Manufacture of Rubber and Plastic Products

Introduction

The manufacture of rubber and plastic-based products is a dynamic sector producing goods that have an extremely wide application, being used by virtually all other industries as well as being provided directly to consumers. On the rubber side, using both natural and synthetic materials the dominant market is automotive and other transport equipment (notably tyres and inner tubes, the largest single sub-sector but also hoses and belts, gaskets and seals and sealants). Industrial/machinery and building/construction are also significant end use markets along with consumer and institutional markets (e.g. conveyor belts, floor-coverings, engineering components, gloves, medical equipment, etc). The plastics manufacturing sub-sector converts primary plastics produced by the chemicals industry into intermediate or final products using a variety of production methods such as injection moulding and extrusion. The versatility of plastics allows these materials to be used in everything from car parts to toys, from footwear to appliances. Major end use markets for plastics are packaging – the largest single use (e.g. bottles, containers, bags and tubes); building and construction (e.g. pipes, conduits, fittings, doors, windows, frames, sanitary ware, etc.); consumer and institutional (e.g. kitchenware and tableware, sports goods, toys, laboratory, office and school supplies); transport (e.g. motor vehicle parts, specialised composites); electrical and electronic (e.g. appliances, electronic components, wire and cable coverings); furniture and furnishings (e.g. household and office furniture and fittings, floor coverings); and adhesives, inks and coatings (e.g. sealants, printing inks, paints and enamels).

Employment

Figure 1 Rubber and Plastics Products Employee Jobs, Lancashire, 2005

Source ONS - Annual Business Inquiry

Both components of the industry, but especially plastics, are well represented in Lancashire where it has an employee workforce of over 8,100 or 7.9% of manufacturing employees against an equivalent share of 6.3% in Great Britain. All parts of Lancashire have some stake in the industry though nearly a fifth of all the jobs are based in Blackburn (Figure 1). It is a male dominated industry with men making up over 80% of the employee workforce and only 7% of all employees work on a part-time basis (Table 1).

The rubber and plastic products sector in Lancashire comprises over 260 separate establishments, this number having remained fairly constant over the past 7-8 years. It is largely composed of small and medium sized companies, often serving specialised niche markets, although there are also a small number of more sizable establishments. Statistically, the "average" company size is 31 employees. There are 25 companies (9.6% of the total) who employ more than 100 people and these account for more than a half of the industry's employee workforce. Amongst these larger companies there are many that hold important global niche markets.

Figure 2 Rubber and Plastics Products Establishments, 2005

Source ONS - Annual Business Inquiry

There is a significant clutch of such companies in Blackburn, including Lucite International, manufacturers of acrylic sheets and composites, including "Perspex" and "Lucite"; RPC Containers, leading manufacturer of rigid plastic packaging; Tensar International, manufacturers of geogrid and geotextile products for ground stabilisation solutions; Precision Polymer Engineering, manufacturer of high performance rubber seals; and Welton Hurst, leading provider of specialist blow moulding services. Elsewhere other important players include Flexipol Packaging Ltd, flexible packaging manufacturers; Glasdon UK Ltd, Blackpool-based designer and manufacturer of street furniture, environment and safety products and modular buildings; Trelleborg CRP Ltd, manufacturer of high performance syntactic buoyancy products; Ultraframe Ltd, manufacturer of conservatory roofing systems; Veka PLC, extruders of PVC-U window and door systems; and Wardle Storeys, manufacturers of specialist technical foils, acoustic materials, fabricated components and related products.

Employment Trends

Figure 3 Rubber and Plastics Products Employee Jobs, Lancashire, 1950-2005

Source Ministry of Labour/ONS - ERII Employment Records

The rubber and plastics processing industry was a major post-war growth sector in Lancashire creating more than 6,500 jobs between 1950 and 1970 and played an important role in the diversification of the local economy away from its dependence on the traditional textile and allied sectors (Figure 3). At its peak in the 1970s the rubber sector alone employed nearly 7,000 people. Large-scale job losses in the late 1970s and early 1980s were associated with the collapse of plastic coated textiles, plastic floor coverings and general rubber products.

