32521CA Plastic & Resin Manufacturing in Canada Industry Report

Plastic & Resin Manufacturing in CanadaMarch 2016 1
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Breaking the mold: Rising input costs will

constrain industry profit margins
IBISWorld Industry Report 32521CA
Plastic & Resin

Manufacturing in Canada
March 2016
David Witter
2 About this Industry
16 International Trade
32 Key Statistics
Industry Definition
18 Business Locations
32 Industry Data
Main Activities
Similar Industries
20 Competitive Landscape
Additional Resources
20 Market Share Concentration
32 Annual Change
20 Key Success Factors
3 Industry at a Glance
32 Key Ratios
33 Jargon & Glossary
20 Cost Structure Benchmarks

22 Basis of Competition
4 Industry Performance
23 Barriers to Entry
Executive Summary
23 Industry Globalization
Key External Drivers
Current Performance
25 Major Companies
Industry Outlook
25 NOVA Chemicals Corporation
10 Industry Life Cycle
28 Operating Conditions
12 Products & Markets
28 Capital Intensity
12 Supply Chains
29 Technology & Systems
12 Products & Services
29 Revenue Volatility
14 Demand Determinants
30 Regulation & Policy
15 Major Markets
31 Industry Assistance
www.ibisworld.ca | 1-800-330-3772 | info @ibisworld.ca
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About this Industry

Industry Definition
This industry manufactures resins, plastic

materials (i.e. polymers) and synthetic
rubber. Key product groups include
thermosetting resins, thermoplastic resins
Main Activities
The primary activities of this industry are
and synthetic rubber. Raw material inputs

are sourced from chemical industries and
industries involved in producing
petroleum-based feedstock.
Thermoset resin manufacturing

Thermoplastic resin manufacturing
Synthetic rubber manufacturing
Polyethylene resin manufacturing
Polypropylene resin manufacturing
The major products and services in this industry are

Thermosetting resins and plastic materials
Other thermoplastics
Polyethylene resins and plastic materials
Synthetic rubber
Other resins
Similar Industries
32552CA Adhesive Manufacturing in Canada

Operators in this industry are engaged in manufacturing resin adhesives.
32599CA Chemical Product Manufacturing in Canada
Companies in this industry are primarily engaged in custom compounding of resins.
32611CA Plastic Film, Sheet & Bag Manufacturing in Canada
Companies in this industry are engaged in manufacturing plastic film and bags.
32621CA Tire Manufacturing in Canada
Companies in this industry primarily process natural, synthetic or reclaimed rubber into intermediate or final
products.
Additional Resources
For additional information on this industry

www.canplastics.com
Canadian Plastics
www.plastics.ca
Canadian Plastics Industry Association
www.rubberassociation.ca
Tire and Rubber Association of Canada
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Plastic & Resin Manufacturing in Canada March 2016
Industry at a Glance
Plastic & Resin Manufacturing in 2016
Key Statistics
Snapshot
Revenue
Annual Growth 11-16
Annual Growth 16-21
Profit
Exports
Businesses
-0.8%
$8.1bn
$8.4bn
$1.1bn
24
10
12
% change
% change
NOVA Chemicals
Corporation
38.0%
120
Demand from manufacturing
Revenue vs. employment growth
Market Share
1.8%
-12
-24
-36
-5
-10
-15
-48
Year 08
10
12
14
Revenue
16
18
20
-20
Year
22
09
11
13
15
17
19
21
Employment
SOURCE: IBISWORLD
p. 25
Products and services segmentation (2016)
2.3%
Other resins
13.1%
Demand from
manufacturing
Synthetic rubber
Canadian-dollar effective
exchange rate index
36.2%
13.6%
Demand from
construction
Thermosetting resins
and plastic materials
World price of crude oil
p. 4
34.8%

SOURCE: IBISWORLD
Industry Structure
Life Cycle Stage

Revenue Volatility
Mature
Medium
Regulation Level
Medium
Technology Change
Medium
Capital Intensity
High
Barriers to Entry
High
Industry Assistance
Low
Industry Globalization
High
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32
Medium
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
The Plastic and Resin Manufacturing

industry returned to normalcy over the
five years to 2016. Industry operators
convert petrochemicals into resins that
can be used to create plastic products.
The industrys major markets are
customers in the manufacturing and
construction industries. As economic
conditions improved following the
recession, demand from the
manufacturing and construction sectors
followed suit, with demand for industry
Fortunately
for operators, downstream users of

industry products in the US rebounded sharply
following the recession
products benefitting. However, falling
crude oil and natural gas prices adversely
affect revenue. As a result, over the five
years to 2016, IBISWorld expects
industry revenue to decline at an
annualized rate of 0.8% to $8.4 billion.
However, revenue is expected to recover
slightly following a rough 2015, leading
to a 0.7% increase.
The industry is characterized by a high
level of globalization, indicated by
exports accounting for 95.8% of revenue

