NAFTA, Plastics & President Trump

By: Tony Deligio 2. December 2016

The build-up and hype around the election of a U.S. president are ultimately a bit anticlimactic given yawning gap between the confetti and balloons of election night and the hand-on-the-Bible of an inauguration.


The 73 days between Donald Trump’s stunning Nov. 8 victory and his assumption of the presidency on Jan. 20 feels even longer than its two months and 12 days, mostly because of the amount of uncertainty in the country.


That November to January gap is usually filled with speculation about how the new administration, assuming there’s no incumbent, will run the country. As much as any speculation is informed, the guesswork here draws on what a candidate campaigned on and the early makeup of his or her cabinet.


Taken at his word, President-elect Trump, among other things, has issued a consistently hard line on free-trade agreements, promising renegotiation for existing ones, like NAFTA, and abandonment of new ones, like the Trans Pacific Partnership. In the case of NAFTA, the potential impact on plastics can’t be understated.


According to SPI: The Plastics Industry Trade Association’s December 2015 Global Trends Report, the U.S.’s largest trade surpluses in resin, plastic products, plastics machinery and molds were with Mexico. Per the report:


In 2014, as in previous years, the U.S. plastics industry had its largest surplus with Mexico. The surplus with Mexico is attributable to the North American Free Trade Agreement (NAFTA). U.S. plastics companies are taking advantage of duty-free access into Mexico’s market given the country’s close proximity.


In 2014, the U.S. plastics industry exported a total of $15.8 billion in plastics-related goods to Mexico, with a total trade surplus of $11.1 billion. Again, for each of the major categories, Mexico was the No. 1 market in terms of surplus.


Resin: $6.7 billion surplus with Mexico.


Plastic products: $4.0 billion surplus with Mexico.

Moldmaking: $283 million surplus with Mexico.


Machinery: $215 million surplus with Mexico.


As far as plastics goods and equipment are concerned, NAFTA has been beneficial to U.S. companies if you judge the “winner” in a trade deal by the direction trade predominantly flows. An argument against the deal could be made on behalf of plastics workers whose jobs have been displaced by NAFTA, but on the whole, employment in the plastics industry has been on the rise over the last two decades, according to SPI.


On Nov. 23, the German Plastics and Rubber Machinery Assn. (VDMA) released its latest report noting that in 2015, the U.S. had overtaken China to regain first place among the most important markets for German machinery.


U.S. imports reached a record 719 million euro in 2015—almost three times the level of 2009’s market nadir. VDMA also used the release to call out strong growth in Mexico and tie it to America’s resurgence.


In 2015, VDMA reported that exports of German plastics and rubber machinery to our southerly neighbor were nearly 50% higher than 2014, pushing Mexico to fourth place among Germany’s most important markets.


The VDMA went further, editorializing as much as is possible in such a report, noting:


The Mexican market’s strong rate of growth may also be explained by the North American Free Trade Agreement (NAFTA), which has dismantled trade barriers in the region.

It went further yet in a paragraph under the head, “U.S. and Mexico will continue to be important markets in the future”, leaving no doubt where it stands on NAFTA.


Owing to the high level of demand for plastics, plastic packaging in particular, German plastics and rubber machinery manufacturers expect sales to the U.S. and Mexico to remain strong. Existing free trade agreements are of fundamental importance for this; any form of protectionism on the other hand will be damaging to the business activities of all concerned.— Thorsten Kühmann, VDMA Managing Director


I recently completed a swing through Chicago and Milwaukee, visiting six companies over two days. Every single company on the trip had ties to Mexico, most of those with physical operations there. Every company spoke about the strength of their current business, but they were also unanimous in their uncertainty about the future.


With one month and 18 days until Donald Trump stands across from Chief Justice John Roberts, lots of people in plastics are wondering what differences, if any, they’ll see in regards to trade policy between candidate Trump and President Trump. 


Help Us Help You

By: Tony Deligio 14. November 2016

The only thing more overwhelming than the amount of information available today is the myriad means to have it delivered to you.


How do you consume media content; what types of content do you seek out; how do you use information to make important decisions in your business? Gardner Business Intelligence, the research arm of Plastics Technology publisher Gardner Business Media is once again offering its Media in Manufacturing survey.


Please take a few minutes to complete the brief survey and exert your influence over media in manufacturing. Once the completed surveys are tabulated, you’ll be among the first to see how your media opinions and practices compare to others in industry. Your responses will be combined with others and shared in aggregate only, and your contact information will be used only to send results to you. Please take a few minutes now to provide your input.


Check out results from the 2015 survey here and see its key findings on buying cycles, social media, search, mobile and more.


