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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 1

IBISWorld Industry Report 32521 Plastic & Resin Manufacturing in the US December 2018 Darshan Kalyani

Plastic makes perfect: Growing downstream markets are expected to support industry demand

2 About this Industry 2 Industry Definition

2 Main Activities

2 Similar Industries

2 Additional Resources

3 Industry at a Glance

4 Industry Performance 4 Executive Summary

4 Key External Drivers

6 Current Performance

8 Industry Outlook

10 Industry Life Cycle

12 Products and Markets 12 Supply Chain

12 Products and Services

14 Demand Determinants

15 Major Markets

16 International Trade

18 Business Locations

20 Competitive Landscape 20 Market Share Concentration

20 Key Success Factors

20 Cost Structure Benchmarks

22 Basis of Competition

23 Barriers to Entry

23 Industry Globalization

25 Major Companies 25 DowDuPont Inc.

26 Wacker Chemie AG

27 Hexion Inc.

28 Operating Conditions 28 Capital Intensity

29 Technology and Systems

29 Revenue Volatility

30 Regulation and Policy

31 Industry Assistance

32 Key Statistics 32 Industry Data

32 Annual Change

32 Key Ratios

33 Industry Financial Ratios

34 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]

This report was provided to University of Baltimore (2132433030) by IBISWorld on 13 April 2019 in accordance with their license agreement with IBISWorld

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 2

This industry manufactures resins, plastic materials (i.e. polymers) and synthetic rubber. This includes thermosetting resins, thermoplastic resins and synthetic

rubber. Raw material inputs are sourced from chemical industries and industries involved in the production of petroleum- based feedstock.

The primary activities of this industry are Thermoset resin manufacturing

Thermoplastic resin manufacturing

Synthetic rubber manufacturing

Polyethylene resin manufacturing

Polypropylene resin manufacturing

32552 Adhesive Manufacturing in the US Companies in this industry manufacture resin adhesives.

32599 Chemical Product Manufacturing in the US Companies in this industry manufacture custom compounds of resins.

32611 Plastic Film, Sheet & Bag Manufacturing in the US Companies in this industry manufacture plastics resins and convert resins into plastics products.

32621 Tire Manufacturing in the US Companies in this industry process natural, synthetic or reclaimed rubber into intermediate or final products.

Industry Definition

Main Activities

Similar Industries

Additional Resources

About this Industry

For additional information on this industry plastics.americanchemistry.com American Chemistry Council – Plastics

www.ihsmarkit.com IHS Markit

www.plasticsindustry.org Plastics Industry Association

The major products and services in this industry are Thermosetting resins and plastic materials

Synthetic rubber

Thermoplastics – polyethylene

Other thermoplastics

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Revenue vs. employment growth

Products and services segmentation (2018)

48.4% Other thermoplastics

31.9% Thermoplastics - polyethylene

10.8% Thermosetting resins and plastic materials

8.9% Synthetic rubber

SOURCE: WWW.IBISWORLD.COM

Key Statistics Snapshot

Industry at a Glance Plastic & Resin Manufacturing in 2018

Industry Structure Life Cycle Stage Mature Revenue Volatility Medium

Capital Intensity Medium

Industry Assistance Medium

Concentration Level Low

Regulation Level Heavy

Technology Change Medium

Barriers to Entry Medium

Industry Globalization High

Competition Level Medium

Revenue

$95.9bn Profit

$7.5bn Exports

$37.7bn Businesses

1,015

Annual Growth 18–23

0.8% Annual Growth 13–18

-3.2%

Key External Drivers Value of construction World price of crude oil World price of natural gas Trade-weighted index

Market Share DowDuPont Inc. 5.7%

p. 25

p. 4

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32

SOURCE: WWW.IBISWORLD.COM

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Key External Drivers Value of construction Industry products such as PVC pipes, ZLQGRZV��PROGLQJV�DQG�ÀRRULQJ�DUH� used as inputs in a wide variety of materials that are used by the construction sector, most notably in homebuilding. Consequently, demand for synthetic resins and plastic materials LV�LQÀXHQFHG�E\�WKH�OHYHO�RI�FRQVWUXFWLRQ� activity. The value of construction is expected to increase in 2018, representing a potential opportunity for this industry.

World price of crude oil Hydrocarbons, which are derived from crude oil, are a main ingredient in resin and synthetic rubber manufacturing. When the price of crude oil increases, manufacturing input costs also rise, KXUWLQJ�SUR¿W�PDUJLQV��6RPH� manufacturers will pass the higher input costs on to consumers in the form of higher prices. The availability of substitute goods means higher prices will lead to moderate revenue increases. The world price of crude oil is expected to increase in 2018.

Executive Summary Despite enduring a volatile period, the Plastic and Resin Manufacturing industry has experienced steady demand for its SURGXFWV�RYHU�WKH�¿YH�\HDUV�WR�������7KH� industry, which relies on demand from downstream manufacturers and the FRQVWUXFWLRQ�VHFWRU��KDV�EHQH¿WHG�IURP� increased construction and manufacturing activity, though low SURGXFW�SULFHV�KDYH�QHJDWLYHO\�DɣHFWHG� revenue. Consequently, revenue is expected to fall at an annualized rate of �����WR�ɻ�����ELOOLRQ�GXULQJ�WKH�SHULRG�

The prices of raw materials, such as crude oil, have been volatile. Although crude oil prices reached record levels in 2013, the price has dropped dramatically since, including a 47.2% fall in 2015 resulting from supply increases and depressed demand. Overall, the world price of crude oil is expected to drop at an DQQXDOL]HG�UDWH�RI������RYHU�WKH�¿YH� years to 2018. However, this has LQFUHDVHG�SUR¿WDELOLW\��DV�UDZ�PDWHULDO� prices have decreased. Consequently, SUR¿W�LV�H[SHFWHG�WR�EH�VWURQJ�LQ������DV� LQGXVWU\�SOD\HUV�UHDS�WKH�EHQH¿WV�RI�

lower input prices and automation. Industry revenue is also expected to LQFUHDVH������LQ������ ([SRUWV�DFFRXQW�IRU�D�VLJQL¿FDQW�

percentage of industry revenue, but export growth has been hampered by a strengthening dollar. The trade-weighted index, measuring the relative strength of WKH�86�GROODU�WR�IRUHLJQ�FXUUHQFLHV��LV� expected to grow an annualized rate of �����RYHU�WKH�¿YH�\HDUV�WR�������6LQFH� they have become relatively more H[SHQVLYH�WR�IRUHLJQ�EX\HUV��86�LQGXVWU\� exports are anticipated to drop at an annualized rate of 0.5% during the period. However, the value of imports is expected to rise at an annualized rate of �����WR�ɻ�����ELOOLRQ�RYHU�WKH�¿YH�\HDUV� to 2018.

Much like the current period, growing downstream markets are expected to VXSSRUW�LQGXVWU\�GHPDQG�RYHU�WKH�¿YH� years to 2023, although rising input prices will constrain the industry to grow DW�DQ�DQQXDOL]HG�UDWH�RI������WR�ɻ����� billion. Alternatively, the prices of crude oil and natural gas, two key inputs, are expected to grow at annualized rates of 2.8% and 2.8%, respectively, over the QH[W�¿YH�\HDUV��7KHVH�SULFH�LQFUHDVHV�ZLOO� WLJKWHQ�SUR¿W�PDUJLQV�DQG�FRQVWULFW� growth as producers attempt to pass costs along to consumers.

Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

Export growth has been hampered by a strengthening dollar

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Industry Performance

Key External Drivers continued

World price of natural gas Ethylene, which is derived from natural gas, is a key raw material input for polyethylene, a type of plastic produced by this industry. As the price of natural gas increases, the price of ethylene rises, driving up material costs for plastic and resin manufacturers. To cope with rising costs, operators are likely to pass on cost increases to consumers, which could lower demand, but will push revenue upward. The world price of natural gas is expected to rise in 2018. However, inherent volatility in natural gas prices will

continue to pose a potential threat to the industry.

Trade-weighted index The trade-weighted index (TWI) measures WKH�YDOXH�RI�WKH�86�GROODU�UHODWLYH�WR�RWKHU� currencies. When the TWI shifts, demand for domestic plastic and synthetic rubber PDQXIDFWXULQJ�LV�DɣHFWHG��$�ZHDNHU�86� GROODU�LQFUHDVHV�IRUHLJQ�SXUFKDVHV�RI�86� industry products; conversely, an appreciating dollar reduces demand for domestic industry products and renders LPSRUWV�PRUH�DɣRUGDEOH��7KH�7:,�LV� expected to fall in 2018.

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SOURCE: WWW.IBISWORLD.COM

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Industry Performance

Current Performance

The pervasiveness of plastics and plastic- based products has helped the Plastic and Resin Manufacturing industry experience D�VWHDG\�VWUHDP�RI�GHPDQG�RYHU�WKH�¿YH� years to 2018. However, industry revenue KDV�FRQWUDFWHG�RYHU�WKH�SDVW�¿YH�\HDUV�� Volatile, but ultimately declining, raw material prices have led to operators in the industry decreasing product prices. This, in turn, decreased selling prices of industry products, and industry revenue KDV�VZXQJ�LQ�OLQH�ZLWK�WKHVH�ÀXFWXDWLQJ� FRPPRGLW\�SULFHV��2YHUDOO��RYHU�WKH�¿YH� years to 2018, industry revenue is expected to decrease at an annualized UDWH�RI������WR�ɻ�����ELOOLRQ�

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SOURCE: WWW.IBISWORLD.COM

Steady demand The manufacturing and construction sectors account for more than half of industry revenue. Key manufacturing industries include automobile manufacturing, in which plastic and resin are inputs for automotive parts and interior components, and packaging material production, which uses industry products to manufacture plastic bags, ¿OPV��VKHHWV�DQG�ERWWOHV��,Q�WKH� construction sector, several materials are produced using plastic and resin inputs, LQFOXGLQJ�SLSLQJ��ZDOOSDSHU��ÀRRULQJ�DQG� window applications.

Consumer spending plays a key role in determining the level of demand for both markets. As employment and income OHYHOV�KDYH�ULVHQ�RYHU�WKH�SDVW�¿YH�\HDUV�� demand for manufactured consumer goods and new construction has increased steadily. Therefore, demand for the Plastic and Resin Manufacturing LQGXVWU\�KDV�UHERXQGHG�RYHU�WKH�SDVW�¿YH� \HDUV��$FFRUGLQJ�WR�WKH�86�%XUHDX�RI� Economic Analysis, consumer spending KDV�LQFUHDVHG�DQ�DQQXDOL]HG������RYHU� WKH�¿YH�\HDUV�WR�������VXSSRUWLQJ�KLJKHU� demand for plastic and resin materials. As consumers purchased more goods, manufacturing activity increased. In

addition, the number of newly constructed homes has increased every year due to growth in consumer VSHQGLQJ��¿UVW�WLPH�KRPHEX\HU�FUHGLWV� and other government housing programs.

