JobsOhio today shared a newly released study from Shale Crescent USA, a nonprofit focused on promoting the manufacturing advantages created by abundant natural resources available in Ohio, Pennsylvania, and West Virginia, dispels the long-held belief that plastic-based goods are cheaper to import than manufacture locally. Furthermore, the study reveals that the low-cost gas and natural gas liquids flowing from the U.S. Shale Gas Revolution have the potential to turn the $53 billion U.S. plastics importing industry on its head.Of that $53 billion in imports, nearly half originate in Asia, with China alone accounting for $25 billion. However, since the COVID-19 pandemic spotlighted the financial and logistics benefits of shorter supply chains, Ohio has surpassed China as the world's low-cost center for plastics manufacturing, thanks to advantages in cost, economic climate, and market access.

From a transportation standpoint, a standard container of finished goods originating in China will travel anywhere from 6,500 to 20,000 nautical miles to reach a U.S. port before being processed for national distribution. On the other hand, Ohio businesses and manufacturing facilities are located within a day's drive of 50% of the U.S. population and over 70% of the end-to-end plastics industry supply chain. That same radius also captures over one-third of the U.S.'s natural gas production, creating substantial environmental advantages by eliminating the need for lengthy, fragile transcontinental supply chains and their associated greenhouse gas emissions. This gives Ohio-based plastics manufacturers a tremendous ESG advantage over Chinese competitors and gives their U.S.-based industrial customers an immediate reduction in their Scope 2 greenhouse gas emissions footprint when they switch to Ohio-based plastics suppliers.

While transportation is the major differentiator between operations based in China or Ohio, the study found that forces of supply and demand are positioned to positively impact U.S. resin prices. The U.S. is a net exporter of polyethylene and China is a net importer. In addition, the U.S. uses low-cost natural gas to produce resin while China uses more expensive oil-based naphtha. Since more than 80% of PE production costs are dependent on the type of feedstock and energy used, U.S. resin producers experience greater margins and higher overall profits compared to overseas producers.

Ohio, West Virginia, and Pennsylvania combined (Shale Crescent USA) now produce over one third of U.S. natural gas supply and over one and a half times more natural gas and natural gas liquids than the entire country of China. China is energy deficient and is reliant on global supply chains to either import plastic resin or produce resin from much costlier oil-based Naphtha.

In addition to these significant cost drivers, Ohio also holds an edge on China in terms of average electricity rates (35% lower) and manufacturing lease rates (28% lower). These fundamental advantages are expected to remain intact for decades as they position Ohio to capture a significant share of the $25 billion worth of plastic products currently imported from China annually.

The study also notes the Buckeye State's advantage in the realm of workforce demands and labor rates. There has been a tenfold increase in China's manufacturing wages over the past 25 years and China's manufacturing industry averages annual wage rate increases of 10 percent. By contrast, increased automation and productivity enhancements in the U.S. decreased labor cost inputs and eroded China's historical labor cost advantage.

Meanwhile, Ohio was recently ranked as the #1 state in the U.S. for plastics employment by Plastics Industry Association, boasting 75,000+ of the nearly 1 million plastics industry workers across the U.S.

"With applications from automotive to aerospace, food and healthcare, 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."

This research is available to all manufacturing operations through Shale Crescent USA. We also encourage you to join Plastics News' webinar on December 1st, 2022 at 2 p.m. ET, during which JobsOhio's Managing Director for Energy and Chemicals Matt Cybulski and experts from Shale Crescent USA will discuss the trends that have led to onshored plastics supply chains becoming the most effective (and low-cost) solution to ongoing supply chain woes.

Further details about the event and instructions on how to register can be found here: The New Competitive Advantage of U.S.-based Plastic Manufacturing.

About Shale Crescent USA
The Shale Crescent USA economic development initiative aims to encourage high-wage job creation in Ohio, Pennsylvania, and West Virginia. At no cost, the multi-stakeholder initiative provides industry research and resources to manufacturers looking to launch or expand operations. Shale Crescent USA identifies competitive advantages and opportunities to leverage low-cost, abundant natural gas, unmatched access to key markets & infrastructure, and other business advantages. The Shale Crescent USA region is one of the most economic and sustainable petrochemical and manufacturing hubs in the world. For more information, visit ShaleCresentUSA.com. To learn how your organization can capitalize, contact Greg Kozeraat gkozera@shalecresentusa.com

About JobsOhio
JobsOhio is a private nonprofit economic development corporation designed to drive job creation and new capital investment in Ohio through business attraction, retention, and expansion. The organization also works to seed talent production in its targeted industries and to attract talent to Ohio through Find Your Ohio. JobsOhio works with six regional partners across Ohio: Dayton Development Coalition, Ohio Southeast Economic Development, One Columbus, REDI Cincinnati, Regional Growth Partnership, and Team NEO. Learn more at www.jobsohio.com. Follow us on LinkedIn, Twitter, and Facebook.

 

Source:prnewswire.com

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