This industrys products are used as
inputs for a wide variety of
manufacturing industries, including
automobile manufacturers, electronics
producers and packaging
manufacturers. Therefore, increased
demand for finished products boosts
demand for synthetic resins and
plastic materials. Demand from
in 2016. As a result, the industry is highly

susceptible to economic conditions
abroad, most notably in the United
States. Trade between the United States
and Canada is extremely high as a result
of proximity, leading to lower transport
costs and the elimination of all trade
barriers resulting from the North
American Free Trade Agreement.
Fortunately for industry operators,
downstream users of industry products in
the United States, most notably the Car
and Automobile Manufacturing industry
(IBISWorld report 33611a), have
rebounded sharply following the
recession. In the five years to 2016,
exports have increased at an annualized
rate of 3.7% to $8.1 billion to the benefit
of industry operators.
Over the next five years, IBISWorld
expects the industry to grow at a steady
pace. Export growth will slow
significantly, but still play a major role in
overall demand. Over the five years to
2021, IBISWorld expects industry
revenue to increase at an annualized rate
of 1.8% to $9.2 billion. Despite solid
revenue growth, profit margins are
expected to be constrained by rising raw
material costs and strong competition
between industry participants.
manufacturing is expected to increase

over 2016.
Canadian-dollar effective
exchange rate index
The Canadian-dollar effective
exchange rate index (CERI) measures
the strength of the Canadian dollar in
relation to the currencies of Canadas
primary trading partners. An
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appreciation of the Canadian dollar makes

imported resin products more price
competitive against local Canadian goods.
Conversely, when the dollar depreciates,
Canadian products are more attractive on
the international market. In 2016, the
CERI is expected to decline, creating a
potential opportunity for the industry.
Demand from construction
Industry products are used in a wide
variety of construction industries, most
notably in home building. Consequently,
demand for synthetic resins and plastic
materials is influenced by levels of
construction activity. Demand from
construction is expected to rise in 2016.
World price of crude oil

Hydrocarbons, which are derived from
crude oil, are a main input for resin
and synthetic rubber manufacturing.
When the price of crude oil increases,
the cost of manufacturing also rises,
negatively affecting profit margins.
Some manufacturers will pass the
higher input costs on to consumers in
the form of higher prices. However,
higher prices often deter customers
from making purchases, decreasing
industry revenue. The world price of
crude oil is expected to decrease in
2016, but it will remain volatile,
representing a potential threat for
the industry.
Canadian-dollar effective exchange rate
index

8
130
120
Index
% change

continued
-4
-8
100
-12
-16
Year
110
09
11
13
15
17
19
21
90
Year 07
09
11
13
15
17
19
21
SOURCE: IBISWORLD
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Bouncing back

industry primarily engages in the
conversion of petrochemicals like ethylene,
vinyl chloride and propylene into a variety
of resins that can be used to produce
plastics and adhesives. Sales of plastic and
resin products in Canada are heavily
reliant on demand from downstream
construction and manufacturing
industries, as well as the economic health
of Canadas trading partners.
industry is highly globalized, marked by a
high level of imports and exports. In an
industry where more than 90.0% of industry
revenue is generated from exported
products, Canadian resin makers are
strongly impacted by events affecting the
international economy. More specifically,
the industry is closely tied to US markets, as
84.5% of total exports head to the United
States. Demand from downstream users in
the US construction and automobile
manufacturing sectors was decimated
during the recession. However, demand
from these key users bounced back strongly
since, benefiting industry operators.

Unfortunately, depressed crude oil and
natural gas prices adversely affect revenue.
Despite improving demand conditions both
domestically and globally, IBISWorld
expects industry revenue to fall at an
annualized rate of 0.8% to $8.4 billion in the
five years to 2016. After the hits taken in
2014 and 2015, IBISWorld expects industry
revenue will increase 0.7% in 2016.
Plastics are an integral part of society, as

they are included in almost every facet of
a manufacturers supply chain. Plastic is
incorporated into the design of millions
of products spread across a variety of
industries. The diversity of applications
for this industrys products and the range
of its customers insulate the industry
from the risk associated with one
particular market to some degree. The
industrys two largest markets are the
manufacturing and construction sectors.
Downstream users in the
manufacturing industry benefited from
an improving economy over the five years
to 2016, indicated by a rise in per capita
disposable income and a falling
unemployment rate. As a result,
downstream users demanded more
products from industry operators.
Automobile manufactures, for example,

use plastic and resin inputs in the creation
of automotive parts and interior
components. Automakers were forced to
temporarily shut down operations as
demand for their products waned during
the recession; however, as economic
conditions improved, demand for cars
returned. With stronger demand for new
cars following the recession, automobile
manufacturers demanded more plastic and
resins, boosting industry revenue growth.
Similarly, the construction market
showed solid growth over the five years
to 2016. New construction of large
multiunit housing investments, such as
rental condominiums and apartments,
spurred demand for industry products.
Low interest rates over the period
encouraged investors to pour money
Industry revenue
15
0
% change
Current
Performance
-15
-30
-45
Year 08
10
12
14
16
18
20
22
SOURCE: IBISWORLD
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Bouncing back
continued
into large-scale investments.