Is It Time For Injection Molding Machine Makers to Standardize Controls?

By: Tony Deligio 27. September 2016

If you looked at four machines from four different suppliers, you’ll find four different sets of icons and terminologies, all in different layouts.


Anytime Microsoft Office releases an update, my productivity drops and my muttering rises as I struggle to find key functions that I formerly could have clicked through to in seconds. That said, I know Office, and although even small changes seem huge at first, eventually that underlying familiarity helps me navigate the program and find what I need. In fact, a couple days after the update, I probably couldn’t tell you what the old layout even was.


Similarly, I’ve worked on Mac’s for the duration of my computing life. I can muddle through on a PC, but I won’t work as quickly; I won’t be able to exploit all its capabilities; and I might even screw some stuff up.


The average injection molder typically has a mix of various machines from various vendors, running disparate controls. For a process tech, it’s like working on a Mac running Office 95 one minute and then switching to a PC with Windows Vista the next. Every time they step up to a new machine, they need to take a few seconds (or more) to recalibrate. The difference between the shop floor and the office, however, is running the chance saving in the wrong file format versus ruining a mold.


This challenge for molders became clear to me in reading Robert Gattshall’s next feature for Plastics Technology. In our October issue, Gattshall, who is the engineering manager at Henkel’s Richmond, Mo. facility and who previously tackled how and why Scientific Molding can go awry, looks at how a lack of standardization in machine controls, for everything from key icons to basic terminology, poses a day-to-day challenge for injection molders.


Be sure to check it out and share any control conundrums (or workarounds) in comments. 


Slideshow: Taipei Plas 2016

By: Tony Deligio 31. August 2016

Held August 12-16 at Taipei's Nangang Exhibition Center, Taipei Plas 2016 logged a record number of overseas exhibitors. Check out the highlights in this slideshow (pictured: the long dusk shadow cast by Taipei's Taipei 101 tower).

Slideshow: Taipei Plas 2016


Taiwan’s Plastics Machinery Industry to China: It's Not You, It's Me

By: Tony Deligio 18. August 2016

Despite being separated geographically by only the Taiwan Strait, which at its narrowest point is just 100 miles wide, economically, Taiwan and China are growing further and further apart.


China is still Taiwan’s largest trading partner—its geographic proximity and deep cultural and historical ties help maintain that status—but it is being targeted less and less by Taiwan’s plastics and rubber machinery makers, as they seek new markets on their own and at the behest of their government.


Touring Taipei Plas last week on a press junket organized by show sponsors TAITRA (Taiwan External Trade Development Council) and TAMI (Taiwan Assn. of Machinery Industry), myself and other trade journalists from around the globe sat down with numerous leading Taiwanese equipment suppliers. Many boasted export rates above 90% but none said China was their top market.


The pivot away from China is detailed here, and apparent in the fact that China’s share of Taiwan plastics and rubber machinery exports has dropped from 30% in 2013 to 20% in 2015, with further shrinkage in the first half of 2016.


In its show-opening press conference, TAITRA and TAMI officials detailed the country’s outreach via TAITRA’s 60 overseas offices all around the globe, specifically acknowledging dignitaries on hand from Afghanistan and Malaysia. Even within the press group, you could see this strategy at work as I was joined by reporters from Mexico, Russia, Indonesia, India and Japan.


In 2014 when I attended the show, many Taiwanese suppliers noted that as they invested in new production facilities, they were doing so in Taiwan, after years of almost exclusively building up factories in China. This time around, many of those same companies acknowledged that China’s market is driven largely by cost, while Taiwanese machinery is increasingly marketed on higher technology. Because of this, more than a few said they had all but given up on selling into the mainland.


Earlier this year, Taiwan elected a new president—Tsai Ing-wen—its first female leader and only the second from the Democratic Progressive Party—a party openly opposed by the mainland. Tsai campaigned in part on a “Southward” policy, seeking greater business and cultural ties in Southeast Asia, and she offered some interesting insights into the shifting dynamics between the Republic of China and the People’s Republic of China in this July 21, Q&A with The Washington Post:


Q: Isn’t China your No. 1 trading partner?


A: China is still our largest trading partner; however, complementarity between our economies is decreasing. We had the ability to organize a manufacturing process, and then we moved our manufacturing capability to China to make use of their labor pool. But now the situation is very different. [Chinese] labor costs are increasing, and China has their own capability.


Q: So China has become a competitor of Taiwan?


A: They are more and more our competitors.


Breaking up, as the song says, is hard to do; it will be interesting to see how "seeing other countries" is faring for Taiwan at the next Taipei Plas in 2018.


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