Ohio’s Plastics Industry Primed for Reshoring Opportunities: Study
COLUMBUS, Ohio – A report prepared by a pro-energy group and released this week by JobsOhio shows Ohio’s manufacturers are in a strong position to recapture a significant share of imported plastics-based products.
The study was written by Shale Crescent USA, a nonprofit that promotes economic development through the use of natural resources – namely, natural gas – found in Ohio, West Virginia and Pennsylvania’s shale formations.
According to the report, the United States imports $53 billion worth of plastics-based imports annually, of which China accounts for $25 billion, representing a threefold increase over the past 10 years.
Ohio’s manufacturers, however, are well positioned to reshore a large portion of these imported products, the report shows.
Increased automation, technological advances, reduced transportation costs, accessibility of natural gas produced from U.S. shale plays and the fragility of global supply chains have created opportunities for domestic companies to manufacture these products.
“Through this report, JobsOhio is providing us with information we can use to continue expanding our economy through reshoring,” Guy Coviello, president and CEO of the Youngstown/Warren Regional Chamber, said in a preface to the report. “This will help us attract more companies here. This will also help our existing companies reduce their supply chain costs and improve supply chain reliability.”
According to the report, a standard container of goods originating from China will travel between 6,500 and 20,000 miles before national distribution at a U.S. port. Plus, sourcing products from a domestic manufacturer reduces travel time from 30 days to between an average of two to five days, the reported noted.
Ohio’s manufacturing and distribution centers are located within a day’s drive of 50% of the U.S. population and more than 70% of the plastics industry supply chain.
The study also found that the U.S. uses low-cost natural gas to produce plastic resin. As a result, “U.S. resin producers experience greater margins and higher overall profits compared to overseas producers.”
More than one-third of the U.S. gas supply is procured from Ohio, Pennsylvania and West Virginia. Collectively, these states produce 1 1/2 times more natural gas and natural gas-liquids than the entire country of China, according to the study.
In October, Royal Dutch Shell’s $6 billion polyethylene cracker plant began production in Monaca, Pa. The plant uses ethane gas from the region’s shale formations and produces polyethylene pellets, which are used to manufacture hundreds of different plastics-based products.
In early 2021, retail giant Walmart announced it would invest $350 billion over the next decade on products made, grown or assembled in the United States, underscoring the supply chain challenges brought on by the COVID-19 pandemic.
Ohio also possesses other advantages such as lower lease rates and electricity rates, the report said. Meantime, China’s wage labor rates are increasing 10% per year. Increased automation and technological advances in the U.S. have led to reduced overall labor costs and increased productivity, the report shows.
At the same time, Plastics Industry Association ranked Ohio No. 1 for plastics employment. The state boasts more than 75,000 jobs in the plastics industry, the report said.
“With applications from automotive to aerospace, food and health care, plastics are just as essential to U.S. manufacturers as semiconductor chips,” said J.P. Nauseef, president and CEO of JobsOhio. “The Shale Crescent USA study puts an exclamation point on what we have been saying for years – Ohio has the resources, location, talent, business-friendly environment and quality of life that gives manufacturers a sustainable competitive advantage. Simply put, Ohio is the best place in the world for vital industries to invest, build and thrive.”
Published by The Business Journal, Youngstown, Ohio.