Additionally, to combat recessionary
effects, the government embarked on a
stimulus package with large capital
outlays being dedicated to the
improvement of outdated
Trade matters
This industry is characterized by a high

level of trade. Canadian plastic and resin
manufacturers specialize in
manufacturing lower-performance resins,
while foreign manufacturers specialize in
more complex, higher-performing resins.
Industry revenue growth has been aided
by improving downstream domestic
demand; however, the industry has been
equally, if not more affected by a rising
level of exports. Over the five years to
2016, exports have increased at an
annualized rate of 3.7% to $8.1 billion,
underpinning revenue growth for industry
operators. The majority of export growth
has been driven by improvements in the
US economy, the industrys largest trade
partner. The United States and Canadas
proximity to each other, as well as the
elimination of all trade barriers as a result
of the North American Free Trade
Agreement, results in high trade between
the two countries. Due to the industrys
heavy reliance on exports, the overall
health of the global economy is extremely

important for industry operators.
Similar to exports, import growth over
the period has been strong. Over the five
years to 2016, imports increased at an
annualized 2.5% to $8.1 billion. Import
growth is traditionally strong due to the
industrys aforementioned dependence on
high performance resins from foreign
manufacturers. However, import growth
has been even stronger over the period due
to the appreciation of the Canadian dollar
relative to its trading partners. This
appreciation slowed dramatically in 2014,
and is expected to continue its slide in 2015.
A weakening dollar will decrease imports as
foreign-produced goods become relatively
more expensive in domestic markets.
Industry profitability has increased

slightly over the period, up to 13.2% of
total revenue from 11.7% in 2011. New
technologies, such as metallocene
technology and the advanced Sclairtech
technique, pioneered by NOVA
Chemicals Corporation enable
producers to create resins that are less
expensive to produce with favourable
properties, such as increased strength
and reduced opacity. Additionally,
stronger downstream demand following
the recession enabled industry
operators to increase prices, benefiting

profit margins.
Over the five years to the 2016, the
number of industry players has
remained fairly stable. The number of
enterprises has fallen at an annualized
rate of 1.4% to 120 over the five years to
2016. The declining number of
operators leads to fewer employment
opportunities in the industry. Over the
past five years, the number of
employees has fallen by an average of
0.3% per year to reach 5,352 workers.
Profitability
infrastructure. The construction

industry uses products derived from
plastic and resin, such as PVC pipe,
flooring and insulation. As a result of
construction activity rising, demand for
plastic and resin has followed suit.
Similar
to exports, import
growth over the period has
been strong
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Industry
Outlook
The Plastic and Resin manufacturing

industry is expected to generate solid
revenue growth as the Canadian
economy continues to expand. Over the
five years to 2021, downstream
manufacturing and construction
industries will continue to improve upon
Continued growth
Over the next five years, downstream users,

such as the manufacturing and construction
sectors, are expected to build on their recent
momentum as per capita disposable income
and consumer spending levels will increase
by 0.8% and 1.8% per year, respectively.
This will elevate demand for consumer
goods that incorporate plastic and resin
products manufactured by this industry.
Additionally, larger orders for plastic and
resin products will likely encourage
manufactures to open new locations or
expand existing facilities to keep up with
rising demand. The number of industry
enterprises is expected to increase an
average annual 0.8% to 125 in the five years
to 2021. With more players in the industry,
employment is forecast to grow at an
annualized rate of 1.4% to 5,742 workers
over the same period.
Raw material prices represent a
significant cost for industry operators. The
price of crude oil and natural gas was highly
volatile over the past five years, experiencing
double-digit increases and decreases from
year to year. The fluctuating prices for these
inputs made it hard for operators to gauge
their overall costs. Prices of raw materials
like natural gas will likely rise over the next

five years but with less volatility than in
recent years, providing some relief for
manufacturers. However, as demand for
industry products begins to normalize, as
indicated by slower increases in the price of
plastic materials and resin, industry
operators will have trouble passing on
increase costs to downstream users. As a
result, over the five-year period IBISWorld
expects the industrys profit margin to
stagnate, remaining within its historical
range. Nonetheless, industry operators will
be in a better position to deal with higher
raw material prices, as manufacturers begin
employing new manufacturing techniques
and technologies, resulting in more stable
profit margins. NOVA Chemicals
Corporations new Sclairtech technology,
for example, has only begun to harness
[its] true potential, according to the
companys 2015 annual report.
The industry will continue to be

dependent on exports to spur revenue
growth going forward. As exports
approach record highs, growth is
anticipated to be very slow, but continue
to account for a very high percentage of
revenue. Export growth will be
underpinned by a weak Canadian dollar,
which will make industry products more

competitive on a global scale.
Furthermore, the industrys largest trade
partner, the United States, is expected to
continue solid economic growth,
supporting demand for industry exports.
Exports as a share of revenue are
expected to decline from 95.8% of
Trade remains key
past gains, bolstering industry revenue

in the process. As a result of these
positive trends, IBISWorld expects
industry revenue to increase at an
annualized rate of 1.8% to $9.2 billion
over the five years to 2021, including
2.4% growth in 2017.
The
industry will continue

to be dependent on exports
to spur revenue growth
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Trade remains key

continued
revenue in 2016 to 91.0% in 2021, although

the value of exports is anticipated to grow
an average of 0.8% per year over the
period to reach $8.4 billion.
Despite a weak currency, imports will
continue to account for a significant
portion of domestic demand as
downstream domestic manufacturers will
rely on complex imported US resins.
Canadian plastic and resin
manufacturers do create specialized
resins, most notably in Ontario and

