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Increase in Plastic and Rubber Manufacturing is Expected as Prices of Raw Materials Decrease

Posted by Lloyd Bell on Nov 1, 2017 1:55:56 PM

Plastic Manufacturing .jpgThe following overview of the plastics and rubber manufacturing industry trends is part of a larger series of industry reports that will be published between August and November 2017 for the benefit of our subscribers. Data and information provided is cited from IBIS World, a global business intelligence leader specializing in industry market research.

In 2016, Meaden & Moore clients in the plastics and rubber manufacturing industry experienced a 9.8% decrease in revenue. This decrease in revenue caused the net income for the clients in this industry to fall 15.0%. The plastic manufacturing industry as a whole experienced revenue growth of 1.9% over the past five years. This growth is expected to increase slightly to 2.5% over the next five years.

The automotive manufacturing industry is one of the largest market for plastics. The expected demand for plastic products over the next five years is expected to rise marginally. As more fuel efficient cars become more popular, plastic parts are replacing traditionally metal parts in cars. Plastic tools and hardware are another major market for plastics. The tool and hardware industry is expected to grow over the next five years. The increases in these two markets will cause an increased demand for plastics products, raising both revenue and profit. The construction industry is a large market for plastics as well, particularly residential construction. The construction industry as a whole is expected to rise, and increasing house prices, along with increased disposable income, has increased incentives to renovate homes. These incentives will increase demand for plastic products considerably. Plastic packaging also comprises a large portion of revenue for the plastic manufacturing sector. As oil prices and transportation costs rise, the demand for this lightweight packaging will increase, increasing the industries revenue.

As the main input for the plastic manufacturing industry, raw plastic materials and resin are important to the profits of the industry. The prices of raw plastic materials and resin are expected to decrease over the coming years, allowing for an increase in profit for the industry. 

Source: IBIS World 

The following chart, "Manufacturing - Plastics and Rubber" has been compiled by Meaden & Moore

Manufacturing-Plastics and Rubber.jpg

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Topics: Accounting & Auditing, Corporate Finance

Lloyd Bell

Lloyd Bell

Lloyd W.W. Bell III is Director of the Cor­porate Finance Group at Meaden & Moore. He has over 20 years of experience in financial management.