Wednesday, May 25th, 2016

The U.S. Plastics Industry’s Top Five Export Markets

Of the U.S. plastics industry’s $427 billion in annual sales, slightly more than 20 percent of that comes from exports, according to SPI’s 2015 Global Trends Report. The lion’s share of that goes to these top five export markets for the U.S. plastics industry as of 2015.

Sunday´s bikers in Paseo de la Reforma, Mexico

1) Mexico

No surprise that the first entry on this list is America’s closest neighbor and strongest trading partner.  The U.S. exported $15.8 billion in goods to Mexico in 2014. Mexico’s plastics industry relies greatly on its U.S. partners, particularly when it comes to resin, where the U.S. has a $6.7 billion surplus with Mexico.

Toronto skyline

2) Canada

The U.S. plastics industry exported $13.2 billion worth of products to its northern neighbor in 2014. The North American Free Trade Agreement (NAFTA) drives a great deal of America’s beneficial trade relationships with both Canada and Mexico, but this relationship goes both ways. Most U.S. polyethylene imports come from Canada, a country with rich hydrocarbon resources that can be converted into chemicals and resins.

Beijing, China CBD Cityscape

3) China

The world’s largest resin consumer is America’s third-largest export market, where U.S. companies had a $2.8 billion surplus in 2014 (as opposed to a $9.2 billion deficit for the industry as a whole).

Rio

4) Brazil

Brazil relies heavily on U.S. products from throughout the plastics supply chain, with the U.S. running trade surpluses with the country in all four plastics categories (resin, plastic products, molds and plastics machinery).

Yokohama

5) Japan

Japan could overtake Brazil to become the fourth-largest export market for U.S. companies (if it hasn’t already since the time of this writing) but regardless, it remains an important trade partner for the U.S. and ships a great deal of machinery put to use at U.S. companies.

Wednesday, April 20th, 2016

Why TSCA Reform Benefits Both the Public and the Plastics Industry

US CapitolThere’s much praise for both the House and Senate versions of the Toxic Substances Control Act (TSCA) legislation. Why? How does reforming a 40-year old piece of legislation impact an additive supplier in the value chain for an intricate piece in a larger finished product? Why should consumers be optimistic about the safety of future household products?

TSCA reform that is being negotiated by representatives from each chamber of Congress will update the 40-year-old regulatory framework to reflect today’s chemical manufacturing environment. In particular, we expect the negotiated version to overhaul the safety standards for chemicals entering the market, codify federal preemption language, and to protect confidential business information.

Here’s a look at what SPI and its members/stakeholders support:

Updated Safety Standards

TSCA will better define the safety standards that chemical manufacturers must meet so that consumers are more confident about the safety of chemicals in commerce. Costs and other non-risk factors should not be considered when evaluating the safety of a chemical. It is important TSCA consider potentially exposed subpopulations, such as children, to a chemical even under the intended conditions of use. Without these changes, it is difficult for businesses to demonstrate the safety of their products under the current, outdated regulatory system.

Federal Regulation to Preempt State Regulations

TSCA reform will reduce the need some states feel to step into the realm of chemical regulation. It’s more efficient for a company to comply with one federal regulation than it is to juggle 50 individual state regulations. The federal government recognizes this and is defining a threshold for states to implement their own regulatory standards.

Protect Confidential Business Information

Today’s TSCA reform outlines when information needs to be provided by private companies, but it also clarifies what is and is not protected. This confidence allows businesses to move forward with more innovative solutions to today’s chemical needs without worrying about disclosing trade secrets in the regulatory process.

U.S. manufacturers have made great strides in advancing chemical technology and use. These innovations make life as we know it possible. Unfortunately, the regulatory environment has not kept pace – but we expect this to change when negotiations conclude and a final bill is signed into law. We are confident that promising days lie ahead for those in the plastics industry impacted by TSCA.

Thursday, February 11th, 2016

Four Reasons Why New Duty Drawback Rules Will Benefit U.S. Plastics and Other Manufacturers

The Senate approved a compromise version of the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644) today. The bill would make American manufacturers more competitive globally by streamlining trade flows, reducing paperwork burdens for smaller shipments and, notably, making duty drawback more available to companies of all sizes.

ExportingPhotoTrade

Duty drawback is an oft-overlooked portion of U.S. trade law but it’s a powerful tool, defined as the refund, reduction or waiver of customs duties assessed or collected upon importation of an article or materials which are subsequently exported or destroyed. In English, that translates to, “if the U.S. charges a duty on something you import, but you use that imported item to produce an item that’s eventually exported, the U.S. will refund the duty it originally charged you.”

This is an especially powerful tool for plastics companies, but successfully taking advantage of it can often be too burdensome for many smaller organizations. Here are four reasons why that’s about to change, and why the new duty drawback provisions included in H.R. 644 are good for U.S. plastics.

1. The new statute makes drawback more available to companies of all sizes: successfully claiming drawback often means heavy paperwork; officials must be able to draw a clear line from the goods upon which the duty was first imposed to the exported good they eventually were a part of. Rather than tackle that process, many companies will opt to just pay the duty. The new bill, however, simplifies the process, giving more exporters an opportunity to reduce their costs with drawback.