Quebec, however, most of these facilities
are smaller and were built before the
North American Free Trade Agreement.
As a result, manufacturers of these niche
resins are not able to produce on a large
enough scale to supply the domestic
market entirely. IBISWorld expects the
value of imports to only rise slightly,
totalling $8.1 billion in 2021, which is the
same amount as in 2016.
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Life Cycle Stage
Revenue is growing slightly slower

than the overall economy
Manufacturers are focused on improving
existing products instead of creating new ones
% Growth in share of economy
Consolidation among top manufacturers is

occurring as they try to increase their market share
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry

Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Quantity Growth
Many new companies;

minor growth in economic
importance; substantial
technology change
Chemical Product Manufacturing
Plastic Bottle Manufacturing
Adhesive
Manufacturing
Electric Power Transmission
Plastic & Resin Manufacturing

Plastic Pipe & Parts Manufacturing
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
% Growth in number of establishments

SOURCE: WWW.IBISWORLD.COM.AU
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Industry Life Cycle

This
industry
is M
ature

industry is in the mature phase of its
economic life cycle. The industry is
characterized by market saturation and a
stable number of industry enterprises.
Industry value added (IVA), which
measures the industrys contribution to the
overall economy, is expected to increase at
an average annual rate of 1.1% over the 10
years to 2021. In contrast, Canadian GDP is
forecast to increase at an annualized rate of
1.9% over the same period.
The number of industry operators is
expected to decline slightly over the 10
years to 2021. The industry experienced
drastic enterprise declines during the
recession as input costs spiked and
demand plummeted. However, as profit

margins returned to historical levels, the
number of players competing in the
industry has remained and is expected to
remain stable. A stable number of industry
participants is a characteristic indicative
of an industry in its mature phase.
Exports dominate the market for
industry goods, accounting for well over
half of all sales. As a result, demand for
industry products is determined by the
health of the global economy, most
notably that of the United States. The
United States is expected to experience
similar growth to Canada, further
cementing this industry as one in its
mature phase.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

32611CA
Plastic Film, Sheet & Bag Manufacturing in Canada

This industry uses various polyethylene products produced by this industry to create plastic
bags and sheets.
32612CA
Plastic Pipe & Parts Manufacturing in Canada

This industry demands resins in order to manufacture plastic pipes, PVC pipes in particular.
32616CA
Plastic Bottle Manufacturing in Canada

This industry creates plastic bottles and containers from various plastic materials and
synthetic resins produced by the Plastic & Resin Manufacturing industry.
32619CA
Plastic Products Miscellaneous Manufacturing in Canada

This industry produces miscellaneous plastic materials out of materials created by the Plastic
& Resin Manufacturing industry.
32621CA
Tire Manufacturing in Canada

This industry purchases massive amounts of synthetic rubbers produced by Plastic & Resin
Manufacturers.
KEY SELLING INDUSTRIES
Products & Services
22112CA
Electric Power Transmission in Canada

Electricity is a significant cost for the Plastic, Resin and Rubber Manufacturing industry.
22121CA
Natural Gas Distribution in Canada

Natural gas is a key energy source used by the industry.
32411CA
Petroleum Refining in Canada

Petroleum byproducts are used in the manufacture of plastic and resins.
32511CA
Petrochemical Manufacturing in Canada

Plastic and resin manufacturers source a number of key inputs from this industry.
Products and services segmentation (2016)
13.1%
2.3%
Other resins
Synthetic rubber
36.2%
13.6%
Thermosetting resins
and plastic materials
Total $8.4bn
34.8%
According to the North American

Industry Classification System (NAICS),
the Plastic and Resin Manufacturing
SOURCE: IBISWORLD
industry primarily engages in

manufacturing synthetic resins, plastic
materials and synthetic rubber from
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Products & Markets
Products & Services

