The U.S. plastics industry, like all other manufacturing industries around the world, confronts the forces of globalization, and it struggles to comprehend this process and adjust its business models accordingly. This is no easy task since globalization is a phenomenon of vast complexity and scope, embracing issues of a cultural, economic, environmental, geopolitical and social nature. It has been unfolding for several centuries, yet recently this process has clearly accelerated. Technological change in transoceanic transportation has increased the volume of international trade in agricultural and manufactured goods whereas technological change in telecommunications has transformed the range of internationally tradable services. Vast amounts of capital move freely around the world in search of high rates of return on investment, and multinational companies with vast economies of scale proliferate. China, India, Eastern European countries, and other developing economies have taken advantage of these transformtive developments and emerged as important consumers and producers of plastic materials, machinery, tooling and products on global markets.
Economists have for centuries advocated international trade liberalization as essential to improving productive efficiency and raising consumer welfare. Yet they have also made it clear that in the short term trade yields both benefits and costs the classic dichotomy of winners and losers. The problem is that losers can be quite vocal, and anti-globalization movements have sprouted up around the world. In the process one can lose sight of the potential gains from globalization.
Despite the challenges that globalization presents to U.S. plastics processors, their material and machinery suppliers, and their domestic customers in diverse manufacturing industries, the evidence is compelling that the progress of globalization has coincided with strong U.S. and global economic growth and development. Anti-globalization groups rail against rising import penetration rates, yet data generated by international agencies suggest that there is actually a positive correlation between import penetration rates and GDP growth. Gradual market-opening stimulates innovation and enhances productivity, leading ultimately to improved living standards. Moreover, data generated in the course of this research program suggest that when the benefits of U.S. plastic product exports and onshoring of foreign-owned operations are set against the costs of U.S. plastic product imports and offshoring of domestic operations, U.S. plastics processors are actually enjoying a net benefit from globalization. In effect contries and companies accepting and adapting to globalization are benefiting the most.
The objectives of this report, prepared by a leading economist to the U.S. plastics industry, are threefold. First of all, it attempts to provide a balanced and nuanced understanding of globalization and its diverse dimensions. Secondly, it analyzes the recent trend of U.S. international trade with respect to those product markets and foreign competitors of critical importance to U.S. plastics processors.
The third objective of this report is to complement theory with fact by eliciting the views of regional plastics processors with respect to globalization and its implications for their domestic and foreign operations. Over the period January-February 2007 survey questionnaires were mailed to over 1,000 high-level officials at U.S., Canadian and Mexican companies with capabilities in every major plastics processing business blow molding, injection molding, rotomolding, thermoforming, composite thermoset processing, etc. Survey responses serve to illuminate the wide range of experience among these regional processors with respect to the share and growth of export accounts in specific markets, as well as the extent to which accounts have been lost to import competition and customers relocating manufacturing operations to foreign countries. These processors shared their perceptions with respect to the balance of benefits and costs associated with globalization. They also offered insights into their evolving stategies to confront globalization, as well as steps that regional plastics industry organizations and the federal government should take to enhance the domestic and global competitiveness of regional plastics processors.
ABOUT THE AUTHOR
Dr. Peter J. Mooney is the founder and president of Plastics Custom Research Services. Dr. Mooney holds a Ph.D. in economics from the University of North Carolina, and he has covered the plastics industry as a technical/economic market research analyst and consultant since 1980. He is a member of several plastics industry associations such as the Society of the Plastics Industry, the Society of Plastics Engineers, and the Association of Rotational Molders International. He is also a member of the National Association of Business Economists. He has researched and written over 75 multi-client reports, as well as over 100 single-client reports, in the field of plastics and related industries. He has organized, chaired, and made presentations to numerous conferences on critical issues facing the domestic and global plastics industry.