Everyone who works in the plastics industry or a related industry has reason to celebrate. Economic forecasts for the plastics industry indicate a rosy outlook for the year ahead and possibly even beyond 2022. Though the ongoing pandemic took a toll on the plastics industry as well as the overarching economy, the silver lining is plastics processors were not as harshly impacted as some anticipated.
Why the Plastics Industry is on the Rise
The 2021 MAPP Plastics Benchmarking Study that accounted for upwards of 100 plastics processors in North America, spanning nearly 150 facilities, reports the industry had positive EBIT as a whole, solid balance sheets, ongoing capital investments, and ever-improving efficiency. EBIT is an acronym short for earnings before interest and taxes. The numbers are even better when you factor positive customer gains into the picture.
Molders have been concerned about the pool of labor dating back several years. The coronavirus pandemic worsened the labor issue all the more. Manufacturers have struggled to fill vacant positions amid spiking demand. However, it must be noted the manufacturing sector’s unemployment rate is a mere 3.6% compared to the nationwide unemployment rate which is slightly greater than 5%.
Outlook of the Plastics Industry
The plastics industry has endured a considerable amount of stress in the past two years, yet it has held strong. As long as the pandemic comes to a close, industry employers should have no trouble finding workers and materials at reasonable prices. However, it will take some time for labor challenges to be resolved. If you own or manage a business in the plastics industry, it is in your interest to rely on a recruiter for assistance in finding qualified candidates.
Those who work in the plastics industry will also find it interesting to learn that the ongoing pandemic, along with regional tensions and challenges in transporting materials, will likely prolong the country’s plastics industry trade deficit. However, this deficit might shrink in the year ahead.
The United States’ machinery production is likely to increase by slightly more than 1.9% on a year-over-year basis, yet it won’t match the 15% year-over-year growth rate of the prior year. Fast forward to the second quarter of the year ahead, and we will have a better idea as to whether the supply chain is returning to normal.
Resin Prices Will Remain Elevated
Resin prices have soared, yet the trend won’t subside in the months ahead. Plastics industry business owners and managers should not anticipate any sort of relief in terms of the pricing of resin as elevated prices resulting from ongoing scarcity and heightened demand will likely continue through the year ahead.
However, some industry analysts believe the rate of resin price hikes will slow around the 23% mark in the third quarter of ’22 and possibly dip down to 15% by the fourth quarter. Even if these forecasts come true, resin prices will still be nearly 20% above those of the prior year in terms of year-over-year comparisons.
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