As a result of increased consumer spending, industrial production, which includes manufacturing, is expected to grow at an annualized rate of 1.0% over WKH�¿YH�\HDUV�WR�������6LPLODUO\��WKH� number of housing starts, a key statistic in assessing the performance of the residential construction industry, is expected to grow at an annualized rate of �����RYHU�WKH�¿YH�\HDUV�WR������

However, increasing demand has not translated into top-line growth for industry RSHUDWRUV��$�VLJQL¿FDQW�GHFOLQH�LQ�FUXGH�RLO� and natural gas prices beginning in late �����DQG�FRQWLQXLQJ�WKURXJK������KDV�OHG� to operators decreasing the sales prices of WKHLU�SURGXFWV�VLJQL¿FDQWO\��7KHUHIRUH�� industry revenue contracted 13.5% and �����LQ������DQG�������UHVSHFWLYHO\�� despite steady demand from all sectors. These commodities are key raw materials that are used to manufacture industry products. However, a rebound in these commodities in 2018 will help propel LQGXVWU\�UHYHQXH�WR�JURZ������WKLV�\HDU�

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Industry Performance

Cost and profit Plastic resin, the primary component of plastic, is made from petrochemical and natural gas feedstocks. Consequently, the cost of manufacturing plastics rises and falls in accordance with oil and natural gas prices. As oil prices climbed until 2013, industry players were forced to raise prices and reduce costs to maintain SUR¿WDELOLW\��:KLOH�SULFH�LQFUHDVHV�DQG�D� low-demand environment are detrimental to this industry’s average SUR¿W�PDUJLQ��SODVWLF�DQG�UHVLQ� manufacturers made necessary labor FXWV�WR�RɣVHW�ULVLQJ�PDWHULDO�H[SHQVHV�� which helped keep their own prices relatively competitive.

Recently, however, input prices have dropped, with the world price of crude oil expected to fall at an annualized rate of �����RYHU�WKH�¿YH�\HDUV�WR������� including a staggering 47.2% drop in 2015 alone. Additionally, the world price of natural gas is expected to decrease at an annualized rate of 10.8% during the same period, maintaining its position near historically low levels. Industry

operators have been forced to lower SULFHV�WR�UHÀHFW�WKHVH�ORZHU�FRVWV�

Therefore, more recently, increased demand for lower-priced goods has induced industry players to increase HPSOR\PHQW��2YHU�WKH�¿YH�\HDUV�WR������� employment is expected to grow slightly DW�DQ�DQQXDOL]HG�UDWH�RI������WR�������� workers. Furthermore, technological advancements have enabled workers to become more productive. As a result, the DYHUDJH�LQGXVWU\�SUR¿W�PDUJLQ�LV� H[SHFWHG�WR�ULVH�WR�DQ�HVWLPDWHG������LQ� ������,QFUHDVHG�SUR¿W�PDUJLQV�VSXUUHG� more domestic manufacturers to enter this industry. The number of industry enterprises is expected to increase at an annualized rate of 0.4% to 1,015 over the ¿YH�\HDUV�WR������

Increased demand for lower-priced goods has caused operators to increase employment

Trade limits growth Exports have been a source of consistent demand for plastic and resin manufacturers. In addition, emerging economies, such as Mexico and China, demanded more plastic and resin materials to serve an expanding middle FODVV��$�VWUHQJWKHQLQJ�86�GROODU�KDV� decreased the relative purchasing power of foreign buyers, while China’s growth is slowing, resulting in the country purchasing fewer domestically manufactured goods. Exports are anticipated to fall at an annualized rate of �����WR�UHDFK�ɻ�����ELOOLRQ�RYHU�WKH�¿YH�

years to 2018, accounting for an HVWLPDWHG�������RI�LQGXVWU\�UHYHQXH�

Domestic operators also experience strong competition from foreign producers. Relatively lower-cost imports are expected to rise at an annualized rate of 2.3% to an HVWLPDWHG�ɻ�����ELOOLRQ�RYHU�WKH�¿YH�\HDUV� to 2018, accounting for 23.8% of domestic demand in 2018. Though imports are DQWLFLSDWHG�WR�GHFOLQH�RYHU�WKH�SDVW�¿YH� years, this fall is only in value and is attributable to lower product prices. The volume of plastic and resin imports is expected to rise during the period.

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Industry Performance

Sustained demand The industry’s two largest buyers, downstream manufacturers and the construction sector, are set to experience growth in demand and revenue over the QH[W�¿YH�\HDUV��IROORZLQJ�D�SHULRG�RI� FRQWLQXHG�UHFRYHU\�RYHU�WKH�SDVW�¿YH� \HDUV��2YHU�WKH�¿YH�\HDUV�WR�������SHU� capita disposable income is anticipated to grow an annualized 2.3%, while unemployment is expected to remain low during the period. These two factors will spur more consumer spending at the retail level, which will increase demand for manufactured goods that use plastic and resin as inputs, thus increasing industry demand. The industrial production index, a measurement that includes manufacturing activity, is set to JURZ�DW�DQ�DQQXDOL]HG�UDWH�RI������RYHU� WKH�¿YH�\HDUV�WR�������$V�PDQXIDFWXULQJ� activity improves, demand for plastic and resin inputs will rise.

Demand for plastic-based construction materials is also anticipated to expand. Housing starts are expected to increase at DQ�DQQXDOL]HG�UDWH�RI������RYHU�WKH�¿YH� years to 2023, and the value of private nonresidential construction is also set to

LQFUHDVH�GXULQJ�WKH�¿YH�\HDU�SHULRG��$V� construction projects advance, demand IRU�SLSHV��ÀRRULQJ�DQG�RWKHU�SODVWLF�EDVHG� construction materials will increase, thereby stimulating demand for plastic and resin inputs.

Demand from foreign buyers will also rise, with exports forecast to increase at DQ�DQQXDOL]HG�UDWH�RI������WR�ɻ����� ELOOLRQ�RYHU�WKH�QH[W�¿YH�\HDUV�� accounting for 40.5% of industry revenue in 2023. Much of this demand is expected to come from neighboring Mexico and Canada, which, in addition to their VKDUHG�ERUGHUV�ZLWK�WKH�8QLWHG�6WDWHV�� DOVR�SRVVHVV�IDYRUDEOH�86�WUDGH�UHODWLRQV� via the North American Free Trade $JUHHPHQW��$V�WKH�86�GROODU�FRQWLQXHV�WR� UHPDLQ�YRODWLOH�RYHU�WKH�QH[W�¿YH�\HDUV�� imports are expected to fall at an DQQXDOL]HG�UDWH�RI������WR�ɻ�����ELOOLRQ� RYHU�WKH�¿YH�\HDUV�WR�������DFFRXQWLQJ� for 23.2% of domestic demand.

Industry Outlook

The importance of plastic and resin products in construction and manufacturing industries is expected to help the Plastic and Resin Manufacturing industry rebound in terms of revenue RYHU�WKH�¿YH�\HDUV�WR�������6WURQJHU�

industrial production and construction activity will underpin sustained revenue growth for operators. Consequently, over WKH�¿YH�\HDUV�WR�������,%,6:RUOG�H[SHFWV� industry revenue to rise slightly at an DQQXDOL]HG�UDWH�RI������WR�ɻ�����ELOOLRQ�

Demand from foreign buyers will rise

Profit remains strong Raw material prices will increase over the QH[W�¿YH�\HDUV��6SHFL¿FDOO\��WKH�SULFH�RI� crude oil is expected to increase at an DQQXDOL]HG�UDWH�RI������RYHU�WKH�¿YH� years to 2023, while the world price of natural gas is expected to rise at the same UDWH�DV�FUXGH�RLO�RYHU�WKH�QH[W�¿YH�\HDUV�� With demand from key downstream buying markets set to increase, plastic

and resin manufacturers are expected to pass on most of these additional costs to customers. However, increased downstream demand is also expected to lead industry operators to hire more employees as their manufacturing capacity expands. Wages are expected to ULVH�DW�DQ�DQQXDOL]HG�UDWH�RI������WR�ɻ���� ELOOLRQ�GXULQJ�WKH�¿YH�\HDU�SHULRG��$V�D�

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Industry Performance

UHVXOW��SUR¿W�PDUJLQV�DUH�DQWLFLSDWHG�WR� decline, accounting for 7.4% of revenue in 2023.

Companies will likely invest more resources into integration and research and development, particularly in relation WR�LQQRYDWLRQ�DQG�HɤFLHQF\�LQ�WKH� production process. Popular resins such as polypropylene and polyethylene, which together account for more than half of all industry revenue, are produced in bulk within large, highly capital- intensive facilities. To lower production costs, larger, more successful companies LQWHJUDWH�WKHVH�IDFLOLWLHV�LQWR�RLO�UH¿QHULHV� WR�PRUH�HɤFLHQWO\�VRXUFH�LQSXWV�DQG� expand their distribution capabilities.

Manufacturers will also likely invest resources into bioplastic technology, an alternative to fossil fuel-based plastics, which are derived from biomass sources such as vegetable oil and cornstarch. In addition to being biodegradable, the production process for bioplastics generates less greenhouse gas when compared with petroleum-based plastics. +RZHYHU��ELRSODVWLF�LV�VLJQL¿FDQWO\�PRUH� expensive to produce than petroleum-

based plastic, averaging 20.0% more in SURGXFWLRQ�FRVWV��6WLOO��SODVWLF�DQG�UHVLQ� manufacturers will continue to explore ways to use bioplastics and reduce their SURGXFWLRQ�FRVWV�RYHU�WKH�QH[W�¿YH�\HDUV� 6HYHUDO�QHZ�SOD\HUV�DUH�IRUHFDVW�WR�

enter the industry with the expectation of reaping the benefits of industry-wide revenue growth. Over the five years to ������,%,6:RUOG�HVWLPDWHV�WKH�QXPEHU� of enterprises will increase at an annualized rate of 1.3% to 1,082 enterprises. Furthermore, employment is expected to grow at an annualized rate of 1.0% to 82,231 workers during the same period. The difference between enterprise growth and employment growth highlights the industry’s gradual shift toward automation in the production process. The Plastic and Resin Manufacturing industry is already highly capital- intensive and, while additional labor will be needed to monitor production processes and handle customer service inquires, the majority of new demand will arise through investments in new production equipment.

