Wednesday, June 10th, 2015
Third Largest Manufacturing Sector Poised to Meet Growing Demand for its Innovative Products
In our report “Market Watch: Plastics in the Fast Lane,” SPI: The Plastics Industry Trade Association discusses an anticipated increased use of plastics in automobiles as consumers and the government demand lighter vehicles that are more environmentally friendly and competitively priced. The plastics manufacturing industry is well-positioned to meet the potential demand of the automobile industry due to technological advances driving a more sophisticated, growing manufacturing sector.
The plastics industry, which is the third largest sector of U.S. manufacturing in dollar value of shipments, is in the vanguard of innovation and nowhere is this more conspicuous than in the automotive/transportation industry. While plastics make up about 50 percent of a modern automobile’s volume, they only account for about 10 percent of its weight.
The use of plastics in lightweighting vehicles has proven to be a cost-effective way to help boost vehicle mileage for decades, a trend not expected to change as the Obama Administration has raised the average fuel efficiency standards of new cars and trucks to 54.5 miles per gallon by 2025, according to the report.
Plastics can play a critical role in enabling automakers to meet the standards. And given the inherent advantages that plastics represent compared to other alternative materials, it is extremely likely that the transportation choices of the future will use more plastic, not less.
A glance inside any modern car or truck shows the interior compartment to be dominated by plastics – from instrument panels to interior trim to upholstery. Plastics are also used in lighting, bumper systems, fuel storage and delivery systems, ducts, fenders and exterior body panels, and more and more within engine compartments or other under-the-hood components. Likewise, the composition of aircraft, passenger trains and urban metro vehicles continues to evolve toward greater dependence on plastics.
SPI notes that consumption of plastic goods grew at a record-breaking pace in 2014 (the latest government statistics available) to $298.3 billion, up 11.5 percent from $267.3 billion in 2013. As the automotive sector relies more on plastic to replace metal parts, the increased use of 3D printing will pave the way for more innovative applications of plastic.
Impact of Millennials
Other research in the report is based upon the work of Ken Gronbach, a marketing expert and author who studies demographic and cultural trends to predict buying habits. His research shows that the Millennial Generation (born in the early 1980s to early 2000s) has “no great love affair with the automobile and when asked what they would give up first, their car or their phone, their answer is almost always unanimous – their car.”
Like generations before, the Millennials don’t seem to resemble their predecessors in that they’re slow to get married, have children – and to obtain their driver’s licenses. Perhaps they’re late bloomers – due to the economy and their heavy college loans. Whatever the case, experts agree that sooner or later they’ll come around and buy vehicles. And, since the Millennials tend to be more environmentally conscious than previous generations, it is expected that they will demand lighter, more energy efficient vehicles.
The only downside to the increased demand is the shortage of skilled talent. “New manufacturing jobs are significantly different from the rote assembly line work of earlier generations. Manufacturing is built upon advanced technologies that demand more advanced skills from workers. Employees must be able to grasp engineering concepts, work with computers, make mathematical calculations and adapt to constant change. A manufacturing worker today must have the equivalent of two years of college, usually more, and the bar keeps rising.
Manufacturing is critical to a healthy economy. Our goal should be to dominate high end manufacturing that reflects emerging technologies that are frequently found in the more advanced plastic processors in the U.S.
The report attributes the workforce shortage to Baby Boomers retiring and the trend toward off-shoring that resulted in more young people seeking a four-year degree rather entering trade school. The skills gap afflicting all of manufacturing in the U.S. is equally if not more applicable to the plastics industry. Already, many individual companies are working with local schools to make young people aware of the exciting opportunities that abound in plastics and the basic skills and knowledge they need to take advantage of them.
It is incumbent upon people in the industry to take the initiative, study what other companies are doing, recognize the learning differences of the next generation, and become actively involved in promoting plastics manufacturing as a career choice – and as the product choice!
“Market Watch: Plastics in the Fast Lane” is the first in a series of unique reports being written by SPI. Later this year, staff will publish reports on healthcare, packaging, and housing and construction.