I hesitate to get too deep into a political discussion, just a month before the U.S. presidential election. Voters are so polarized these days, I wouldn’t change anyone’s mind if I tried, and it’s not really Plastics News’ place as a trade magazine to endorse candidates.
On top of that, I like to think that both parties — and third parties, and independents, too — can be right sometimes.
Maybe that makes me a moderate — gasp!
A wise person once told me that neither political party has a monopoly on common sense. And both parties have their share of rogues, too. (I’d attribute that to William Harvey, who’s been president of Hampton University for an amazing 38 years, but I guess I never wrote it down, so I can’t find the exact quote. But you can trust me, he said it.)
I’ve watched politicians long enough to realize that they don’t mean everything they say. Many have had late-career conversions on what appeared to be core beliefs. It’s amazing what some will say to get elected, and re-elected.
Damn few ever do anything in their careers that would qualify them for a chapter in the next edition of “Profiles in Courage.”
I say all this to introduce a topic that didn’t used to be all that controversial, at least not in business circles. But lately that’s changed.
The issue is free trade.
We’ve long held a position in favor of free trade. Our editorial agenda, which we update and publish in the first issue of every year, states: “Free trade encourages efficiency and inspires stability around the world.”
Sure, free trade causes disruption sometimes. But in the big picture, if we can have a level playing field, free trade should reward the best companies in the world.
And now, thanks to a new report from the Society of the Plastics Industry Inc., we have proof that’s true. And what’s really interesting is that many of those world-class companies are based in the United States, and they manufacture plastic materials, parts, tools and equipment.
SPI released its 2016 Global Business Trends report last week in Chicago. Officials said the report “paints a complex, but ultimately positive and promising, portrait of the U.S. plastics industry.”
Most notably, the U.S. plastics industry remains one of the few manufacturing sectors with a trade surplus. That’s largely thanks to the resin sector, which benefits from low cost feedstock and world-scale manufacturing.
But other sectors are outperforming the overall economy. And in the 20 countries where the United States has free trade agreements, U.S. plastics firms have surpluses in plastic products and machinery, as well as in resin.
“Free trade agreements are a good fit for U.S. plastics firms,” Michael Taylor, SPI’s international affairs and trade vice president, told Plastics News’ Frank Esposito.
The report includes some special analysis on China’s plastics industry, which it describes as a key plastics trading partner with the United States.
In 2015, China was the third-largest export market for the U.S. plastics industry, behind Mexico and Canada. U.S. plastics companies exported $5 billion in goods in China, or 8.4 percent of total exports.
But China also has the largest bilateral trade deficit with the U.S. plastics industry, including $12 billion in plastic products alone. And China held 10 percent of the U.S. mold market in 2015, and 5.2 percent of the U.S. machinery market.
The report cites several factors that contribute to the trade deficit with China, including low wages, government subsidies, tariffs, non-tariff trade barriers and currency manipulation.
There’s plenty of anecdotal evidence that global companies are reshoring work to North America. But the SPI report notes that “higher wages in China are cutting into the country’s competitive advantage, but that has not changed the game so far. China’s currency, the RMB, may no longer be undervalued and may not be as manipulated as it once was. Nevertheless, the RMB has been losing value in the last two years, which will further exacerbate the enormous U.S. trade deficit with China.”
Industry innovation
In the specialized world of plastics industry trade journalism, we tend to look at time in three-year blocks. Every three years there’s a K show in Germany. Every three years there’s an NPE in the United States.
We’re now just a few weeks away from K 2016 in Düsseldorf, so it’s an appropriate time to reflect on how the industry has changed since the last big show, in 2013.
In terms of technology and innovation, it’s been an exciting three years. We’ve seen advances in processing, tooling, machinery and materials. As just one example, we first started to hear about Industry 4.0 at K 2013, and it’s clear that at this show, it’s going to be a huge theme. And this time, processors are going to hear exactly how it’s going to help their businesses.
On the business side, I think it’s fair to say that the overall picture has been positive. It all depends on your market and your customers, of course. But we continue to see advances — and willingness to explore the advantages of plastics — in markets like automotive, construction, packaging and health care.
The past three years have been good ones to be in the plastics industry. And thanks to free trade, they’ve been at least a bit better in the United States.
I think that’s as political as I’m going to get today. But remember, I think both candidates are willing to say just about anything to get elected. So this isn’t an endorsement. More of a statement of common sense. Feel free to vote your conscience.
Loepp is editor of Plastics News and author of “The Plastics Blog.” Follow him on Twitter @donloepp.