Profit remains strong continued

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Industry Performance The industry has fairly stable products, brands and ownership

3URGXFW�JURXSV�DQG�XVHU�LQGXVWULHV�DUH�FOHDUO\�GH¿QHG

IVA has grown moderately over the past decade

The industry experiences increased merger and acquisition activity

Life Cycle Stage

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Industry Performance

Industry Life Cycle The Plastic and Resin Manufacturing industry is in the mature phase of its life cycle because of its moderate growth rate, product saturation, market acceptance and increased merger and acquisition activity. Industry value added (IVA), which measures the industry’s contribution to the overall economy, is expected to increase at an annualized rate of 1.5% over the 10 years to 2023, ZKLFK�LV�EHORZ�WKH�H[SHFWHG�86�*'3� growth rate of an annualized 2.2% during the same period. However, it is still a mature industry.

Other indications that the industry is in the mature phase of its life cycle LQFOXGH�FOHDUO\�GH¿QHG��VHJPHQWHG� product groups and industry users. In

addition, its key buying sectors, manufacturing and construction, are made up of many industries that are either maturing or declining themselves. Product development has also been largely stagnant, with no new technological innovations boosting the industry to a new growth stage. For example, bioplastics, while lucrative niche products, are not growing VLJQL¿FDQWO\�HQRXJK�WR�DOWHU�WKH� industry’s life cycle.

Merger and acquisition activity has also been steady, which is yet another VLJQ�RI�D�PDWXUH�LQGXVWU\��2YHU�WKH�¿YH� years to 2018, larger operators acquired smaller ones to increase market share and reach higher economies of scale.

This industry is Mature

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Products and Services 7KH�LQGXVWU\¶V�SURGXFWV�FDQ�EH�FODVVL¿HG� LQWR�¿YH�PDLQ�JURXSV��WKHUPRSODVWLF� polyethylene, other thermoplastics, thermosetting resins and plastic materials, synthetic rubber and other resins and materials.

Thermoplastics – polyethylene $W�DQ�HVWLPDWHG�������RI�WRWDO�LQGXVWU\� revenue, polyethylene makes up a VLJQL¿FDQW�VKDUH�RI�WKH�3ODVWLF� �5HVLQ� Manufacturing industry. Its primary use is for packaging goods such as plastic EDJV��SODVWLF�¿OPV�DQG�ERWWOHV��DQG�LW�LV� the most common plastic manufactured by the industry. It is also a popular choice for pressure pipe systems due to its inertness, strength and ease of assembly.

Polyethylene is a thermoplastic, or a group of plastics that can be heated and UH�IRUPHG�VHYHUDO�WLPHV��,W�LV�FODVVL¿HG� into categories based on its density and branching, as these two factors have a VLJQL¿FDQW�LPSDFW�RQ�LWV�PHFKDQLFDO� SURSHUWLHV�DQG�DSSOLFDWLRQV��³%UDQFKLQJ´� refers to polymer chains with branch points that can connect additional chain segments. In general, the more branching a polymer has, the less dense and hard it will be. High-density polyethylene, which has a low degree of branching, is commonly used in items like milk jugs, detergent bottles, garbage containers and a large number of toys. In contrast, low-density polyethylene has a high volume of branching is a popular choice

Products & Markets Supply Chain | Products and Services | Demand Determinants Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES 32611 Plastic Film, Sheet & Bag Manufacturing in the US

This industry uses various polyethylene products, which are by industry used to produce plastic bags and sheets.

32612 Plastic Pipe & Parts Manufacturing in the US This industry demands resins to manufacture plastic pipes.

32613 Laminated Plastics Manufacturing in the US These operators demand resin and synthetic rubber for their laminate flooring production.

32614 Polystyrene Foam Manufacturing in the US This industry demands polystyrene resins.

32615 Urethane Foam Manufacturing in the US This industry demands resins for its production of urethane foam.

32616 Plastic Bottle Manufacturing in the US Various plastic materials and synthetic resins produced by this industry are used to produce plastic bottles and containers.

KEY SELLING INDUSTRIES 22112 Electric Power Transmission in the US

Electricity is a significant cost for the Plastic, Resin and Rubber Manufacturing industry.

22121 Natural Gas Distribution in the US Natural gas is a key energy source used by the industry.

23712 Oil & Gas Pipeline Construction in the US New construction and plant expansions are important for the industry to satisfy demand.

32411 Petroleum Refining in the US Plastic, resin and rubber manufacturers use feedstock derived from petroleum.

32511 Petrochemical Manufacturing in the US Petrochemical inputs represent a significant cost for cost for the industry.

Supply Chain

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Products & Markets

Products and Services continued

IRU�SODVWLF�EDJV�DQG�¿OP�ZUDS��'HPDQG� for polyethylene remained mostly stable RYHU�WKH�SDVW�¿YH�\HDUV�WKDQNV�WR�LWV� broad array of applications.

Other thermoplastics This segment includes polypropylene, a thermoplastic polymer noted for its ruggedness and resistance to heat and chemical solvents. Due to its durability, it is used in an array of applications, including carpets, food storage, textiles and automotive components. Also included in this segment is polyvinyl chloride (PVC), which is the third-most widely-produced plastic, after polyethylene and polypropylene. PVC is a favorite choice among the construction industry because it is less expensive than ductile iron and other more durable alternatives. In addition, it can be made softer and more elastic by adding plasticizers, which LQFUHDVH�WKH�SODVWLF¶V�ÀXLGLW\�

The most common use of PVC is the production of pipes for household, municipal and industrial applications. Demand for these products has risen as the construction sector, especially UHVLGHQWLDO��KDV�JURZQ��2YHU�WKH�¿YH�\HDUV� to 2018, the number of housing starts expected to grow at an annualized rate of ������&ROOHFWLYHO\��RWKHU�WKHUPRSODVWLFV�

are expected to account for 48.4% of industry revenue in 2018, an increase from 2013.

Thermosetting resins and plastic materials This segment is expected to account for an estimated 10.8% of industry revenue in 2018. Whereas thermoplastics can be reheated and reformed, thermosetting materials are permanent. The most common thermosetting plastic is phenol UHVLQV��ZKLFK�ZHUH�WKH�¿UVW�FRPPHUFLDO� synthetic resin and are mainly used to manufacture circuit boards and other electronics. Phenol resins are also a popular choice for pool balls, laboratory countertops and a myriad of coatings, adhesives and laminates. Other thermosetting resins are commonly used in construction materials and consumer JRRGV�VXFK�DV�HOHFWURQLFV��6LQFH������� demand for these products has increased as construction activity and consumer spending expanded.

Synthetic rubber Unlike natural rubber, which comes from trees, synthetic rubber is man-made and derived from petroleum and other PLQHUDOV��6\QWKHWLF�UXEEHUV�DUH�FODVVL¿HG� according to whether they are vulcanized

Products and services segmentation (2018)

Total $95.9bn

48.4% Other thermoplastics

31.9% Thermoplastics - polyethylene

10.8% Thermosetting resins and plastic materials

8.9% Synthetic

rubber

SOURCE: WWW.IBISWORLD.COM

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 14

Products & Markets

Demand Determinants

Manufacturing is the central driver of demand in the Plastic and Resin Manufacturing industry, as a myriad of manufacturing industries incorporate SODVWLF�LQSXWV�LQWR�WKHLU�SURGXFWV��6LQFH� 2013, industrial production has been on the rise, growing at an estimated DQQXDOL]HG�UDWH�RI������LQ�WKH�¿YH�\HDUV� WR�������WKDQNV�LQ�SDUW�WR�D�UHYLWDOL]HG�86� auto industry. As manufacturing continues to gain steam, demand for plastic inputs will increase.

In addition, a large portion of plastic chemicals are used in packaging products from downstream manufacturers. Demand for packaging materials is linked to consumer VSHQGLQJ��ZKLFK�GHFOLQHG�IRU�WKH�¿UVW� time in over two decades during the downturn but has grown steadily over WKH�SDVW�¿YH�\HDUV��&RQVXPHUV�SXUFKDVHG� more manufactured goods and consequently, demand for plastic packaging has increased.

Construction A range of plastic inputs are used in construction parts, like pipes that use SODVWLF�PDWHULDOV��YDOYHV��¿WWLQJV��ÀRRULQJ�� insulation and windows. A major driver of overall construction is residential development, which often spurs subsequent construction projects such as roads, bridges, schools and commercial

GHYHORSPHQW��2YHU�WKH�¿YH�\HDUV�WR������� the value of residential construction has LQFUHDVHG�DW�DQ�DQQXDOL]HG�UDWH�RI������� including an estimated 1.2% increase in 2018. This increase in construction aided demand for plastic inputs used in these building projects.

Demand for substitute goods ,QGXVWU\�GHPDQG�LV�DɣHFWHG�E\�WKH�SULFH� and availability of substitute goods. The main substitute good for plastic is rubber. Plastic products, such as toys and food-storage containers, often compete directly with rubber counterparts. Another substitute for plastic is glass, which is used as an alternative material in dishware. In addition, unstable crude oil prices are VHUYLQJ�DV�D�FDWDO\VW�WRZDUG�¿QGLQJ�QHZ� plastic alternatives. As the price of crude RLO�LQFUHDVHV��DV�LV�H[SHFWHG�RYHU�WKH�¿YH� years to 2023, the price of plastic, and VXEVHTXHQWO\�WKH�LQWHUHVW�LQ�¿QGLQJ� nonoil-based replacements, also rises. The growing shift in consumer preference toward more environmentally-friendly products further contributes to the trend of developing nonoil-based plastics. One example that has emerged from this trend is Arboform, a wood pulp-based, nontoxic alternative plastic that is being touted as a replacement material for

Products and Services continued

or non-vulcanized. Vulcanization is a process by which sulfur and other chemicals are added to rubber in a curing process, typically involving a combination of high pressure and heat. The result is a mechanically-superior product that is stronger and more durable. Products made from vulcanized rubber include tires, shoe soles and hockey pucks. Un-vulcanized rubber is characterized by its stickiness and propensity to deform when subjected to

warm or cold temperatures. Un- vulcanized rubber is generally sold as a raw material input for vulcanized rubber.