continued
basic organic chemicals. This industry is

in the mature stage of its life cycle, so its
product segments are not expected to
change much over the next five years.
IBISWorld estimates that the industrys
revenue is primarily generated through
the sale of thermoplastic resins and
plastic materials.
Polyethylene resins and plastic
Polyethylene resins and plastics
represent the largest product segment for
the industry in 2016, accounting for an
estimated 34.8% of industry revenue.
Thermoplastic resins are polymer
compound materials that soften or
become liquid when heated, and harden
again to its original state when cooled.
The softened or liquid material is
typically molded through various
techniques, such as injection molding or
extrusion. There are over forty types of
thermoplastic resins, each with its own
properties, which are suited for different
uses; however, polyethylene is the most
common type of resin and plastic.
Polyethylene can be recycled, heated and
reformed several times.
Polyethylene can be classified into
different categories based on its density.
Low-density polyethylene (LDPE) and
high-density polyethylene (HDPE) are
the two most common and widely sold
types of polyethylene due to their
mechanical properties. LDPE has a low
tensile strength but higher ductility, and
is used in the production of grocery
store bags, most plastic wraps and films
and some bottles. HPDE, on the other
hand, is stronger and used to make
opaque plastic milk and water jugs;
bleach, detergent and shampoo bottles;
some plastic bags; and toys. Increased
consumer spending and rising per capita
disposable incomes will lift this
segments share of revenue higher in the
five years to 2021.
As previously mentioned, there are over
forty types of thermoplastics but
polyethylene tends to dominate as a
share of revenue. Other common types of
thermoplastics include acrylonitrile
butadiene styrene (ABS), polypropylene,
polyvinyl chloride (PVC), nylon and
acrylic, among others. These
thermoplastics are molded to create glass
substitutes and various plastic products
such as outdoor furniture, consumer
casings, children toys and much more.
Extrusion, a process in which material is
forced through a series of dies (similar to
wire drawing) to form it into its desired
shape, is used widely by manufacturers of
uniform, high-volume products due to its
low cost and fast production runs.
Extrusion of thermoplastics creates a
wide array of tubes, pipes, rods and
plastic bottles, just to name a few. All
other thermoplastics are expected to
account for 36.2% of industry revenue.
Thermosetting resins and
plastic materials
Thermoplastic and thermosetting plastic
are completely different types of plastic.
Thermoplastic can be reheated and
reformed, whereas a thermoset typically
is molded, cured into shape and becomes
permanent. Thermoset plastics are
synthetic materials that are liquid or
malleable at room temperature but are
strengthened during the curing process.
Curing is typically induced by heat,
radiation or both. Thermosetting plastics
have a number of advantages over
thermoplastics. For one, thermosetting
plastics retain their strength and shape
under high-temperature conditions and
will not become weaker when exposed to
heat. Also, thermosetting plastics do not
need to cool before being removed from
their mold, allowing for faster production
runs. Examples include phenol
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Products & Markets
Products & Services

continued
formaldehyde, urea formaldehyde, epoxy,

polyurethane, unsaturated polyester, alkyd
and silicone. This segment is expected to
represent 13.6% of industry revenue in 2016.
Synthetic rubber
Unlike natural rubber produced from
rubber trees, synthetic rubber is artificially
made from petroleum byproducts. A range
of different synthetic rubbers has emerged,
reflecting the various applications and the
chemical and mechanical properties they
require. Synthetic rubbers are classified
according to whether they are vulcanized or
nonvulcanized. Vulcanization is a process by
Demand
Determinants
Because plastic and other resins are used

by nearly every industry in Canada,
demand for these products is based on a
range of factors. Economic and industrial
trends tend to drive demand for industry
products the most because the Canadian
manufacturing industry uses plastic and
other resins in their production processes
and in their finished products. Whether
Canadian manufacturers use this
industrys plastic to hold or package their
final products or use rubber components
to drive their industrial machinery, the
Plastic and Resin Manufacturing
industrys effects are present in almost
every sector across Canada.
Manufacturing
The products produced by this industry
are used in a variety of manufacturing
industries; however, the largest
purchasers include automakers,
electronic producers and packaging
manufacturers. These manufacturers
need plastic and rubber in their
manufacturing operations and an uptick
in demand from their respective
downstream industries will subsequently
lead to greater revenue streams for
industry establishments. Some economic
factors that determine demand for
which sulfur and other chemicals are added

to rubber in a curing process, typically
involving a combination of high pressure
and heat. The result is a mechanically
superior product that is stronger and more
durable. Products made from vulcanized
rubber include tires, shoe soles and hockey
pucks. Un-vulcanized rubber is
characterized by its stickiness and
propensity to deform when subjected to
warm or cold temperatures. Un-vulcanized
rubber is generally sold as a raw material
input for vulcanized rubber. This segment
is expected to represent 13.1% of total
industry revenue.
manufacturing industries include

consumer spending, per capita
disposable income, industrial production
rates and capital expenditure.
Construction
The construction industry uses various
plastics to create building components
such as pipes, flooring and roofing
materials, windows and doors, storage
tanks and insulation, among others.
Growth in this sector is largely
attributable to cheap financing and
historically low interest rates, growing
population rates driving the need for
housing and a falling unemployment
rate. As real estate developers plan
more construction projects to capture
future demand, they will need more
plastic building materials manufactured
by this industry.
Other
Nearly half of industry revenue is derived
from polyethylene, a type of plastic that is
used to create grocery and other plastic
bags. Revenue from plastic bags is
vulnerable to changes in consumer
behavior. For example, Toronto placed a
ban on single-use plastic bags, leading to
consumer shifts toward reusable
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Products & Markets
Demand
Determinants
continued
Major Markets
shopping bags instead. Single-use bags

