Ohio-based manufacturers are turning to plastic-based reshore products

COLUMBUS, Ohio — A report compiled 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 plastic-based products.

The study was authored by Shale Crescent USA, a nonprofit organization that promotes economic development through the use of natural resources – namely natural gas – found in the shale formations of Ohio, West Virginia and Pennsylvania.

According to the report, the United States imports $53 billion worth of plastic-based imports annually, of which China accounts for $25 billion, a tripling over the past 10 years.

However, Ohio manufacturers are well positioned to restock a large portion of these imported products, the report shows.

Increasing automation, technological advances, reduced transportation costs, the accessibility of US shale-derived natural gas, and the fragility of global supply chains have created opportunities for domestic companies to manufacture these products.

“Through this report, JobsOhio provides us with information that we can use to further grow our economy through reshoring,” said Guy Coviello, President and CEO of the Youngstown/Warren Regional Chamber, in a foreword to the report. “That will help us bring more companies here. This will also help our existing businesses reduce their supply chain costs and improve supply chain reliability.”

According to the report, a standard container of goods originating in China will travel between 6,500 and 20,000 miles before being distributed nationwide at a US port. Also, sourcing products from a domestic manufacturer cuts travel time from 30 days to an average of two to five days, according to the report.

Ohio’s manufacturing and distribution centers are within a day’s drive of 50% of the US population and more than 70% of the plastics supply chain.

The study also found that the US uses inexpensive natural gas to produce plastic resin. As a result, “US resin producers are experiencing larger margins and higher overall profits compared to foreign producers.”

More than a third of US gas supplies come 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 cracking plant began production in Monaca, Pennsylvania. The plant uses ethane gas from the region’s shale formations and produces polyethylene pellets, which are used to manufacture hundreds of different plastic-based products.

In early 2021, retail giant Walmart announced it would invest $350 billion over the next decade in products made, grown or assembled in the United States, underscoring the supply chain challenges posed by the COVID-19 pandemic .

Ohio also possesses other advantages such as lower lease and electricity rates, the report said. Meanwhile, China’s wage labor rates are increasing at 10% a year. The report shows that increasing automation and technological advances in the US have resulted in lower overall labor costs and higher productivity.

At the same time, the Plastics Industry Association ranked Ohio #1 for plastics jobs. The state has more than 75,000 jobs in the plastics industry, the report said.

“With applications in automotive, aerospace, food and healthcare, plastics are as important to US manufacturers as semiconductor chips,” said JP Nauseef, President and CEO of JobsOhio. “The Shale Crescent USA study puts an exclamation mark on what we’ve been saying for years – Ohio has the resources, location, talent, business-friendly environment and quality of life that give manufacturers a sustainable competitive advantage. Simply put, Ohio is the best place in the world for major industries to invest, build and thrive.”

Published by The Business Journal, Youngstown, Ohio.