As with the other product segments, synthetic rubber chemical demand has been volatile. However, as American automotive manufacturers emerged from bankruptcy and consumers spending increased, demand for synthetic rubber products grew. As a share of industry revenue, synthetic rubber is estimated to DFFRXQW�IRU������RI�UHYHQXH�LQ������

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 15

Products & Markets

Major Markets

0DMRU�PDUNHW�VHJPHQWV�IRU�WKH�3ODVWLF� � 5HVLQ�0DQXIDFWXULQJ�LQGXVWU\�ÀXFWXDWH� with the performance of downstream plastic and resin product buyers. These include a host of manufacturing industries and construction buyers.

Manufacturing Players in the industry operate throughout a broad spectrum of manufacturing and packaging industries that use plastic to seal and transport produced goods, including automobile, electronic, home furnishing and plastic bottling production. Collectively, these downstream manufacturers make up and estimated 30.1% of total industry revenue. Demand from this segment has EHHQ�YRODWLOH�RYHU�WKH�SDVW�¿YH�\HDUV��

Also, during this period, industrial SURGXFWLRQ�LQ�WKH�8QLWHG�6WDWHV��ZKLFK� includes manufacturing, grew at an annualized rate of 1.0%. One of the strongest rebounding industries during WKH�SDVW�¿YH�\HDUV�ZDV�DXWRPRELOH� manufacturing, a key buyer for plastic and resin producers. Other manufacturing industries that demand plastic and resin products include furniture, machinery and electronic industries. As a percentage of revenue, PDQXIDFWXULQJ�KDV�LQFUHDVHG�LQ�WKH�¿YH� years to 2018.

Exports Exports make up the second largest PDUNHW�IRU�86�SODVWLF�DQG�UHVLQ� PDQXIDFWXUHUV�DW�������RI�WRWDO�LQGXVWU\�

Demand Determinants continued

products such as speaker boxes, golf tees and automotive parts.

Trade-weighted index $�ZHDN�86�GROODU�PDNHV�GRPHVWLF� producers more competitive with foreign manufacturers because it gives foreign countries more purchasing SRZHU�LQ�WKH�8QLWHG�6WDWHV��7KH�GROODU�� however, has been strengthening, and

the trade weighted index is expected to JURZ�DQ�DQQXDOL]HG������RYHU�WKH�¿YH� \HDUV�WR�������PDNLQJ�86�H[SRUWV� relatively more expensive. Emerging economies, such as China and India, have been hubs of manufacturing growth, and the more cost-competitive domestic producers can be, the higher the potential demand for the industry’s products in foreign markets.

Major market segmentation (2018)

Total $95.9bn

39.4% Exports

30.1% Manufacturing

22.4% Construction

8.1% Other

SOURCE: WWW.IBISWORLD.COM

Provided to: University of Baltimore (2132433030) | 13 April 2019

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 16

Products & Markets

International Trade While exports have contracted and LPSRUWV�KDYH�LQFUHDVHG�RYHU�WKH�SDVW�¿YH� years, the sheer volume of exports is VLJQL¿FDQWO\�ODUJHU�WKDQ�WKDW�RI�LPSRUWV�� During this period, the disparity between exports and imports is expected to result LQ�D�WUDGH�VXUSOXV�RI�ɻ�����ELOOLRQ�LQ������

Exports Exports in the industry are expected to IDOO�DW�DQ�DQQXDOL]HG�UDWH�RI������WR�ɻ����� ELOOLRQ�RYHU�WKH�¿YH�\HDUV�WR������� Despite growing plastic and resin demand from emerging economies, volatile feedstock prices and a VWUHQJWKHQLQJ�86�GROODU�KDYH�FRQVWUDLQHG� exports. The most common export GHVWLQDWLRQV�IRU�86�SODVWLF�DQG�UHVLQ� manufacturers in 2018 are Mexico and

Canada, which represent 22.5% and ������RI�WRWDO�LQGXVWU\�H[SRUWV�� UHVSHFWLYHO\��7KHVH�FRXQWULHV�EHQH¿W�IURP�

Major Markets continued

revenue in 2018, up from 34.3% in 2013. The total value of industry exports has declined at an annualized rate of 0.5% RYHU�WKH�SDVW�¿YH�\HDUV��7KH�86�GROODU�KDV� strengthened during the period, making domestically produced goods more expensive and constraining growth, a trend expected to continue. However, higher resin demand from emerging economies, such as Mexico, has supported export demand. Mexico has increased its manufacturing output; therefore, it is in need of more plastics and resins for its produced goods. Over WKH�¿YH�\HDUV�WR�������H[SRUWV�DUH� forecast to increase at an annualized rate of 1.3%.

Construction The construction market accounts for an estimated 22.4% of industry revenue. This industry primarily purchases WKHUPRSODVWLF�UHVLQV�XVHG�LQ�ÀRRULQJ�DQG� window covering applications. When the subprime mortgage crisis hit, plastic and resin manufacturers experienced a sharp decline in demand from construction

material manufacturers that sustained XQWLO�������ZKHQ�LW�¿QDOO\�WXUQHG�WKH� FRUQHU��2YHU�WKH�¿YH�\HDUV�WR�������WKH� value of construction is expected to grow at an annualized rate of 3.8%, including �����JURZWK�LQ�������2YHU�WKH�¿YH�\HDUV� to 2023, the value of construction is anticipated to increase at an annualized rate of 1.0%, which will likely bolster this segment’s share of overall revenue. The construction segment has increased DV�D�VKDUH�RI�UHYHQXH�RYHU�WKH�¿YH�\HDUV� to 2018.

Other This segment accounts for an estimated 8.1% of total industry revenue and encompasses a host of industries, including chemical processing, agriculture and wholesale buyers. Products include ethanolamine, ethyleneamines, isopropanolamines, chelants and other chemical compounds that are commonly found in pesticides, detergents and cleaners. The size of this VHJPHQW�KDV�LQFUHDVHG�RYHU�WKH�¿YH�\HDUV� to 2018.

Level & Trend Exports in the industry are High and Steady Imports in the industry are Medium and Increasing

$ bi

lli on

30

-20

-10

0

10

20

2410 12 14 16 18 20 22Year

Exports Imports Balance

Industry trade balance

SOURCE: WWW.IBISWORLD.COM

Provided to: University of Baltimore (2132433030) | 13 April 2019

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 17

Products & Markets

International Trade continued

their shared borders with the United 6WDWHV��DV�ZHOO�DV�IURP�IDYRUDEOH�WUDGH� conditions via the North American Free Trade Agreement (NAFTA). Rounding out the remainder of the top exporting destinations are China (11.4%) and %HOJLXP��������

Imports 2YHU�WKH�¿YH�\HDUV�WR�������WKH�WRWDO� value of imports in the industry is expected to rise at an annualized rate of

�����WR�ɻ�����ELOOLRQ�GXH�WR�IDOOLQJ� product prices. The largest source of imports is Canada, expected to account for 30.7% of industry imports in 2018, ZKLFK�EHQH¿WV�IURP�LWV�FORVH�SUR[LPLW\�WR� WKH�8QLWHG�6WDWHV�DQG�IURP�WUDGH�IULHQGO\� provisions within NAFTA. Germany is the second-largest importer and is expected to account for 10.1% of industry imports in 2018. Rounding out the remainder of the top importing countries DUH�-DSDQ��������DQG�0H[LFR��������

Imports From...

Total $18.2bn

7.5% Mexico

7.9% Japan

10.1% Germany

30.7% Canada

43.8% All other countries

Exports To...

Total $37.7bn

42.9% All other countries

22.5% Mexico

16.7% Canada

11.4% China

6.5% Belgium

Year: 2018 SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA SOURCE: USITC

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 18

Products & Markets

Business Locations 2018

MO 1.0

West

West

West

Rocky Mountains Plains

Southwest

Southeast

New England

VT 0.2

MA 3.2

RI 0.9

NJ 3.0

DE 0.4

NH 0.9

CT 1.6

MD 0.5

DC 0.1

1

5

3

7

2

6

4

8 9

Additional States (as marked on map)

AZ 0.9

CA 9.7

NV 0.5

OR 1.5

WA 0.9

MT 0.2

NE 0.3

MN 2.1

IA 0.5

OH 7.8

VA 1.1

FL 3.1

KS 0.6

CO 0.9

UT 0.7

ID 0.3

TX 9.9

OK 0.9

NC 4.2

AK 0.0

WY 0.0

TN 1.9

KY 2.6

GA 4.4

IL 6.4

ME 0.2

ND 0.1

WI 3.0 MI

5.0 PA 4.4

WV 0.6

SD 0.1

NM 0.0

AR 0.6

MS 1.1

AL 1.5

SC 2.1

LA 2.3

HI 0.1

IN 3.6

NY 2.6 5

6 7

8

3 21

4

9

SOURCE: WWW.IBISWORLD.COM

Mid- Atlantic

Establishments (%)

Less than 3% 3% to less than 10% 10% to less than 20% 20% or more

Great Lakes

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 19

Products & Markets

Business Locations In 2018, The Plastic and Resin Manufacturing industry is estimated to be composed of 1,324 establishments. The industry is reliant on demand from downstream manufacturers; therefore, business locations are concentrated in regional manufacturing hubs. The Great /DNHV�DQG�6RXWKHDVW�UHJLRQV�RI�WKH� 8QLWHG�6WDWHV�DFFRXQW�IRU�QHDUO\�KDOI�RI� all establishment locations at 25.8% and 25.4%, respectively. Additionally, these WZR�UHJLRQV��HVSHFLDOO\�WKH�6RXWKHDVW��DUH� KRPH�WR�VHYHUDO�RLO�UH¿QHULHV��7KHLU�FORVH� proximity to ports helps as well, with the 6RXWKHDVW�UHJLRQ�EHLQJ�IDLUO\�FORVH�WR� Mexico and the Great Lakes region having easy access to Canada. 7KH�6RXWKZHVW���������DQG�:HVW�

UHJLRQV���������RI�WKH�8QLWHG�6WDWHV�KROG� the next largest numbers of establishments; collectively, these regions account for almost a quarter of industry plants. In addition to being near ports DQG�UH¿QHULHV��WKHVH�UHJLRQV�EHQH¿W�IURP�

having large representative states. For example, California, which is in the West UHJLRQ�RI�WKH�8QLWHG�6WDWHV��DFFRXQWV�IRU� �����RI�LQGXVWU\�HVWDEOLVKPHQWV�

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Distribution of establishments vs. population

SOURCE: WWW.IBISWORLD.COM

Provided to: University of Baltimore (2132433030) | 13 April 2019

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 20

Cost Structure Benchmarks

The Plastic and Resin Manufacturing industry is heavily influenced by raw material costs, demand and pricing levels. Raw material pricing is particularly important, given the lag between raw material price changes and the ability of plastic and resin manufacturers to implement product price changes. Furthermore, companies that locate near the distribution centers of key inputs, most notably natural gas and crude oil, can reduce transportation costs.

