the massachusetts plastics industry: a regional - massbenchmarks

2005 • VOLUME SEVEN ISSUE 2 MASSACHUSETTS BENCHMARKS. . . . . . . .25

From the FieldFrom the FFFFFieldieldieldieldield

IntroductionThe Fall 2003 issue of Benchmarks introduced a series ofarticles on manufacturing clusters in the Commonwealth,focusing on how metalworking’s resiliency in Massachusettsgrew out of a broad-based technical infrastructure, accessto highly skilled workers and purposeful linkages betweenfirms in the cluster. In the long run, the synergies betweenmetalworking companies and their customers — medicalequipment makers, telecommunications manufacturers,aerospace firms — are critical for the state to maintain somelevel of manufacturing vibrancy. Sustainable growth requires

The concentration of 62 plastics firms in cen-

tral Massachusetts and elsewhere in the state

shows that the plastics sector’s ability to succeed

is driven by many of the same factors that have

enabled metalworking and other manufactur-

ing sectors to keep operating in Massachusetts

despite an overall decline in manufacturing.

The MassachusettsPlastics Industry:

A regional perspective

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

R O B E R T F O R R A N T

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

MASSACHUSETTS BENCHMARKS 2005 • VOLUME SEVEN ISSUE 2. . . . . . . .26

a research agenda and continuous innovation, which buildsupon a set of well-coordinated relationships between enter-prises in the particular industry cluster.

This issue examines how the same view applies to theplastics cluster, which consists of firms that manufactureplastics products and those that provide inputs to such firms,including precision mold makers, machinery builders andraw materials suppliers. While figures on firms and employ-ment vary from one data source to another, in 2004 thestate’s plastics cluster contained approximately 735 firmsand 26,000 employees, with total sales of roughly $4.4billion. Those figures are significantly lower than thosereported in 2002 by the Society of the Plastics Industry(SPI), which placed employment and shipments at 36,737and $7.5 billion respectively (www.plasticsdatasource.org).

These discrepancies likely stem from variations in thedefinitions used for the sector (a hazard when doing thissort of work) and from a pronounced slump in manufacturingin the Commonwealth since 2001. But even with this decline,the plastics cluster still comprises an important manufacturingconcentration in several parts of the state. For example, thereare 62 plastics firms in the Leominster-Fitchburg-Gardnerarea, a figure that jumps to 90 when Clinton and Worcesterare included. With related mold makers, machinery buildersand materials makers included, the five communities contain130 firms and almost 5,000 jobs.

Industry trends: From combs to cell phonesFor years, Massachusetts plastics companies mainly stampedout sunglasses, combs, lawn chairs, buckets, dishware, ghastlypink flamingos and McDonald’s Happy Meal toys. Today,firms design and produce sophisticated products, such ascellular phones, laptop computer casings, medical devicesand parts for Internet storage devices and other high techproducts. Firms also use leading-edge new materials devel-oped at the state’s world-class research centers at UMassLowell and UMass Amherst. Statewide, employment roseslowly but steadily in the 1990s and shipments climbed overthe decade from $4.5 billion to $8 billion before beginning

to slide in 2001. Companies are in three distinct marketsegments: packaging, including plastic bags for food proc-essors and foam packing materials; specialty products forthe aircraft, computer, medical and telecommunicationsindustries; and high-volume commodity products, such ascosmetics tubes, cutlery, dinnerware and disposable bowlsand cups.

Today, firms design and produce

sophisticated products, such as

cellular phones, laptop computer

casings, medical devices and parts

for Internet storage devices and

other high tech products.

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

According to SPI,

plastics is the nation’s fourth

largest manufacturing industry

in terms of shipments, behind

motor vehicles and equipment,

petroleum refining and electronic

components and accessories.

