Donald J. Trump– Good Or Bad For Plastics?

President Trump’s feared trade confrontation with Mexico has not happened and looks to be nowhere in sight. The American plastics industry has a large trade surplus with Mexico and has nothing to gain from a trade war with Mexico–or Canada or China for that matter.

While his planned pullout of the Paris Climate Accord is obviously a major error, its impact on plastics is only on the fringes. Possibly there will be less demand for plastics in wind turbines, but market forces are going to be more important than action by Trump.

On the other hand, his proposed protection of the American steel industry (which the business-friendly Wall Street Journal feels is stupid) may speed the substitution of plastics-for-steel, a trend already in full force and propelled by lightweighting, preferable properties of plastics (particularly corrosion resistance), and the design benefits of injection and blow molding. It should be noted that engineering plastics keep muscling up to compete in automotive applications. Note, for example,  the new high-heat, high-strength polyamides introduced at K2016 for steel-replacing under-the-hood automotive parts. For companies like DSM, it’s the future.

Following are some interesting points, including data from the lead editorial in today’s Wall Street Journal.

Cold-rolled steel coil (the type of steel used for automotive body panels) is 34 percent more expensive than the same product made in China and 27 percent more than the Southern European equivalent. In other words, plastic parts are more cost competitive versus steel parts made in the U.S. than they are in China or Europe, on a relative basis. That’s thanks to the federal government, which has never shown support for the American plastics industry to anything like the extent it has shown to the steel industry for more than 50 years.

And that support has totally backfired on steel producers, who were often heavy handed in dealing with governments local and national.

Due in part to a long history of federal protection and  jawboning (starting with JFK against U.S. Steel in 1962), the American steel industry has become increasingly noncompetitive and is now dominated by steel made in electric furnaces that cannot compete against plastics for high-end engineering applications. The great names of American steelmaking are gone, except for USS, which is a shell of its former self and would have been wise to shift its business model to self-driving cars. Steel made by electric mini mills make up two-thirds of domestic production today compared to one-quarter in 1980.

The last great steelman in America was Edgar Speer, who told me it was his dream to build a new world-class fully integrated steel mill on Lake Erie in the late 1970s. Speer was replaced by finance man David Roderick who noted the mill would cost more than half of the company’s total capitalization at the time, and killed the project– with the board’s grateful blessing. Today the cost would by many, many multiples of the company’s capitalization.

Trump’s proposed duties (Bush also guilty here) would penalize car makers and other downstream consumers of steel, whom I imagine are stepping up plastic value engineering programs.

 

 

 

About Doug Smock

Former Chief Editor at Plastics World and Senior Technical Editor Design News
Injection Molding

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