Profit 3UR¿W�ZLOO�YDU\�EHWZHHQ�LQGLYLGXDO� operators depending on the size of their operations and on their ability to

HVWDEOLVK�HɤFLHQFLHV�LQ�UDZ�PDWHULDO� purchases and operations. However, ,%,6:RUOG�HVWLPDWHV�SUR¿W��DV�PHDVXUHG� by earnings before income and taxes, will amount to 7.8% of total industry revenue in 2018. This increase in industry SUR¿WDELOLW\��XS�IURP������LQ�������LV� primarily due to strong recovery from downstream markets and the sharp drop in crude oil prices from 2014 through ������+RZHYHU��ULVLQJ�LQSXW�SULFHV�DUH� H[SHFWHG�WR�FRQVWUDLQ�SUR¿W�JURZWK�LQ�WKH� ¿YH�\HDUV�WR�������7KH�ZRUOG�SULFH�RI� natural gas is expected to rise at an DQQXDOL]HG�UDWH�RI������LQ�WKH�¿YH�\HDUV� WR�������&RQVHTXHQWO\��,%,6:RUOG� H[SHFWV�SUR¿WDELOLW\�WR�GHFUHDVH�GXULQJ� the same period.

Key Success Factors Provision of superior after-sales service :LWK�OLWWOH�GLɣHUHQFH�EHWZHHQ�SURGXFWV�� RSHUDWRUV�VKRXOG�GLɣHUHQWLDWH�WKHPVHOYHV� by providing better-quality service.

Economies of scale The need for low-cost, world-scale manufacturing facilities operating on a large scale is essential in this intensely competitive industry.

Upstream vertical integration (ownership links) Plastic and resin manufacturers that control feedstock, raw materials, distribution and other operations can control costs more HɣHFWLYHO\�DQG�DUH�PRUH�OLNHO\�WR�RXWSHUIRUP� manufacturers that are not integrated.

Guaranteed supply of key inputs Access to a consistent supply of competitively priced raw material inputs, including feedstock, is essential to remaining competitive. Concentration on core business )RU�RSWLPXP�HɤFLHQF\�DQG� competitiveness, operators should divest RI�ORZ�SUR¿W�RU�VPDOOHU�SODQWV�DQG�LQVWHDG� concentrate on their core product(s). Optimum capacity utilization In an industry where supply and demand imbalances can create considerable volatility, the ability to use existing capacity to its optimum HɤFLHQF\�LV�HVVHQWLDO�

Market Share Concentration

The Plastic and Resin Manufacturing industry has a low level of concentration, UHÀHFWLQJ�WKH�IUDJPHQWHG�QDWXUH�RI�WKH� industry. There are an estimated 1,303 establishments operating in the industry, producing a variety of products. Thus, despite the existence of prominent global

chemical groups, only one company has a market share greater than 5.0%. Another indicator of the low level of concentration LV�WKH�IDFW�WKDW�QHDUO\�������RI�DOO� industry operators employ fewer than 20 ZRUNHUV��,%,6:RUOG�DQWLFLSDWHV�WKHVH� WUHQGV�WR�SHUVLVW�RYHU�WKH�QH[W�¿YH�\HDUV�

Competitive Landscape Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization

Level Concentration in this industry is Low

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:

Provided to: University of Baltimore (2132433030) | 13 April 2019

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 21

Competitive Landscape

Cost Structure Benchmarks continued

Purchases $FFRXQWLQJ�IRU�DQ�HVWLPDWHG�������RI� industry revenue in 2018, raw material costs are the largest expense for plastic and resin manufacturers. Key raw materials include propylene, ethylene, phenol, acetone, chlorine, benzene and naphtha. The majority of these materials are made from petroleum or natural gas. In recent years, the cost of many of these UDZ�PDWHULDOV�KDV�ÀXFWXDWHG�VLJQL¿FDQWO\�� UHÀHFWLQJ�WKH�YRODWLOH�QDWXUH�RI�FUXGH�RLO� DQG�QDWXUDO�JDV�SULFHV��2YHU�WKH�¿YH�\HDUV� to 2018, the prices of crude oil and QDWXUDO�JDV�KDYH�H[SHULHQFHG�VLJQL¿FDQW� declines and increases. In addition to being volatile, raw material costs tend to be cyclical, so industry participants with the ability to use a wide range of raw PDWHULDOV�W\SLFDOO\�EHQH¿W�IURP�ORZHU� variable costs.

Fuel costs associated with transportation are also included in the purchase segments.

6PDOOHU�LQGXVWU\�PDQXIDFWXUHUV�DUH�XVXDOO\� QRW�LQWHJUDWHG�ZLWK�D�UH¿QHU\�RU� petrochemical complex; therefore, they need to transport raw materials and other feedstock for their production.

Labor and capital Wages are the second-largest cost to the industry and account for an estimated 7.8% of total industry revenue in 2018. 2YHU�WKH�¿YH�\HDUV�WR�������WKH�WRWDO� number of employees in the industry has increased at an annualized rate of 1.1%. Depreciation expenses increased slightly overall, from 2.0% of industry revenue in 2013 to 2.3% in 2018. Depreciable assets include buildings, storage equipment and machinery used in the manufacturing process. The small and increasing share of depreciation relative to revenue is illustrative of this industry’s aging equipment stock. Industry players have been increasingly investing in

Sector vs. Industry Costs

n Profi t n Wages n Purchases n Depreciation n Marketing n Rent & Utilities n Other

Average Costs of all Industries in sector (2018)

Industry Costs (2018)

0

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7.3 7.8

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12.1

Provided to: University of Baltimore (2132433030) | 13 April 2019

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 22

Competitive Landscape

Basis of Competition Internal competition Price is the key basis for competition in the Plastic and Resin Manufacturing industry. However, given the fact that plastic materials, resin and synthetic rubber are global commodities, prices are largely determined by those of global chemicals like ethylene, which is a key input for polyethylene and other thermoplastics. Price is also dependent upon other variables like the prices of raw materials such as crude oil and natural gas, as well as the degree or integration and scale of production. A larger plastic and resin manufacturer may own its own supplier and distributor; therefore, the company can reduce costs and price its products more competitively than other operators.

Product performance attributes, such as strength-to-weight ratios, waterproof ability, malleability, safety, installation costs and the ability to be recycled are also major factors for competition. 5HVHDUFK�DQG�GHYHORSPHQW��5 '��LV�WKH�

basis for improving product performance and establishing a higher degree of GLɣHUHQWLDWLRQ�EHWZHHQ�FRPSHWLWRUV�� therefore, plastic and resin PDQXIDFWXUHUV�GHYRWH�VLJQL¿FDQW� ¿QDQFLDO�UHVRXUFHV�WR�5 '�

External competition The industry often competes against manufacturers of similar products composed of substitute materials, such as rubber, wood and tile. Plastic and resin manufacturers generally compete with rubber and other substitute material manufacturers on price, product performance, technological innovation, quality and service. Much like the relationship between competing domestic plastic and resin manufacturers, the advantage over foreign competition often stems from a company’s cost structure, which is SULPDULO\�DɣHFWHG�E\�UDZ�PDWHULDO�SULFHV�� In 2018, imports are expected to meet 23.8% of domestic demand.

Cost Structure Benchmarks continued

automation, contributing to depreciation’s rising share.

Other expenses Rent and utilities are estimated to account for 4.2% of industry revenue in 2018. Marketing and advertising costs

are expected to amount to 0.1% of industry revenue. Other costs, which include freight and insurance premiums, research and development investments and licensing and legal fees, are estimated to account for 14.7% of industry revenue in 2018.

Level & Trend Competition in this industry is Medium and the trend is Increasing

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 23

Competitive Landscape

Industry Globalization

The Plastic and Resin Manufacturing industry has a high level of global exposure, which is evident by the industry’s reliance on trade. In 2018, imports are anticipated to account for 23.8% of domestic demand after rising at DQ�DQQXDOL]HG�UDWH�RI������WR�ɻ�����ELOOLRQ� RYHU�WKH�SDVW�¿YH�\HDUV��7KRXJK�WKH�YDOXH� of imports is decreasing due to depressed prices, the volume is still rising. This is SULPDULO\�GXH�WR�D�VWUHQJWKHQLQJ�86� GROODU�RYHU�WKH�SDVW�¿YH�\HDUV��PDNLQJ� foreign goods relatively less expensive than their domestic counterparts. Countries such as Mexico and Canada account for the majority of industry trade due to their close proximity and limited trade barriers from agreements like the

North American Free Trade Agreement. Exports are anticipated to decline as domestically produced goods cost relatively more due to the strengthening 86�GROODU��2YHU�WKH�¿YH�\HDUV�WR������� exports are expected to fall at an DQQXDOL]HG�UDWH�RI������WR�ɻ�����ELOOLRQ�

Plastic and resin manufacturers are also increasing their footprints abroad through foreign partnerships. For example, industry player DowDuPont Inc. (DowDuPont) maintains ownership LQWHUHVWV�LQ�VHYHUDO�IRUHLJQ�DɤOLDWHV�� LQFOXGLQJ�D�������LQWHUHVW�LQ�0(*$�6$�� an Argentine company that provides natural gas and other feedstock to DowDuPont’s petrochemical plant in Argentina. Other DowDuPont ownership

Level & Trend Globalization in this industry is High and the trend is Increasing

Barriers to Entry %DUULHUV�WR�HQWU\�DUH�VXEVWDQWLDO��WKRXJK� not insurmountable. The highly capital- intensive nature of the industry is particularly important. Hundreds of millions of dollars are required to construct a complex with the capability to produce high-performance products, processes and applications. In addition, many of the plants tend to be highly integrated complexes, requiring special technical equipment, machinery and expertise. Economies of scale and the ability to produce at a high capacity are QHFHVVDU\�WR�RSHUDWH�HɤFLHQWO\�DQG� achieve low unit costs.