Over the mid-1980s/early 1990s rationalisation of production facilities continued in response to increasing global competition and this had a further knock-on effect on employment levels despite an underlying quite successful new business start-up rate in the sector. Over this period activity in the industry was generally less buoyant than that nationally. However, within the plastic processing side of the industry from 1993 both production and employment were on a generally upward trend in marked contrast to the experience of manufacturing activity generally. Thus, between 1993 and 2000 the industry generated about 1,900 net new jobs (+30%), making it amongst the fastest growing manufacturing sector in the County and one of very few to actually create net new jobs. The rubber side of the industry continued to contract, albeit at a lesser pace, but there were offsetting gains in plastic processing, notably in plastic packaging goods, plastic builders' ware and miscellaneous plastic products. Post 2000 the effects of the national manufacturing downturn and intense global competition began to adversely impact on the sector once again. There were job losses in the miscellaneous plastics sector in particular and also in rubber products. The latter included the final closure of the Michelin tyre plant in Burnley. In general however employment, particularly in plastic processing has tended to hold up much better than in most other local manufacturing activities Geographically, Blackburn, Burnley, and Lancaster have experienced the most severe job reductions over recent years but there have been modest compensating gains in a number of districts.

General Characteristics

Nationally, the Rubber and Plastics Products industry comprises over 7,000 separate enterprises employing 205,000 people. In 2005 it had annual turnover of some £21bn and generated nearly £8bn in gross vale added.

Figure 4 Rubber and Plastics Products Production Trends, Lancashire, 1994-2004

Source ONS - Annual Business Inquiry

Key factors affecting the demand for many rubber and plastic products include the health of end-use markets, growth in the overall economy and trends in overseas trade. Though they are two quite distinct sectors, rubber and plastics do have close linkages: both process polymeric material based on hydrocarbons and much of the processing machinery are similar. They remain dynamic industries enjoying the advantage of extensive and diversified demand across all sectors of industry as well as the consumer market. Price competition in the rubber sector, particularly in that part of the industry serving the transport equipment sector that accounts for about 70% of the rubber products market, is intense but sales of elastomeric products to other industries are somewhat less affected. Virtually every product manufacturer uses, or can use, plastic components. The sector has been characterised by the continuous development of new products and applications, including substitution of traditional materials such as steel, aluminium, glass, wood and natural fibres. As new polymers and composite materials are introduced by the chemical industry, so the industry is constantly refining and adding products to those that have been made over many decades. Locally, the largest sub-groups are miscellaneous plastic products (everything from high tech engineering plastic components to humble housewares), plastic builders' ware, general rubber goods (mainly for industrial/automotive use), and plastic plates, sheets, etc., together with a quite rapidly growing plastic packaging sector.

In 2004 the industry in Lancashire achieved turnover of some £815m, down slightly from the previous year's all time high, and gross value added of £287m (Figure 4). The industry has expanded steadily over the past couple of decades and the more recent period 1994-2005 has also seen a bout of encouraging growth with gross value added rising by over 40% in real terms, or double the pace of the UK sector overall. This growth was in part associated with some remarkably successful new business ventures, the use of new polymer alloys and composites and new product launches into higher value added niches, often spurred by the growing need to better compete with a rise in imports of less specialised plastic and rubber products. In turn this has raised the capital intensity of the sector. The local industry's success over recent years has been recognised by a growing number of companies who have won Queen's Awards both in the field of International Trade and for Innovation. GVA in 2004 was equivalent to 5.6% of the Lancashire manufacturing industry total, more than half a percentage point higher than a decade earlier.

Over the past decade the market has been greatly affected by growing global competition, technological progress and environmental concerns pushing the industry to set up effective recycling and recovery schemes. More recently the strength of Sterling and rising feedstock costs have been of major constrain for many companies. However, the industry has continued to invest strongly in the development of new products and processing technology. Labour productivity has been on a general upward trend, having increased markedly over the past decade and the level of gross value added per head in the Lancashire industry, at £36,300 in 2004, is now above that of the industry nationally, having previously lagged. This has followed greatly increased levels of net capital expenditure. Investment per head in the Lancashire industry held steady over the decade 1994-2004 whilst the trend nationally was of a steady fall.

The above average performance of the rubber and plastic products industry over recent years compared with manufacturing industry generally is expected to continue with prospects for the sector considered positive.