are seen as environmentally harmful;
however, this ban has since been
reversed. Also, growth in the Internet and
E-commerce has reduced demand for
retail-related plastic shopping bags;
however, some plastic bags and wraps are
used for packaging products to ship to
consumers. Consumer preferences for

alternative packaging solutions are a
growing trend and have demand
determinants of their own, including
cost, perceptions of quality (transparency
and barrier protection), environmental
suitability and the recyclability of the
packaging material.
Major market segmentation (2016)
0.8%
1.2%
Other
Construction
2.2%
Manufacturing
Total $8.4bn
Exports
Exports represent the largest market for
Canadian plastic and resin manufacturers,
generating an expected 95.8% of total
industry revenue in 2016. The industrys
largest trade partner is the United States,
representing 84.5% of all exports. As a
result of an improving real estate market,
coupled with higher levels of
manufacturing activity in the US,
indicated by a rising industrial production
index, exports have experienced high
growth over the five years to 2016. In the
coming five years exports are expected to
experience solid demand as a depreciating
currency causes Canadian goods to
become more attractive on the
international market. Thermoplastics and
thermosetting plastics and components
made from these materials are widely
used in industrial machinery.
95.8%
Exports
SOURCE: IBISWORLD
Manufacturing
The manufacturing segment of the major
markets includes manufacturers of
plastic products, paints and adhesives, as
well as manufacturers throughout a
spectrum of industries that incorporate
plastic into their manufacturing process
or use it to seal and transport finished
goods. Plastic manufacturers purchase
resins produced by this industry to create
plastic bags, sheets, films, bottles and
other plastic-packaging products and
various foams and rubbers. Plastic resin
is also used to create manufacturing
components used in industrial machinery
such as rubber hoses, tires, cables and
pipes. Even more, automobile, electronic
and furniture manufacturers all use a
wide array of plastics created by this
industry in their final goods as well.
IBISWorld estimates that demand from
WWW.IBISWORLD.CA
Products & Markets
Major Markets
continued
International Trade
Level & Trend
xports in the
E
industry are H
igh
and I ncreasing
Imports
in the
industry are H
igh
and I ncreasing
Canadian manufacturers will generate

2.2% of total industry revenue, while
accounting for about 51.0% of exports.
This segments share of total industry
revenue has increased thanks to rising
consumer confidence. Rising consumer
confidence has spurred demand for new
products, causing manufacturers to
purchase more inputs.
Construction
The construction market uses a lot more
plastic than one might imagine. Plastic is
durable and strong, yet lightweight, with
a multitude of uses. Thermoplastics
usually soften or expand when heated
and certain manufacturers have created
special resin blends that minimize these
occurrences. Thermoset plastics are also
common because of their heat resistance.
Compared with other building materials
in the construction industry, plastics
usually fare better in harsh
environments. The low maintenance cost
throughout their life cycle and good

recyclability of many plastics used in
construction make them preferred by
contractors. Resins and adhesives
produced by this industry are used in the
creation of PVC pipes, flooring,
insulation, roofing, windows and doors.
Currently, the domestic construction
segment accounts for 1.2% of industry
revenue. Plastic construction materials
are expected to account for 29.5% of all
exports over 2016.
The Canadian population is growing at
a faster rate than most industrialized
countries, as the population is expected
to increase at an average annual rate of
0.8% to 37.6 million over the five years to
2021. The need to accommodate the
increasing number of Canadians will
likely increase demand for plastic
construction components in the future.
IBISWorld expects demand from the
construction sector to increase in the five
years to 2021.

industry in Canada exhibits a very high
level of international trade, as imports
are expected to satisfy 95.8% of domestic
demand, while exports are forecast to
generate the same percentage of total
industry revenue in 2016. Levels of trade
for both imports and exports are high due
to the specialized nature of resins.
Canada specializes in manufacturing
lower-performance resins, and relies on
imports to satisfy demand for their
higher-performance counterparts, such
as those manufactured in the United
States. The industrys largest trade
partner is the United States, accounting
for 84.5% of exports and 84.2% of
imports. High levels of trade between
these two countries is due to the
proximity to each other and the
elimination of trade barriers under the
North American Free Trade Agreement.
Imports
Imports of plastic and resin are currently
very high, accounting for 95.8% of domestic
demand. Over the five years to 2016,
imports are anticipated to grow at an
annualized rate of 2.5% to $8.1 billion. The
clear importation leader in this industry is
the United States, from where over three
quarters (84.2%) of all imports are sourced.
US goods have been comparatively cheaper
over the past five years due to the increased
purchasing power of the Canadian dollar.
Other notable countries include China,
Germany and South Korea, which
account for 2.4%, 2.3% and 1.5% of total
imports, respectively.
In the coming five years imports are
projected to remain relatively stable.
Canadian manufacturing firms will still rely
on high-performance imports from abroad.
However, a weakening Canadian dollar will
constrain import growth going forward.
WWW.IBISWORLD.CA
Products & Markets
Exports To...
4.7%
Industry trade balance