It is difficult to get precise figures on plastics employ-ment because trade associations and industry databasesemploy slightly different definitions of the industry. Withthat proviso, we can make some observations. Accordingto the SPI, Massachusetts had the seventh largest concen-tration of plastics and plastics-related companies in thenation in the late 1990s, well behind California and Ohio,which ranked one and two. SPI reported that the Com-monwealth had 41,779 jobs in 2001 and 36,737 jobs in2002 in the expanded cluster. Using a narrower definitionthat calculates only jobs in companies that utilize rawmaterials and make things, Massachusetts ranked 12th inemployment in the late 1990s and 14th in 2004, withclose to 22,000 jobs, placing Massachusetts behind NorthCarolina (40,715 jobs), Tennessee (29,992), Wisconsin(29,973), and Georgia (25,468). Employing the mostpeople are Ohio (88,555) and California (84,674). For2002, plastics industry shipments in Massachusetts totaled$7.5 billion compared to Texas ($33.3 billion), California($26.8 billion), and Ohio ($21.6 billion).

According to SPI, plastics is the nation’s fourth largestmanufacturing industry in terms of shipments, behindmotor vehicles and equipment, petroleum refining andelectronic components and accessories. Though plasticscompanies and supplying industries shipped $393 billionin 2002, disturbing trends, due largely to global trade, arepresent. Generally speaking, original equipment manu-facturers want their injection molded parts producersrelatively close by to hold down shipping costs and to make


design changes easier to facilitate. Thus, as automotive, appli-ance and high-tech manufacturers continue to invest in newplants overseas, negative trends in employment and shipmentsfrom the U.S. are likely to continue.

In 2003, the United States had a nearly $2 billion tradedeficit in resins shipped and a $900 million trade deficit inplastics machinery. The trade deficit in plastic products was$20.2 billion in 2003, compared to $16.9 billion in 2002and $5.8 billion in 1997. Canada was the biggest sourcefor imports, followed by China and Japan (SPI). The fastestgrowth of resin (raw materials) exports was to China,indicating that its trade in finished products to the United

States will increase in the coming years. Reflective of this,imports from China jumped almost 16 percent from 2002to 2003. These global trends make it imperative thateconomic policy makers in Massachusetts vigorouslysupport University of Massachusetts and industry-relatedresearch in nanoscience, biodegradable polymers for thelinks that can be formed between plastics firms and themedical devices, Internet-related devices, biotech andmachinery building industries. Absent an aggressive effort,the state’s plastics industry will without doubt continueto suffer from the ongoing realignment of global manu-facturing expertise.

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

Source: Robert Forrant

The Massachusetts Plastics Industry: Input-output diagram

MASSACHUSETTS BENCHMARKS 2005 • VOLUME SEVEN ISSUE 2

Plastics-related employment includes plastics firms and companies providing molds,machinery and materials to the industry.

Source: Dun & Bradstreet MarketPlace

Plastics-related Employment BenchmarksRegions, third quarter 2004

Berkshire

Boston Metro

Cape & Islands

Central

Northeast

Pioneer Valley

Southeast

Total MA

30

162

16

214

105

103

105

735

1,132

5,650

144

7,914

3,365

5,000

2,438

25,643

EmploymentBusiness

. . . . . . . .28

Where are the firms?While significant numbers of plastics firmsremain in Greater Pittsfield and GreaterSpringfield, the greatest concentration ofplastics employment is in central Mas-sachusetts (especially the Fitchburg-Leominster area), which has 31 percent ofthe state’s plastics employment, followedby Greater Boston and the Pioneer Valley,each of which contains about 20 percentof total plastics employment.

In addition, there is an importantgroup of metalworking firms producingmolds, tooling and machinery for theindustry. North-central Massachusettshas about 200 firms in the plastics cluster,including several firms that producemolds and machinery. While most ofthese firms are not totally dedicated toservicing the plastics industry, they willbe hurt by any weakening in plastics.

degree of product diversification, which has helped insulatethe region from steeper employment contraction.

