Federación de cajas de Ahorros Vasco-Navarras

SUMMARY AND CONCLUSIONS

1. INTRODUCTION

This is the 61 th sector-based report in the series sponsored by the Federation of Basque-Navarre Savings Banks.  It has the same structure and methodology as others in the series, presenting an overview of the sector in the EU, Spain and the ACBC. The chapters include information from official statistical institutes. The report finishes with a chapter devoted to the potentiality and prospects of the sector for the ACBC produced with the help from companies in a series of interviews.

In principal, the plastics sector would cover all the production carried out from this raw material.  For the purposes of this report, this sector is confined to the "manufacture of plastic products" included in Code 25.2 of the National Classification of Economic Activities. This activity includes the manufacture of:

• Plastic plates, sheets, tubes and sections (25.21 CNAE-93) e.g. self-adhesive tapes, plates, sheets, blocks, films, bands, etc. and plastic tubes, pipes, hoses, and accessories for pipes and hoses.
• Plastic containers and packaging (25.22 CNAE-93) e.g. bags, sacks, boxes, crates, jerry cans, bottles, etc.
• Plastic construction products (25.23 CNAE-93) e.g. plastic doors, locks, blinds, skirting boards, tanks, reservoirs, flooring, wall or ceiling coverings in rolls or tiles, bathroom articles (bathtubs, shower trays, washbasins, etc.) and other prefabricated constructions.
• Other plastic products (25.24 CNAE-93) including a wide range of articles e.g. plastic place settings, kitchen utensils, toiletries, etc. safety hats and helmets for the workplace, sport, etc. and caps, insulations, lamp parts and lighting accessories, office and school stationery, furniture fittings, statuettes, conveyor belts, drive belts, and garments and accessories, either sewn or stuck; and also, the manufacture of plastic parts made with different processes by third parties according to contractor specifications.

2. THE PLASTIC MANUFACTURING SECTOR IN THE EU

The gross value added of the European plastic manufacturing sector amounts to 43,425 million euros (1.9% of industry generated GVA) and employs a total of 923,000 people (3% of industrial employment). 40% of plastic manufacturing sector production is used for packaging, with 19% for household consumer goods and 18% for construction. In terms of its use as an intermediary product, the automotive sector absorbs 8%, electricity and electronics 7.5%, and the primary sector 2.5%. 

The importance of the plastic sector-based activity is closely linked to the size and economic development of each economy. Consequently, it is not surprising that Germany generates 32% of the GVA of the sector in the EU as a whole, the United Kingdom 19%, France 14%, Italy 12% and Spain 7%. This result is also reproduced broadly speaking in terms of employment:  Germany concentrates 30% of employment, the United Kingdom 19%, France 14%, Spain 10%, and Italy 9%.

The average contribution of the plastic manufacturing sector to industrial activity of each of the EU-15 economies is 1.9%. That said however, in Denmark, the United Kingdom, France, Austria, Belgium, Finland, Holland and Spain this contribution is in fact greater.

The productivity per employee in this sector and in the EU-15 is 47.1 thousand euros and is clearly lower than that of the industry as a whole (73.8 thousand euros). It has been established that the countries with the greatest sectorial weight in terms of industrial GVA are also those with the greatest productivity.

In terms of foreign trade activity, the value of exports and imports in 2000 amounted to 15,199 and 11,242 million euros, respectively. This represents 1.8% of the total exports made by the manufacturing industry and 1.4% of imports.

The United States is the main destination for exports (15%), followed by Switzerland (10%), Poland (9%), the Czech Republic (7%), and Hungary (5%). Similarly, the United States is the country of origin of 23% of imports, followed by China (22%), Switzerland (14%) and Japan (7%). In terms of the country of origin of exports, Germany stands out with a value of 13,943 million euros in the plastic manufacturing sector, which places it at the top of the exporting countries.  Italy (6,775 million euros) and France (5,215) take second and third place, respectively.