The industry’s maturity combined with LWV�OLPLWHG�VL]H�SRVHV�DQRWKHU�VLJQL¿FDQW� EDUULHU��,W�LV�RIWHQ�GLɤFXOW�WR�HQWHU�D� mature industry dominated by several established manufacturers who have developed close, integrated relationships with their customers. These existing players are also often integrated into raw material supplies and distribution, which further strengthens their position. Though only one industry player generates over 5.0% of industry revenue, ,%,6:RUOG�H[SHFWV�WKDW�WKH�RWKHU�

operators are typically well-funded FRPSDQLHV�WKDW�FDQ�DɣRUG�WR�LQYHVW� heavily in both capital equipment and research and development activities. 0RUHRYHU��D�VLJQL¿FDQW�¿QDQFLDO�

investment is required to acquire, maintain and update plants and equipment. This cost may deter some operators from entering the industry. Research and development is necessary for product innovation, which expands the uses of plastic products, increasing WKHLU�GHPDQG��7R�HɣHFWLYHO\�FRPSHWH��DQ� entrant should be committed to spending D�VLJQL¿FDQW�DPRXQW�RI�FDSLWDO�RQ� research and development.

Level & Trend Barriers to Entry in this industry are Medium and Steady

Barriers to Entry checklist

Competition Medium Concentration Low Life Cycle Stage Mature Capital Intensity Medium Technology Change Medium Regulation and Policy Heavy Industry Assistance Medium

SOURCE: WWW.IBISWORLD.COM

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 24

Competitive Landscape

Industry Globalization continued

interests include a 42.5% stake in The .XZDLW�2OH¿QV�&RPSDQ\�.6&��D�.XZDLW� based manufacturer of ethylene, and a

50.0% ownership in MEGlobal, a Dubai- based manufacturer of polyethylene and other resins.

SOURCE: WWW.IBISWORLD.COM

Trade Globalization Going Global: Plastic & Resin Manufacturing 2005–2018

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0

200

150

100

50

0

Imports/Domestic Demand Imports/Domestic Demand 0 040 4080 80120 120160 160

International trade is a major determinant of an industry’s level of globalization. Exports offer growth opportunities for fi rms. However there are legal, economic and political risks associated with dealing in foreign countries. Import competition can bring a greater risk for companies as foreign producers satisfy domestic demand that local fi rms would otherwise supply.

Export ExportGlobal Global

ImportLocal ImportLocal

Plastic & Resin Manufacturing

2005 2018

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WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 25

Player Performance As one of the largest chemical companies LQ�WKH�8QLWHG�6WDWHV��'RZ'X3RQW�,QF�� (DowDuPont) produces more than 5,000 SURGXFWV�LQ�����PDQXIDFWXULQJ�IDFLOLWLHV� across 34 countries. DowDuPont, based LQ�0LGODQG��0,��HPSOR\V��������SHRSOH� globally. The company provides chemicals, plastic materials and other products to customers in sectors that include electronics, water, energy, coatings and agriculture. Key product segments include electronic and specialty materials, coatings and infrastructure, health and agricultural sciences, performance systems, performance products, basic plastics, basic chemicals and hydrocarbons and energy. In 2017, 'RZ'X3RQW�HDUQHG�ɻ�����ELOOLRQ�LQ�WRWDO� company revenue.

In 2007, DowDuPont (then The Dow Chemical Company) announced a 50/50 joint venture with Chevron Phillips Chemical Company (Chevron Phillips) to

combine the companies’ respective styrene businesses in the Americas. The deal was designed to give DowDuPont access to inexpensive natural gas. The company’s current strategy of focusing on specialty chemical production to reduce its demand for ethylene has also been essential to the industry. To this end, DowDuPont closed three ethylene- related plants in Louisiana in the mid- 2000s. The company’s joint venture with Chevron Phillips is one of the primary reasons it continues to experience DERYH�DYHUDJH�SUR¿W�PDUJLQV��7KLV� strategy is becoming increasingly popular in the industry, as natural gas is a key input for the company’s operations.

In late 2015, The Dow Chemical Company announced plans for a merger DQG�VSLQRɣ�ZLWK�'X3RQW��%RWK�FRPSDQLHV� announced that they would undertake an all-stock merger of equals transaction DQG�DWWDLQ�DQ�HVWLPDWHG�ɻ����ELOOLRQ�LQ�

Major Companies DowDuPont Inc. | Other Companies

94.3% Other

DowDuPont Inc. 5.7% SOURCE: WWW.IBISWORLD.COM

Major Players (Market Share)

DowDuPont Inc. Market Share: 5.7% Industry Brand Names Dow Chemical

DowDuPont Inc. (US industry-specifi c segment) - fi nancial performance*

Year Revenue

($ million) (% change) Operating Income

($ million) (% change)

2013 5,951.7 N/C 781.1 N/C

2014 6,026.7 1.3 727.3 -6.9

2015 5,274.9 -12.5 868.2 19.4

2016 5,360.4 1.6 1,535.3 76.8

2017 4,900.0 -8.6 1,105.0 -28.0

2018 5,498.5 12.2 1,239.9 12.2

*Estimates SOURCE: ANNUAL REPORT AND IBISWORLD

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Major Companies

Other Company Performance

Wacker Chemie AG (Wacker Chemie) is a German chemical company established in ������,W�ZDV��DW�WKDW�WLPH��RQH�RI�WKH�¿UVW� companies to have an industrial size production facility for acetic acid, acetaldehyde and other chemicals. Wacker Chemie established its presence LQ�WKH�86�LQ������ZLWK�WKH�LQFRUSRUDWLRQ� of the Wacker Chemicals Corporation in New York. Over the years, the Americas division has become an important driver of revenue and growth, accounting for almost a quarter of total global revenue in 2017.

:DFNHU�&KHPLH¶V�86�KHDGTXDUWHUV�DUH� located in Adrian, MI, and the company KDV�VL[�SURGXFWLRQ�VLWHV��¿YH�VDOHV�RɤFHV� and 21 distributors across the country. Industry-relevant manufacturing operations are undertaken in the Adrian, MI facility, where it manufactures HODVWRPHUV��VLOLFRQH�ÀXLGV�DQG�HPXOVLRQV�� Other industry-relevant products are manufactured in Allentown, PA; Calvert City, KY; North Canton, OH; and Eddyville, ID. Overall, industry-relevant UHYHQXH�LV�H[SHFWHG�WR�UHDFK�ɻ����ELOOLRQ� in 2018.

Other Companies While DowDuPont makes up a sizeable share of the Plastic and Resin Manufacturing industry, the remaining companies are mostly small- to medium- VL]HG�PDQXIDFWXUHUV��6WLOO��VRPH�ODUJH�

global corporations are also involved in the LQGXVWU\��+RZHYHU��,%,6:RUOG�DQWLFLSDWHV� many of these larger companies operate their plastic and resin manufacturing IDFLOLWLHV�RXWVLGH�RI�WKH�8QLWHG�6WDWHV�

Player Performance continued

synergies. However, the companies also announced that after the merger, the new company will remain a sole entity for only 18 to 24 months before splitting into three publicly traded entities. One of those entities would solely focus on the plastics and chemicals business, making it industry-relevant. However, both companies announced in March 2017 that the proposed merger will be delayed SHQGLQJ�¿QDO�UHJXODWRU\�DSSURYDO�IURP� WKH�(XURSHDQ�8QLRQ��WKH�8QLWHG�6WDWHV�� %UD]LO��&DQDGD��$XVWUDOLD�DQG�&KLQD��,Q� 6HSWHPEHU�������ERWK�WKH�FRPSDQLHV� announced that their merger has been successfully completed and now it the combined entity will trade under the ³'RZ'X3RQW´�QDPH��'HWDLOHG�¿QDQFLDO� information of the combined entity is still not available, and therefore, The Dow Chemical Company’s industry- relevant segments are taken into

consideration to calculate market share of the combined entity.

Financial performance The company operates in the industry via its performance plastics, coating and infrastructure solutions and performance PDWHULDOV�VHJPHQWV��2YHU�WKH�¿YH�\HDUV�WR� ������,%,6:RUOG�HVWLPDWHV�WKDW� 'RZ'X3RQW¶V�LQGXVWU\�VSHFL¿F�UHYHQXH� will decrease slightly at an annualized rate RI������WR�ɻ����ELOOLRQ��,PSURYLQJ� downstream demand bolstered company UHYHQXH�DQG�SUR¿WDELOLW\�DW�WLPHV�RYHU�WKH� SDVW�¿YH�\HDUV��+RZHYHU��LQ������� industry-relevant revenue decreased ������DV�LQSXW�SULFHV�IHOO�VLJQL¿FDQWO\�� lowering the sale prices of industry goods. Conversely, lower prices are expected to EROVWHU�WKH�FRPSDQ\¶V�SUR¿WDELOLW\�DV�VDOH� prices fall at a rate slower than natural gas and crude oil prices.

Wacker Chemie AG Market Share: 1.4%

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Major Companies

Other Company Performance

)RUPHUO\�0RPHQWLYH�6SHFLDOW\�&KHPLFDOV� (Momentive), Hexion Inc. (Hexion) is a large producer of binder, adhesive, coating and ink resins for industrial applications. The company is considered the global leader in the production of epoxy resins. Hexion is divided into four operating segments, and its epoxy and phenolic resins division operates within the Plastic and Resin Manufacturing industry. The other three business segments include formaldehyde and forest product resins, coatings and inks and performance products. Its global scale and breadth of products enable the FRPSDQ\�WR�GHOLYHU�VLJQL¿FDQW�DGYDQWDJHV� to its customers. Key customers include �0��$VKODQG�&KHPLFDO��%$6)�DQG�%D\HU�

In October 2010, Momentive Performance Materials and Hexion 6SHFLDOW\�&KHPLFDOV�PHUJHG�LQWR�����

production facilities with more than 10,000 employees. The company initially RSHUDWHG�DV�0RPHQWLYH�6SHFLDOW\� Chemicals; however, management decided WR�FKDQJH�WKH�QDPH�WR�+H[LRQ�HɣHFWLYH� January 2015. Prior to the merger, Momentive specialized in silicones and DGYDQFH�PDWHULDOV��%HIRUH�MRLQLQJ�XS�ZLWK� Momentive, Hexion undertook a number of additional acquisitions, including the global ink and adhesive resins business of Akzo Nobel in November 2005, the decorative coatings and adhesives business unit of the Rhodia Group in -DQXDU\������DQG�WKH�JOREDO�ZD[� compounds business of Rohm and Hass in 0DUFK�������,%,6:RUOG�HVWLPDWHV�WKDW� WKH�FRPSDQ\�ZLOO�JHQHUDWH�ɻ������PLOOLRQ� from its epoxy and phenolic resins GLYLVLRQ�LQ�WKH�8QLWHG�6WDWHV�LQ������� UHSUHVHQWLQJ�D������PDUNHW�VKDUH�

Hexion Inc. Market Share: 0.9%

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Capital Intensity The Plastic and Resin Manufacturing industry requires a substantial amount of capital investment. The cost of a new manufacturing plant complete with PDFKLQHU\�DQG�HTXLSPHQW�LV�VLJQL¿FDQW� and constant product innovation necessitates regular investment in new technology. Due to the wide range of the SURGXFWV�RɣHUHG�E\�WKLV�LQGXVWU\�� manufacturing equipment can range in price from a few thousand dollars to many millions of dollars. Typical processes plastic may undergo during the manufacturing process include extrusion, molding, thermoforming, coating and recycling.