The long-run success of plastics

firms is predicated on three factors:

their ability to develop new products;

their capacity to work with new

materials; and their ability to train

a new generation of workers to

utilize advanced technologies.

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

Regional plastics employment in Massachusetts, 2000Percent of state total plastics employment

(includes plastics-related firms)


The average Massachusetts firm involved in the plasticscluster has about 35 employees, with most firms employingfrom 21 to 50 workers. A high percentage of firms originatein Massachusetts, indicating a commitment to the regionand a substantial process of start-ups and spin-offs basedon local entrepreneurial skills. A 1998 statewide survey bythe Massachusetts Technology Collaborative found that thetop markets for plastics firms included the automotive/trans-portation, electronics, medical and packaging and bottlingindustries. There was also a large number of custom proc-essors who produced small quantities of a part on demand.Across the state, there remains, at least for now, a high

With the exception of a handful of large firms, theregion’s plastics companies export very little, and the smallerthe firm, the less likely it is to do so. According to theMassachusetts Technology Collaborative, fewer than 10percent of sales went to markets outside the United Statesin the late 1990s. For example, the customer base of GreaterLeominster firms is concentrated in New England andalong the East Coast, with a significant concentration inMassachusetts and Greater Leominster. Medical suppliers,electronics firms, and auto manufacturers are importantgroup customers.


The long-run success of plastics firms is predicated onthree factors: their ability to develop new products; theircapacity to work with new materials; and their ability totrain a new generation of workers to utilize advancedtechnologies. For commodities producers, the threat fromlow-cost imports is severe for those who turn out disposableforks and spoons. For specialty producers in the medicaland telecommunications fields, the challenge is to be ableto engage in rapid new product development, produce usingstate-of-the-art materials and to work to extremely highquality and delivery standards. Success is contingent uponthe ability of these firms to tap into a network of serviceproviders and a rich constellation of production partners.

Industry support structureThe ability to form relationships to access research and engi-neering expertise is crucial to plastics firms as materials andprocesses evolve and as environmental concerns pressure theindustry to develop biodegradable materials. Across the state,some 150 companies build machines and produce molds, tools,dies, instruments and controls for plastics firms. But theseplastics-related enterprises are usually not considered whenlocal, state and federal policies are constructed to support theplastics industry, despite their vital role in the success of plasticsfirms. As plastics firms themselves grow, they cause growthwithin the support sectors; but if plastics firms stagnate, so toowill other sectors within the cluster. For example, most plasticsfirms in the state engage in injection molding. Because accessto high quality molds produced by precision machine shops isessential, interactions between plastics firms and mold makersare vital. Any weakening of the Commonwealth’s mechanical

engineering and machining skill base willthus have negative implications for theplastics industry. Within an approximately 60-mile radi-us of Leominster are more than a dozeneducation and training institutions thatoffer or have the potential to offer servicesto plastics firms in materials development,mold analysis, nondestructive material andproduct testing, product design and work-force education. The University of Massa-chusetts, with two campuses with plasticsresearch and process engineering capabil-ities, plays an important role within theplastics industry support structure. TheAmherst campus’ Center for Research onPolymers, which is one of the leading suchcenters in the world, conducts importantbasic research on new materials. At Lowell,the largest accredited plastics engineeringdepartment in the country hosts the Bio-degradable Polymers Research Center.

Faculties from both campuses receive substantial NationalScience Foundation funding and both centers obtain financialsupport from industry partners. Along with these universityprograms, education and training and development supportcome from a range of institutions including the NyproInstitute, Montachusett Regional Vocational Technical HighSchool in Fitchburg, Mount Wachusett Community College,Fitchburg State College, Worcester Polytechnic Institute, theNational Plastics Center and Museum and the Twin CitiesCommunity Development Corporation.

