Downstream demand from the housing market declined drastically during the recession.
Los Angeles, CA (PRWEB) October 22, 2013
Plastic is known for its flexibility, but the recession bent the Plastic Products Miscellaneous Manufacturing industry too far, causing declines in demand from nearly all of the industry's markets. Plastic product manufacturers have had to contend with drops in revenue and eroding profit margins, causing operators to close factories and slash employment. From 2008 to 2013, industry revenue contracted and revenue dropped significantly in 2009. However, although the past couple of years have been rough on the industry, revenue is expected to return to prerecession levels. Miscellaneous plastic product demand will continue to grow in the future as consumer spending heats up. Consequently, the Plastic Products Miscellaneous Manufacturing industry is expected to experience annualized revenue growth in the five years to 2018.
The Plastic Products Miscellaneous Manufacturing industry consists of a large number of small, regional companies. As a result, the concentration is low, with the four biggest players (SABIC Innovative Plastics, Spartech Corporation, Armstrong World Industries Inc. and Rexam PLC) accounting for less than 10.0% of market share in 2013 (see IBISWorld report 32619 for major player market shares). The wide variety of products manufactured in this industry and the diverse buying markets make it difficult for individual companies to grab a large portion of the market share. The fragmented nature of the industry is particularly evident by examining the largest players, all of which sell different miscellaneous plastic products. Over time, however, the industry's concentration has been increasing, albeit slowly. In 2007, Saudi Basic Industries Corporation acquired General Electric's plastic division, and Rexam acquired O-I Plastics. These acquisitions indicate that companies are making a concerted effort to increase profitability by claiming larger portions of market share.
According to IBISWorld Industry Analyst James Crompton, “The industry relies heavily on several key industries to purchase its products.” For example, automotive manufacturers use plastic in vehicle interiors and in some engine components. The collapse of the domestic automotive industry in 2008 and 2009 caused demand for new cars to plummet, which reduced demand for the plastic components used in the car manufacturing process. Similarly, the meltdown of the housing market and the subsequent reduction in demand for construction and renovations resulted in considerably less cash from plastic flooring, construction and plumbing fixture sales. Since 2010 and 2011, however, both industries have started to rebound and are expected to continue growing in 2013. In addition to slowed downstream demand, competition from abroad is threatening the industry. Since 2001, the United States has imported more plastic products than it has exported. Imports will climb in 2013 and are forecast to grow in the five years to 2018. Currently, “the United States receives nearly half of its imports from China, where lower production costs enable manufacturers to achieve higher profit margins,” says Crompton. This trend is expected to continue in the five years to 2018.
For more information, visit IBISWorld’s Plastic Products Miscellaneous Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Plastic Products Miscellaneous Manufacturing industry is composed of companies that manufacture a range of plastic products, including housewares, building materials, motor vehicle parts, resilient floor coverings and appliance parts. This industry excludes plastic film, sheet, bags, profile shapes, pipes, pipefittings, laminates, foam products and bottles.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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