In addition to the equipment itself, tooling is generally required to make a particular shape. Most tooling processes

involve melting or softening the resin and then forcing it into the desired shape. Other processes force a monomer or

Operating Conditions Capital Intensity | Technology & Systems | Revenue Volatility Regulation & Policy | Industry Assistance

Capital Intensity

0.5

0.0

0.1

0.2

0.3

0.4

SOURCE: WWW.IBISWORLD.COM Dotted line shows a high level of capital intensity

Capital units per labor unit

Plastic & Resin Manufacturing

ManufacturingEconomy

Level The level of capital intensity is Medium

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Operating Conditions

Revenue Volatility Demand for this industry’s products is sensitive to demand primarily from downstream manufacturing industries and construction, which were hit hard by the downturn, and which both tend to exhibit medium to high volatility. Plastic and resin prices tend to exhibit volatility, VLQFH�WKH\�DUH�KHDYLO\�LQÀXHQFHG�E\�WKH� price of raw materials like crude oil and natural gas, which both exhibit high levels RI�SULFH�YRODWLOLW\��7KHUHIRUH��RYHU�WKH�¿YH� \HDUV�WR�������,%,6:RUOG�H[SHFWV�WKDW� industry revenue volatility has been high.

The wide range of end-uses for the industry’s products helps mitigate the reliance on any single area of demand. 2YHU�WKH�SDVW�¿YH�\HDUV��LQGXVWU\�UHYHQXH� ÀXFWXDWHG�VLJQL¿FDQWO\��ULVLQJ������LQ� 2018 and falling as sharply as 13.5% in ������7KH�KLJK�UHYHQXH�ÀXFWXDWLRQV� demonstrate the industry’s reliance on demand from downstream manufacturers and construction, which ERWK�H[KLELW�VLJQL¿FDQW�YRODWLOLW\��DV�ZHOO� DV�LQÀXHQFHV�IURP�SULFHV�RI�NH\�LQSXWV� like crude oil and natural gas.

Technology and Systems

The Plastic and Resin Manufacturing industry exhibits a moderate level of technological change. High volume resins, such as polypropylene and polyethylene, which together account for more than half of all plastics manufactured in the industry, are manufactured in large-scale, highly capital-intensive facilities that are often LQWHJUDWHG�ZLWK�RLO�UH¿QHULHV��DQG�ZKLFK� generally operate on a continuous basis. Most technological development is aimed WRZDUG�LQFUHDVLQJ�WKH�HɤFLHQF\�RI�WKH� production process within these complexes and increasing the manufacturing assets of the operators.

In addition, some manufacturing plants have been exploring the use of bioplastic, a form of plastic that is derived from vegetable oil, cornstarch and other biomass sources. However, ELRSODVWLF�LV�VLJQL¿FDQWO\�PRUH�H[SHQVLYH� to produce than petroleum-based plastic, and production costs can average upward of 20.0% or more than their traditional counterparts. The high costs associated with bioplastic have slowed associated research and development investments, as many plastic and resin manufacturers opt to focus their DWWHQWLRQ�RQ�PRUH�DɣRUGDEOH��SHWUROHXP� based products.

Capital Intensity continued

SUH�SRO\PHU�PL[WXUH�LQWR�D�VSHFL¿F� shape, and then polymerize it in place. The more processes required in the manufacturing process, the higher the investment and replacement costs for industry equipment.

,%,6:RUOG�HVWLPDWHV�WKDW�IRU�HYHU\� ɻ�����VSHQW�RQ�ZDJHV��SODVWLF�DQG�UHVLQ� PDQXIDFWXUHUV�VSHQG�DQ�HVWLPDWHG�ɻ����� on machinery and equipment in 2018. 7KLV�OHYHO�KDV�ÀXFWXDWHG�DV�RSHUDWRUV� DXWRPDWH�SURFHVVHV�DW�GLɣHUHQW�WLPHV�

Level The level of technology change is Medium

Level The level of volatility is Medium

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Operating Conditions

Regulation and Policy Like all manufacturers, industry operators are required to comply with federal, state and local air emission legislation. Most plastic composite manufacturing operations generate hazardous air pollutants (HAPs) during the application and curing of thermoset resins. In particular, the manufacturing of composite products with polyester and vinylester resins and gel coats can UHOHDVH�VLJQL¿FDQW�DPRXQWV�RI�VW\UHQH�� ZKLFK�LV�D�+$3��6WDWH�DQG�IHGHUDO� agencies regulate these emissions, and most manufacturing facilities are required to obtain a registration or permit. Although plastic manufacturing equipment and the production process is designed to comply with these standards, the regulations have nonetheless increased the price of the

equipment and the cost of production. The higher costs associated with these environmental regulations are one of the reasons that companies are now looking to partner with or manufacture in countries with fewer environmental regulations, such as China.

Recycling legislation requiring that a certain percentage of recycled plastic be LQFOXGHG�LQ�D�VSHFL¿HG�QXPEHU�RI�QHZ� plastic containers has been enacted in VHYHUDO�VWDWHV��6LQFH�WKH�SULFH�RI�UHF\FOHG� resin is currently lower than the price of virgin resin, it is unclear how these UHJXODWLRQV�ZLOO�DɣHFW�WKH�FRVW�RI� production. Depending on the plastic product being produced, these regulations could pose a problem for manufacturers due to the higher level of impurities present in recycled plastic.

Revenue Volatility continued

Level & Trend The level of Regulation is Heavy and the trend is Increasing

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Operating Conditions

Industry Assistance 7DULɣV�KDYH�D�ORQJ�VWDQGLQJ�VLJQL¿FDQFH� in the Plastic and Resin Manufacturing industry. They exist to protect domestic manufacturers and the domestic industry from foreign-produced goods. This is especially salient with the growing volume of inexpensive, imported plastic goods from Mexico, China and other HPHUJLQJ�HFRQRPLHV��7DULɣV�LQ�WKLV� industry also exist to some extent as a SXQLWLYH�UHDFWLRQ�WR�WKH�WDULɣV�$PHULFDQ� exporters are charged by other countries.

Imports of plastic products made from polyvinyl chloride, polypropylene and polyethylene are currently subject to a �����WDULɣ�LI�WKH\�GHULYH�IURP�FRXQWULHV� that have normal trade relations (NTR) ZLWK�WKH�8QLWHG�6WDWHV��ZKLOH�LPSRUWV�RI� these products from non-NTR countries are subject to up to more than 100.0% WDULɣ��,Q�DGGLWLRQ��LPSRUWV�RI� polyethylene terephthalate products, such as plastic jars, are currently subject WR�D������WDULɣ�LI�WKH\�GHULYH�IURP�175�

FRXQWULHV��ZLWK�D�WDULɣ�RI�������LI�WKH\� come from non-NTR countries. Imports of both high-density polyethylene and low-density polyethylene products, such as plastic buckets and watering cans, are DOVR�VXEMHFW�WR�D������WDULɣ�LI�WKH\�GHULYH� IURP�175�FRXQWULHV��ZLWK�D�������WDULɣ�LI� they derive from non-NTR countries.

The Plastic and Resin Manufacturing LQGXVWU\�DOVR�EHQH¿WV�IURP�WUDGH� DVVRFLDWLRQV��VXFK�DV�WKH�6RFLHW\�RI�WKH� 3ODVWLFV�,QGXVWU\��63,���ZKLFK�ZDV� HVWDEOLVKHG�LQ������DQG�LV�WKH�ODUJHVW� trade association that represents plastic product manufacturers in the United 6WDWHV��63,�UHSUHVHQWV�������PHPEHUV� across the entire plastics industry supply chain, including processors, machinery and equipment manufacturers and raw material suppliers. Assistance provided E\�63,�LQFOXGHV�WKH�SURYLVLRQ�RI� workplace development programs, compliance assistance, tradeshows, industry information and statistics.

Level & Trend The level of Industry Assistance is Medium and the trend is Increasing

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Key Statistics Revenue

($m)

Industry Value Added

($m) Establish-

ments Enterprises Employment Exports

($m) Imports

($m) Wages ($m)

Domestic Demand

World price of crude oil

($ per barrel) 2010 101,441.4 13,910.0 1,156 882 70,632 37,209.4 13,436.0 5,490.4 77,668.0 79.0 2011 106,615.2 14,007.5 1,171 892 70,622 41,100.1 15,819.9 5,691.5 81,335.0 104.0 2012 110,870.7 14,773.6 1,310 1,014 73,440 39,183.3 16,195.2 5,793.1 87,882.6 105.0 2013 112,890.1 14,803.8 1,283 993 74,347 38,769.7 16,231.8 5,885.5 90,352.2 104.1 2014 112,316.8 15,854.3 1,288 994 73,479 38,454.2 17,878.6 6,082.8 91,741.2 96.2 2015 97,147.5 14,991.6 1,288 997 78,922 34,790.0 16,258.5 6,636.9 78,616.0 50.8 2016 90,795.6 16,492.6 1,266 989 77,576 32,709.0 15,684.5 6,686.7 73,771.1 42.8 2017 88,021.9 15,716.7 1,250 978 76,764 34,506.7 16,824.1 6,826.5 70,339.3 52.8 2018 95,909.1 16,790.9 1,303 1,015 78,359 37,747.7 18,189.6 7,123.5 76,351.0 67.1 2019 96,747.0 16,919.5 1,301 1,013 79,447 38,727.8 17,740.5 7,221.3 75,759.7 67.2 2020 97,678.6 17,024.5 1,360 1,063 80,619 39,227.7 17,796.7 7,327.4 76,247.6 68.3 2021 98,131.1 17,134.6 1,355 1,059 80,796 39,471.2 17,823.9 7,350.4 76,483.8 72.4 2022 98,719.7 17,146.9 1,382 1,081 81,515 39,838.1 17,814.9 7,416.0 76,696.5 74.7 2023 99,622.8 17,188.1 1,383 1,082 82,231 40,324.6 17,870.0 7,488.4 77,168.2 77.1 2024 100,529.3 17,279.6 1,418 1,111 83,242 40,754.9 17,977.1 7,582.5 77,751.5 78.9 Sector Rank 12/193 14/193 70/193 70/193 49/193 6/184 33/184 25/193 17/184 N/A Economy Rank 115/694 174/694 522/694 504/694 357/694 7/216 35/216 210/694 19/216 N/A