Access to a rich technology transfer and education andtraining infrastructure is important to plastics firms. Firmsin demanding markets faced with intense global competi-tion are compelled to push ahead with product improve-ments and new products as fast as possible. They inevitablyencounter organizational and technical problems that a well-coordinated infrastructure of firms and institutions can helpto resolve.

Concluding thoughtsNational and international competition in high-tech manu-facturing and services is of major concern to the Common-wealth. Regional, sustainable growth in the plastics industryrequires a consistent focus on knowledge creation, enterprisedevelopment and industrial innovation. At the start of the21st century, Massachusetts ranked second to California inthe production of optical instruments (116 firms to 48)and semiconductor machinery (121 firms to 23), and thirdin computer and peripheral equipment manufacturing (590firms to 103) and it ranked in the top three states in thenation in the number of firms in these sectors per million

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

Geographic distribution of plastics firms in Massachusetts(includes plastics-related firms)


MASSACHUSETTS BENCHMARKS 2005 • VOLUME SEVEN ISSUE 2. . . . . . . .30

population. How has the Commonwealth done this?Michael Porter, who has focused his attention on answeringthe question of where competitive advantage comes from,answers that it is “created and sustained through a highlylocalized process” (1990, 9). In The New Competitive Ad-vantage, UMass Lowell Professor Michael Best summarizesPorter: “For Porter, firms are not the source of compet-itiveness. Instead, firms derive their competitive advantagefrom their home base environment.” (2001, 8).

The development and diffusion of skills through move-ments of skilled workers within and across industriesrepresents an example of how networks serve as vital learningsystems in regional economies. This behavior helps us tounderstand the historical existence and persistence of certaintypes of firms and skills in a particular region. Such is thecase with plastics. Similarly, the Connecticut River Valley’snineteenth and early twentieth century success as an in-dustrial center were two historical continuities: the region’sability to design and build machine tools and relatedaccessories in partnership with final goods producers, andthe large numbers of skilled machinists in the ConnecticutRiver Valley (Forrant, 2001). Goods producers enjoyed acompetitive advantage over other regions that lacked accessto these sources of innovation. A trip to the National PlasticsMuseum in Leominster reveals the historical continuitiesthat can help us account for the persistence of a cluster ofplastics firms there, despite the more general manufacturingmalaise across the Commonwealth.

References:

Asheim, B. 1996. "Industrial Districts as 'Learning Regions': a Conditionfor Prosperity," European Planning Studies, 4, 379-400.

Best, M. 2001. The New Competitive Advantage: The Renewal of AmericanIndustry. Oxford: Oxford University Press, 2001.

Best, M., and R. Forrant. 1996. "Creating Industrial Capacity: Pentagon-led Versus Production-led Industrial Policies," in Jonathan Michie andJohn Grieve Smith. eds., Creating Industrial Capacity: Towards FullEmployment. New York: Oxford University Press, 225-54.

Browne, L. and S. Sass. 2000. "The Transition from a Mill-Based to aKnowledge-Based Economy: New England, 1940-2000," in P. Temin, ed.,Engines of Enterprise: An Economic History of New England. Cambridge:Harvard University Press, 201-49.

Forrant, R. 2001. "Neither a sleepy village nor a coarse factory town: Skillin the Greater Springfield Massachusetts Industrial Economy," Journal ofIndustrial History, 4, 24-47.

Hekman J. and J. Strong. 1981. "The Evolution of New England Industry,"New England Economic Review, March-April 1981, 35-46.

Keeble, D. and F. Wilkinson. 1999. "Collective Learning and KnowledgeDevelopment in the Evolution of Regional Clusters of High TechnologySMEs in Europe," Regional Studies, 33, 295-303.

Porter, M. 1991. The Competitive Advantage of Massachusetts. Cambridge:The Monitor Group.

ROBERT FORRANT is a professor in the Department of Regional Economicand Social Development at the University of Massachusetts Lowell.

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

the massachusetts plastics industry: a regional - massbenchmarks

Documents