040.
That means a certain mindset must be adhered to when analyzing the approach of multinational companies, “because the EU will hold them accountable, which can lead the U.S. operations to follow suit earlier to keep company operations constant,” he said.
The toy industry, for instance, is also active on this front. “Companies in that sector have announced their intention to remove all plastic from their products,” Farshchi said. “The goal for Lego, for instance, would be no plastic in any of its products going forward.”
And that corporate stance has led to a fascinating amount of research: the company “tested 600 alternatives for plastics that have the same durability, but would not reduce the quality of their products,” he said. “They haven’t found it yet, but they have that commitment. Mattel is taking a similar approach.”
Then there’s the situation at Exxon Mobil, which is being sued by the Attorney General of California for not recycling plastic waste from its products, as it stated it would for decades; the corporation is countersuing the state for defamation.
Farshchi said that’s a precursor of what’s to come.
“The first point of U.S. regulation is that corporate claims will come down,” he said. “For instance, Coca-Cola has promised a lower plastic use pool for year-over-year; it initially aimed to reduce usage by 50% by 2030 from 2015; but now the goal is 35%-45% by 2035.
“So that type of story will be interesting to follow when corporations will no longer be liable to adhere to original target dates in the U.S.,” Farshchi said. “However, Lego’s approach points to gaining a financial lifeline and its long-term profits, and the company wants to remain steadfast. In the long run, switching to a new source will not only be great for the environment and great public relations for the brand, but also allows the corporation to have better control over the same solid product, which might even be better.”
But there is another side to this coin. “The product can’t disintegrate after 10 years, because that would be an obstruction of the market,” he said. “They don’t want the customers to notice any change. Only time will tell us if it was worth the massive effort.”
Another Angle
Also in this mix is another societal concern, this one about the micro and nano plastic residues in people’s bodies.
“There are no solutions for that issue yet, aside from reduction and/or elimination. I think there is agreement that most of us have them in our bodies,” Farshchi said, “but how long has this been going on and how much is too much? It’s a matter of safety over precaution.”
This massive societal issue is affecting all industries at different levels. “Take the airlines,” Farshchi said. “Delta goes through 7 million pounds of plastic waste per year, Alaska Airline 2.2 million pounds,” etc., according to press releases from both airlines. “That’s how broad it is.”
With multi-national corporations not subject to U.S. law, the movement “will come in spurts from corporations like Marriott,” he said, “that are often influenced by what’s going on globally, not just locally, as well as internal priorities and value from their leadership team.”
So with the new administration, while regulation drops, the issue will be “more in the hands of the companies and consumers,” said Farshchi. “Most of these movements began 2019 when the amount of governmental regulations dropped, but many companies took action anyway.”
What addressing the issues boils down to, he said, “is consumer demand. If corporations think consumers are enthused about the changes, I think the future of this movement is great. If not, you’ll be walking in the woods finding plastic waste.”