Environmental acceptance of the activity is reflected in recycling. As a result, in 2000 there were 19.5 tons of plastic waste in Europe and 36% of the total used was recycled (22% in 1991). Denmark, Switzerland, Holland, Norway, Germany and Sweden are the only countries which recycle more than half of the plastic waste generated. On the other hand, Ireland, the United Kingdom, Italy, Greece and Spain do not even recycle a quarter.

Among the modes and/or uses of recycling, it can be seen that the countries which recycle more than half their plastic waste mainly use energy exploitation as the main method of recovery.  On the other hand, countries with a smaller recovery activity use mechanical and chemical recycling methods to a larger degree.

3. THE PLASTIC MANUFACTURING SECTOR IN SPAIN

The plastic manufacturing sector in Spain comprises 4,080 companies and represents 2.5% of the number of industrial companies. In total, it employs 88,817 people, which in 2001 represented 3.3% of industrial employment and a Gross Value Added of 2,568 million euros (2.7% of the industrial GVA). The companies in the sector, with an average employment of 22 workers, are larger than industrial companies (17 workers). These first figures already highlight the importance of the activity in the context of Spanish industry.

Focusing attention on the most significant variables of the profit and loss account for the sector, in 2001, plastic manufacturing activity generated revenue of 11,997 million euros with a net investment of 644 million euros. The result of the financial year amounted to 325 million euros. These figures, which are important in themselves, must be contrasted with the industry as a whole and within the context of the activity being analysed. In terms of the plastic manufacturing sector, therefore, productivity was lower, average expenses per employee were slightly lower, and the investment effort was slightly higher.

76.5% of sector companies have fewer than 20 workers and generate 16% of the revenue and profits. On the other hand, 23.5% of the companies have more than 20 workers and generate 84% of the revenue and profits.

Within the plastic manufacturing industry, the main subsector of activity is the manufacture of plastic products, representing 41% of the sectorial industrial fabric and employment. In economic terms, it generates 36% of sector revenue and 51% of sector profits. The plastic container and packaging manufacturing sector stands out over other subsectors for its higher than average employment and greater investment effort. Finally, the subsector involved in manufacturing plastic plates, tubes and section has the greatest average productivity.

A third of the Spanish plastic manufacturing sector is located in Cataluña: this community is responsible for 32% of the total companies in the sector, 34% of the personnel and of the total operating revenue.

In terms of foreign activity of the sector in 2002, exports and imports reached amounted to 1,875 and 2,154 million euros, respectively, which means 1.4% and 1.2 of total Spanish industrial exports and imports. The trade balance, however, presented a negative balance of 280 million euros. In addition, more than 65% of sector exports are destined for other EU-15 member countries, and more than 80% come from there. In particular, France is the destination for 17% of exports, followed by Portugal (14%) and Germany (8%).  On the other hand, Germany (21%), Italy (18%) and France (16%) are the countries of origin of more than half the imports. Finally, and looking at the sectorial composition, the manufacturing activity of plastic plates, tubes and sections has the greatest foreign activity, representing 54% of exports and 59% of imports.

In 2001, the sector allocated a total of 29 million euros to R&D (with 94% financed by companies' own funds), an activity which 1.8% of sector companies engage in and which is responsible for 0.5% of the employment.

4. THE PLASTIC MANUFACTURING SECTOR IN THE ACBC

In 2001, the plastic manufacturing sector was responsible for 2.7% of the industrial value added generated in the ACBC and 3.1% of the total employment. There are 369 establishments (2002) with an average size of 25 employees. The value added of the plastic manufacturing sector has grown in line with industry. However, in terms of employment, it has generated more jobs than the industry as whole. In the different historic territories, Bizkaia represents 50% of establishments with an average size of 26 workers, followed by Gipuzkoa (39% and 20 workers, respectively). Álava has 14% of the establishments with a slightly greater average employment (36 workers).