2. It includes improvements to substitution: Part of drawback for manufacturers is the concept of substitution, which stipulates that when merchandise that’s “commercially interchangeable” with imported merchandise upon which a duty, tax or fee is levied is ultimately exported or destroyed, the exporter can claim drawback on those goods they imported. The issue is that qualifying such goods for drawback to U.S. Customs and Border Protection (CBP) is an extremely onerous, subjective process. The new drawback provisions make the concept of “commercial interchangeability” an objective matter by basing this assessment on where each imported or exported merchandise falls on the globally-accepted Harmonized Tariff Schedule of the U.S., eliminating the need for subjective interpretation on the part of CBP.Bottling Process

3. Shorter time frames: Typically drawback requires rulings and approvals prior to filing claims, but the new statute would eliminate the 6-12 month wait time that usually separates the request for approval for drawback and the date the first claim can be filed. This means companies claiming drawback can get their money quicker.

4. More time to file: Under the new statute, time frames will be simplified so instead of allowing drawback on only imported goods that were exported within three years of importation, companies can expand that time limit to five years. This would take off some of the pressure, and alleviate some of the recordkeeping burden on both CBP and on drawback claimants.

H.R. 644 is a solid bill with lots of pro-export, pro-manufacturing provisions, which is why SPI advocated for it. If the administrative hurdles, confusing time frames and arcane details have kept your company from taking advantage of duty drawback, now might be the time to take a second look.

Wednesday, January 20th, 2016

The Growing Role of Plastics in Construction and Building

Go to just about any construction or job site around the world and you will find the building blocks architects have used for centuries: metals, wood, stone and masonry. But take a closer look at the new home being built in your neighborhood or the commercial building taking shape in your city, and a comparatively new building tool emerges: plastics and plastics derivatives.

Zero Energy Home

The building and construction sector is currently the second largest consumer of plastics (behind packaging) and it will increasingly use plastics and plastics derivatives given its wide functionality and distinct advantage of other traditional building materials in terms of flexibility, lower costs, energy and weathering efficiency and durability according to an SPI: The Plastics Industry Trade Association report issued at the 2016 International Builders’ Show in Las Vegas.

The report, “Plastics Market Watch: Building and Construction” is the fourth in a series published by SPI analyzing key factors impacting the plastic industry’s key end markets.

2015-03256-SPI-PMW-Construction-4.indd

The leading uses of plastics for residential and commercial construction include roofing, insulation, wall coverings, windows, piping, composite “lumber” planks and rails, flooring and structure wraps.

“The innovation within the plastics industry to improve and diversify products is matched by the building and construction sector’s pace to find and use new solutions to address fundamental issues like structural integrity, energy savings, recycling, and cost savings,” said William R. Carteaux, SPI President and CEO.

According to the report, while the building and construction sector has not regained its prerecession vigor, it is making steady progress with the promise of growth in the future. Globally, China, India, and the U.S. will be the primary drivers of construction activity as India is on pace to overtake Japan as the third largest construction market between 2017 and 2022.

Domestically, an estimated 1.3 million new housing units will be needed per year for the next decade to keep pace with population growth and existing housing unit characteristics, a dramatic increase of several hundred thousand more per year when compared to the Great Recession. “The buying behavior and economic security of Generation Y and Millennials will be the key over the next several years,” Carteaux explained. “Encouraging signals from recent surveys indicate that younger generations are inclined to buy homes.”

The dramatic inroads made by plastics on building and construction sites according to the SPI study are linked to plastics’ utility, cost, ease of installation, longevity and the “propensity of the plastics industry to constantly develop new products to supersede traditional building materials in many phases of the building process.”

“Plastics play an exciting and growing role in building and construction around the world, particularly given the drive to find ‘Smart’ designs with improved environmental and energy efficiencies,” Carteaux concluded. “Our industry needs to continue to collaborate with engineers and architects on building materials and find new innovations and advances. We have a strong, versatile, and ecologically responsible material—the plastics industry should expand its presence on construction sites in the years ahead.”

SPI will continue its Plastics Market Watch reports in 2016—“Automotive Recycling” will be published in the first quarter. Previous reports, including “Automotive & Transportation, “Healthcare & Medical Devices” and “Packaging” are available on the SPI website.

Wednesday, December 16th, 2015

Congress: We Urge Prompt Attention to Passing the Protecting Americans from Tax Hikes (PATH) Act

CongressSunriseViewThe U.S. Congress has a great opportunity to come together and provide tax relief to both American families and the businesses in which they work.

The Protecting Americans from Tax Hikes (PATH) Act would resolve four key issues that affect plastics. Specifically, the PATH Act would:

  • Permanently extend the Research & Development Tax Credit – This has the potential to unlock a great deal of innovation in the plastics industry.
  • Extend “Bonus Depreciation” for Five Years – Bonus depreciation is an added amount of depreciation that can be claimed by a business on property it acquired and placed in service during 2015 through 2019. This facilitates new purchases of equipment.
  • Permanently Extend Section 179 “Small Business Expensing” – The bill locks in the small business expensing limitation at $500,000, lifting it from its current $25,000 ceiling.
  • Place a Two-Year Moratorium on the Medical Device Excise Tax – Due to their superior design flexibility, plastics are increasingly used in medical devices. This tax harms job creation and stymies innovation in the medical device sector.

Combined, these provisions would greatly benefit the public, and anyone who touches or is involved in the plastics’ supply chain.

We encourage both members of the U.S. House and U.S. Senate to act quickly to advance this bipartisan bill.