10
5
$ billion
Exports
Exports of plastic and resin are very high,
accounting for 95.8% of revenue in 2016.
As mentioned previously, the United
States is the industrys largest trade
partner, accounting for 84.5% of exports.
Fortunately for industry operators, the
US economy rebounded relative strongly
from the recession, driven by low interest
rates and other stimulus measures. This
caused demand for industry products to
be used in downstream industries such as
the Car and Automobile Manufacturing
industry (IBISWorld report 33611a) to
rise, effectively benefiting industry
operators. Mostly, the result of an
improving US economy, exports are
projected to increase at an annualized
rate of 3.7% to $8.1 billion over the five
years to 2016. In the coming five years
IBISWorld expects exports to continue
International Trade
continued
0
-5
-10
Year 08
10
Exports
12
Imports
14
16
18
20
22
Balance
SOURCE: IBISWORLD
growing, although very slightly,

underpinned by a depreciating
Canadian dollar, which will make
domestic products more attractive on
the foreign market.
Imports From...
0.8%
Belgium
China
5.8%
4.2%
1.5%
Mexico
Other
9.6%
South Korea
2.4%
China
Other
2.3%
Germany
84.5%
84.2%
United States
United States
Year: 2016
Total $8.1bn
SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA
Total $8.1bn
SOURCE: USITC
WWW.IBISWORLD.CA
Products & Markets

Business Locations 2016
Number of Establishments (%)

Less than 5%
5% to less than 20%
20% to less than 40%
40% or more
NT
YT
NU
NORTHERN TERRITORIES
0.0
BC
3.3
AB
13.2
SK
1.7
MB
2.5
ON
43.0
NL
QC
0.0
33.1
NB
0.8
NS
PE
0.8
1.7
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Products & Markets
Distribution of establishments vs. population

50
40
30
20
10
Saskatchewan
Quebec
Ontario
Prince Edward Island
Nova Scotia
Newfoundland
Northern Territories
Establishments
Population
New Brunswick
Manitoba
Alberta
0
British Columbia
The geographic distribution of

establishments in the Plastic and Resin
Manufacturing industry in Canada is
concentrated in the Ontario and Quebec
provinces. The majority of the Canadian
population is located in the southern part
of the country and most industry
establishments are located within these
two areas. Ontario, the countrys largest
province, is home to the greatest number
of industry establishments, at 43.0%.
Ontario is the most populous province,
accounting for nearly half of the
Canadian population and is home to the
nations capital city, Ottawa. The Dow
Chemical Company, which is a major
player in this industry, has a production
facility in West Hill, near Toronto,
employing more than 300 workers at this
location. Ontario is Canadas leading
manufacturing province, which is likely
why such a large percentage of all plastic
and resin manufacturers are located in
this region.
With the second-largest percentage of
industry establishments, Quebec has
access to key waterways that make the
transportation of exports to Europe and
the Eastern seaboard of the United States
much easier and cost-effective. Most
inhabitants of Quebec live in the urban
areas of Montreal and Quebec City. The
city centres demand large amounts of this
industrys products, therefore, 33.1% of
plastic and resin manufacturers are
located in this province. Quebec and
Ontario both have large populations and
a majority of manufacturers are located
in these provinces in order to be closer to
their main customer base.
Alberta and British Columbia are
located in the western part of the country
Business Locations
SOURCE: IBISWORLD
and account for 13.2% and 3.3% of total

industry establishments, respectively.
Roughly 84.5% of plastic and resin
exports manufactured by this industry
head to the United States and these
territories have access to the western part
of the country. China is the second most
popular destination for exports.
Companies located in Alberta and British
Columbia have an advantage over those
that are not located in these regions due
to reduced shipping cost to far eastern
export countries.
The remaining regions in Canada
comprise 7.5% of the total number of
industry establishments. These regions
house very small portions of the
Canadian population. Economic activity
is also very limited in these areas;
consequently, these areas are not
attractive enough to establish plastic and
resin manufacturing facilities.
WWW.IBISWORLD.CA
20
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration
in
this industry is L ow
Key Success Factors

IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
IBISWorld estimates that the Plastic and

Resin Manufacturing industry in Canada
exhibits a low level of market share
concentration, with the top four players
(NOVA Chemicals Company, Dow
Chemical Company, Momentive and
Arclin) accounting for an estimated
47.2% of total industry revenue in 2016.
The rest of the industry is composed of
small- to medium-size manufacturers.
The plastics industry in Canada is highly
competitive when considering the fact

that the bulk of demand for their
products is from outside nations, such
as the United States. Small- to mediumsize manufacturers have developed
strategies of supplying niche products to
compensate for their lack of economies
of scale. Smaller companies are
effectively competing by producing
specialty resins that larger
manufacturers often neglect.
Steady supply of key inputs

Access to a consistent supply of
competitively priced raw material
inputs, including petrochemical
feedstock, is essential to remaining
competitive in this industry.
Undertaking technical
research and development
Industry operators regularly conduct
technical research and development to
improve production processes and
product quality. Improvements upon
these areas may translate into increased
market share.
Concentration on core business