This comprises four subsectors of activity. The manufacture of other plastic products is the most important in terms of its contribution to the sectorial total, representing half the overall value added, almost 44% of net sales and 59% of employment. The subsector for the manufacture of plastic plates, tubes and sections is the second largest subsector, with a share of 24% in the value added, 32% in net sales, and 20% in the employment generated by the sector as a whole. The third subsector of activity is that of plastic containers and packaging, which contributes 18%, 17% and 16% for the value added, net sales and employment, respectively. Finally, the plastic manufacturing subsector for construction plays a lesser role in terms of its contribution to the total value added (7%), sales (7%) and employment (5.2%) for the sector.

Foreign sector activity has increased five-fold in the last decade and has been characterised by the presence of a clearly positive trade balance (18 million euros in 2002). In 2002, EU countries constituted the main origin and destination of imports and exports (88% and 84%, respectively). Nevertheless, over the last decade, the EU has lost weight in favour of other international markets, such as the United States or China. In 2002, Italy, France and Germany played an important role in imports (27%, 17%, and 20%, respectively), while the main destination of exports was France, with 41% of the total and, in second place, Portugal, with 14% of the total exported by the sector.

Sector expenditure on R&D has almost doubled over the last five years, reaching 3 million euros in 2001.  More and more companies are developing R&D activities (23 in 2001 compared with 8 in 1996) and, in addition, they allocate more personnel to this activity (63 people in 2001 compared with 30 in 1996).

Finally, the environmental impact of the plastic manufacturing sector can be explained both by the impact of the productive process and also by the waste generated. In 2001, Basque companies constituted the third investment community in environmental issues in this sector.

5. PROSPECTS OF THE PLASTIC MANUFACTURING SECTOR IN THE ACBC

The prospects of the plastic manufacturing sector in the ACBC may be dealt with from the SWOT analysis. The SWOT table gathers the factors concerning opportunities and threats of the scene in which the sector is involved and details the internal or endogenous capacity of the Basque corporate fabric to respond to this scene.

As mentioned above, the manufacture of plastic products is an activity with an important role in the ACBC and with a positive recent evolution, shown in the increase in overall employment, the greater average size of companies and return on sales. It is strongly interwoven into the industrial economic activity of the community, since an important part of its production is, precisely, intermediate consumption of the main industrial nucleus of economic activity.

In this analysis of the potentiality of the sector, account is taken of the fact that this assessment depends on its recent evolution and its character, and in many cases, of the intermediate product, which makes it dependent on the evolution of its client activity sectors, among which the automotive and electrical appliance sectors stand out.  In addition, there are a series of factors which are shared by the whole of Basque industry, and which also affect the plastic manufacturing sector, and these are its condition of a small, open economy which is integrated in the European frame.

Among the exogenous, negative factors, so-called threats, from the sector one of the things which would stand out would be the previously mentioned condition of the intermediate product of an important part of sectorial production, the maturity of the plastic manufacturing process, the enlargement of the EU in terms of the entry of new competitors and the limited margin for negotiation in the face of its suppliers of its raw material and/or clients, who are normally large companies.

Among the positive, exogenous factors, the so-called opportunities, it is worth mentioning the growth of the activity resulting from the expansion of consumption, the shortening of the life span of a product and/or the entry of new consumers, the new business opportunities linked to EU enlargement, the development potentiality of plastic material in new applications and plastic recycling.

In terms of the response capacity of the corporate fabric of the sector, the strengths would include the presence of corporate initiatives with clear position strategies in new markets, an extensive corporate path, the corporate selection or specialisation towards product or technology, the taking on of in-service, multipurpose training, the consolidation of payrolls and group associationism or membership.

And the weaknesses would focus on the lack of large driving groups or companies which would make it easy to gain entry into new markets, the limitation of small average-sized resource derivatives which, in turn, determine a cautious management attitude and like other industrial activity, unlikely to develop corporate cooperation strategies. Similarly, it can be seen that R&D activity is focused more on the process than the product, and is more a follower than a leader.