IVA/Revenue (%)

Imports/ Demand

(%)

Exports/ Revenue

(%)

Revenue per Employee

($’000) Wages/Revenue

(%) Employees

per Est. Average Wage

($)

Share of the Economy

(%) 2010 13.71 17.30 36.68 1,436.20 5.41 61.10 77,732.47 0.09 2011 13.14 19.45 38.55 1,509.66 5.34 60.31 80,591.03 0.09 2012 13.33 18.43 35.34 1,509.68 5.23 56.06 78,882.08 0.09 2013 13.11 17.97 34.34 1,518.42 5.21 57.95 79,162.58 0.09 2014 14.12 19.49 34.24 1,528.56 5.42 57.05 82,782.84 0.09 2015 15.43 20.68 35.81 1,230.93 6.83 61.27 84,094.42 0.09 2016 18.16 21.26 36.02 1,170.41 7.36 61.28 86,195.47 0.09 2017 17.86 23.92 39.20 1,146.66 7.76 61.41 88,928.40 0.09 2018 17.51 23.82 39.36 1,223.97 7.43 60.14 90,908.51 0.09 2019 17.49 23.42 40.03 1,217.76 7.46 61.07 90,894.56 0.09 2020 17.43 23.34 40.16 1,211.61 7.50 59.28 90,889.24 0.09 2021 17.46 23.30 40.22 1,214.55 7.49 59.63 90,974.80 0.09 2022 17.37 23.23 40.35 1,211.06 7.51 58.98 90,977.12 0.09 2023 17.25 23.16 40.48 1,211.50 7.52 59.46 91,065.41 0.08 2024 17.19 23.12 40.54 1,207.68 7.54 58.70 91,089.83 0.08 Sector Rank 156/193 89/184 22/184 11/193 171/193 68/193 12/193 14/193 Economy Rank 552/694 101/216 29/216 54/694 603/694 102/694 75/694 174/694

Figures are in inflation-adjusted 2018 dollars. Rank refers to 2018 data.

Revenue (%)

Industry Value Added

(%)

Establish- ments

(%) Enterprises

(%) Employment

(%) Exports

(%) Imports

(%) Wages

(%)

Domestic Demand

(%)

World price of crude oil

(%) 2011 5.1 0.7 1.3 1.1 0.0 10.5 17.7 3.7 4.7 31.6 2012 4.0 5.5 11.9 13.7 4.0 -4.7 2.4 1.8 8.1 1.0 2013 1.8 0.2 -2.1 -2.1 1.2 -1.1 0.2 1.6 2.8 -0.9 2014 -0.5 7.1 0.4 0.1 -1.2 -0.8 10.1 3.4 1.5 -7.5 2015 -13.5 -5.4 0.0 0.3 7.4 -9.5 -9.1 9.1 -14.3 -47.2 2016 -6.5 10.0 -1.7 -0.8 -1.7 -6.0 -3.5 0.8 -6.2 -15.7 2017 -3.1 -4.7 -1.3 -1.1 -1.0 5.5 7.3 2.1 -4.7 23.3 2018 9.0 6.8 4.2 3.8 2.1 9.4 8.1 4.4 8.5 27.1 2019 0.9 0.8 -0.2 -0.2 1.4 2.6 -2.5 1.4 -0.8 0.2 2020 1.0 0.6 4.5 4.9 1.5 1.3 0.3 1.5 0.6 1.6 2021 0.5 0.6 -0.4 -0.4 0.2 0.6 0.2 0.3 0.3 6.0 2022 0.6 0.1 2.0 2.1 0.9 0.9 -0.1 0.9 0.3 3.2 2023 0.9 0.2 0.1 0.1 0.9 1.2 0.3 1.0 0.6 3.2 2024 0.9 0.5 2.5 2.7 1.2 1.1 0.6 1.3 0.8 2.3 Sector Rank 122/193 122/193 117/193 113/193 59/193 89/184 119/184 80/193 135/184 N/A Economy Rank 494/694 493/694 510/694 502/694 338/694 98/216 145/216 385/694 157/216 N/A

Annual Change

Key Ratios

Industry Data

SOURCE: WWW.IBISWORLD.COM

Provided to: University of Baltimore (2132433030) | 13 April 2019

WWW.IBISWORLD.COM Plastic & Resin Manufacturing in the US December 2018 33

Apr 2016 - Mar 2017 by company revenue Apr 2013 - Apr 2014 - Apr 2015 - Apr 2016 - Small Medium Large Mar 2014 Mar 2015 Mar 2016 Mar 2017 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios

Current Ratio 1.8 1.7 1.7 1.8 1.5 2.1 1.9 Quick Ratio 0.9 0.9 0.9 0.9 0.7 1.0 0.9 Sales / Receivables (Trade Receivables Turnover) 8.9 9.0 8.7 8.5 8.5 8.3 8.7

Days’ Receivables 41.0 40.6 42.0 42.9 42.9 44.0 42.0 Cost of Sales / Inventory (Inventory Turnover) 6.8 6.4 6.6 5.7 5.8 5.5 6.3

Days’ Inventory 53.7 57.0 55.3 64.0 62.9 66.4 57.9 Cost of Sales / Payables (Payables Turnover) 11.2 12.2 13.7 12.6 13.0 11.5 13.6

Days’ Payables 32.6 29.9 26.6 29.0 28.1 31.7 26.8 Sales / Working Capital 8.5 8.2 8.9 7.8 9.6 7.4 9.8

Coverage Ratios

Earnings Before Interest & Taxes (EBIT) / Interest 7.5 7.4 6.9 7.7 6.3 7.4 15.6

Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt 3.7 4.0 2.8 3.5 n/a 3.1 5.1

Leverage Ratios

Fixed Assets / Net Worth 0.8 0.7 0.9 0.8 0.8 0.6 0.8 Debt / Net Worth 1.5 1.4 1.7 1.3 1.5 1.2 1.3 Tangible Net Worth 35.1 36.0 30.4 35.8 26.8 40.0 40.1

Operating Ratios

Profit before Taxes / Net Worth, % 23.0 23.4 23.9 23.9 15.6 20.6 30.5 Profit before Taxes / Total Assets, % 8.8 8.9 9.8 9.5 7.6 10.8 14.9 Sales / Net Fixed Assets 7.7 7.2 7.0 6.0 5.8 6.3 5.2 Sales / Total Assets (Asset Turnover) 2.0 2.0 2.0 1.9 1.9 1.9 2.0

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 24.5 22.2 26.8 26.8 31.7 27.0 22.9 Cash after Operations 6.0 5.7 7.3 7.5 6.6 7.1 10.3 Net Cash after Operations 6.1 5.4 7.3 7.7 7.5 7.5 9.4 Cash after Debt Amortization 2.2 1.4 2.3 2.7 2.4 3.1 5.7 Debt Service P&I Coverage 3.7 3.1 3.2 3.2 2.6 3.4 5.7 Interest Coverage (Operating Cash) 8.8 10.3 11.4 11.4 10.2 11.0 30.7

Assets, %

Cash & Equivalents 9.6 8.3 7.6 9.4 8.8 9.5 10.0 Trade Receivables (net) 25.7 24.2 25.1 22.7 22.3 23.9 20.7 Inventory 24.4 24.9 22.8 24.1 22.3 24.9 24.7 All Other Current Assets 2.2 2.8 2.2 2.0 2.4 2.1 1.5 Total Current Assets 62.0 60.1 57.7 58.2 55.9 60.4 56.8 Fixed Assets (net) 28.8 28.8 30.0 31.4 33.2 29.0 33.6 Intangibles (net) 5.0 4.6 6.2 3.9 3.4 4.8 2.7 All Other Non-Current Assets 4.1 6.5 6.1 6.6 7.5 5.8 6.8 Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Total Assets ($m) 6,086.4 6,029.0 5,444.8 4,774.7 201.4 1,286.3 3,287.0

Liabilities, %

Notes Payable-Short Term 9.2 9.3 10.0 8.3 8.5 8.2 8.2 Current Maturities L/T/D 3.5 2.9 3.4 3.3 3.7 3.1 3.0 Trade Payables 15.8 15.2 13.8 14.0 14.7 14.2 12.7 Income Taxes Payable 0.1 0.2 0.1 0.3 0.1 0.1 1.1 All Other Current Liabilities 8.7 8.4 8.3 10.3 17.6 6.4 8.0 Total Current Liabilities 37.5 35.9 35.6 36.2 44.6 32.0 33.0 Long Term Debt 16.0 15.7 20.1 17.0 19.1 15.5 16.9 Deferred Taxes 1.0 1.1 0.9 1.0 0.4 1.2 1.4 All Other Non-Current Liabilities 5.5 6.6 6.7 6.1 5.7 6.5 5.8 Net Worth 40.1 40.6 36.6 39.7 30.2 44.8 42.8 Total Liabilities & Net Worth ($m) 6,086.4 6,029.0 5,444.8 4,774.7 201.4 1,286.3 3,287.0

Maximum Number of Statements Used 180 187 182 175 55 79 41

Industry Financial Ratios

Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects. Note: For a full description of the ratios refer to the Key Statistics chapter online.

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Jargon & Glossary

BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry. CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor. CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator. DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports. EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry. ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control. ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise. EXPORTS Total value of industry goods and services sold by US companies to customers abroad. IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.

INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%. INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded. INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation. INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%. LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services. NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals. PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.

Industry Jargon

IBISWorld Glossary

POLYETHYLENE Any partially crystalline, lightweight thermoplastic that is resistant to chemicals and moisture, has good insulating properties and is used primarily in packaging and insulation. POLYMER A chemical compound or mixture of compounds that consists essentially of repeating structural units. POLYPROPYLENE Any of the various thermoplastics or fibers that are polymers of propylene.

RESINS A large class of synthetic products used chiefly in plastics that have some of the physical properties of natural resins but are different chemically. THERMOPLASTIC A synthetic resin that is capable of softening or fusing when heated and then hardening again when cooled. THERMOSET A product that is relatively incapable of softening or fusing when heated.

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Jargon & Glossary

VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.

WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.

IBISWorld Glossary continued

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