For optimum efficiency and
competitiveness, firms should divest
low-profit or smaller plants and instead
concentrate on their core product(s).
Upstream vertical integration
Plastic and resin manufacturers that control
feedstock, raw materials, distribution and
other operations can control costs more
effectively and are more likely to outperform
manufacturers that are not integrated.
Cost Structure
Benchmarks
Revenue, costs and profit margins are

cost structure benchmarks that vary from
one manufacturing company to the next.
These numbers are affected by certain
factors such as location, company size,
key clients and the financial health of a
companys downstream customers.
Highlighted below are the average costs
for all industry establishments.
Profit
Profit, measured as earnings before
interest and taxes, for establishments in
Effect quality control

Industry suppliers should aim to
manufacturer products of consistent
quality in order to maintain good
relations with customers.
Economies of scale
Low-cost manufacturing facilities
operating on a large scale is essential in
this intensely competitive industry.
this industry are expected to account for

13.2% of total revenue in 2016. This profit
margin is higher on average than most
manufacturing firms in Canada due to
the raw material advantages enjoyed in
provinces, such as Alberta. Over the five
years to 2016, the average profit margin
has increased, up from 11.7%% in 2011,
due to a booming Canadian housing
market, which has increased demand for
industry products. Industry operators
also cut operating expenses during this
period. IBISWorld expects average profit
WWW.IBISWORLD.CA
21
margins for the industry to remain

relatively stable over the next five years,
however, a slight increase may occur as
exports garner a larger share of revenue
due to a weakening Canadian dollar
going forward.
Purchases
In 2016, purchasing costs, which include
the cost of inputs and raw materials,
represented the largest expense category
for the Plastic and Resin manufacturing
industry. At an estimated 63.7% of total
revenue, material costs were much higher
during 2011 and 2012 due to an increase
in the price of petroleum and natural gas.
Petroleum is derived from crude oil and
is a main input into the creation of plastic
resins such as propylene, ethylene, vinyl
and polystyrene. The world price of crude
oil and natural gas has been highly
volatile, and followed a general upward
trend until late 2014. Since then, oil
prices have plummeted, lowering both

purchase costs and revenue for industry
participants. Rapid increases in input
prices negatively affect industry revenue
in times of low demand, because it is
difficult for the average operator to pass
down cost increases to their customers in
the form of higher prices. The price of
plastic material and resins will be highly
correlated to the price of crude oil, so
companies operating in the industry
should be prepared for oscillating input
prices. In the five years to 2021, the price
of crude oil is expected to decline,
effectively reducing purchase costs for
industry operators.
Wages
Wage and labour costs as a share of
revenue for the Plastic and Resin
Manufacturing industry are significantly
lower than the Canadian average, and
this is because most of the processes
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2016)
100
80
Percentage of revenue
Cost Structure
Benchmarks
continued
8.2
12.3
Industry Costs
(2016)
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
13.2
5.1
60
59.0
63.7
2.5
3.6 1.5
12.9
1.9
6.1
9.5
40
20
0.5
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
22
Cost Structure
Benchmarks
continued
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Mediumand the
trend is I ncreasing
involved in the creation of plastic are

automated. Most of the workers in this
industry are engineers and highly skilled
machine operators who mostly oversee
the production runs. Although wages as a
share of revenue are lower than average,
average salaries for industry employees
are significantly greater than the average
manufacturing employee. The average
salary for employees in this industry is
about $81,068. Wage costs account for a
relatively stable percentage of revenue,
and are expected to account for about
5.1% in 2016.
2016. Rent and utilities are higher than

the Canadian average due to the size of
the manufacturing facilities required and
the number of machines that use energy
to melt and form plastics. Depreciation
costs are expected to account for 1.9% of
revenue in 2016.
Rent and depreciation

Rent and utilities are estimated to
account for 6.1% of industry revenue in
Other costs
Marketing and advertising costs are
expected to amount to 0.5% of industry
revenue and are a relatively small
expense for firms. Other costs, which
include freight and insurance premiums,
administrative costs, research and
development investments and licensing
and legal fees, are estimated to account
for 9.4% of industry revenue in 2016.
There are a number of internal and

external factors that companies in this
industry compete on. The largest
manufacturers of plastic and plastic
resins have huge economies of scale,
producing large amounts of resins at very
low costs due to the sheer size of their
operations. These companies are able to
capture large shares of the market due to
their low price and effective distribution
of their finished products. With that said,
the average company in the Plastic and
Resin Manufacturing industry primarily
competes on the basis of price, product
quality and timely delivery. These factors
also determine the next stage of
competition as companies also compete
with each other for large supply contracts
in downstream markets. The better the
company is positioned in terms of
prices, product quality and shipping
time tables, the better chance they have
at winning these contracts. Contracts are
a significant source of revenue for
industry operators.
The top operator in this competitive
space has large economies of scale,
meaning they can charge lower prices
due to lower operating costs. Most of the

resins produced by this industry are
similar because resins have standardized
densities and melt mass flow rates. Other
standards, such as filler content,
viscosity, bond strength and thermal
compatibility, as outlined by the
American Society for Testing and
Materials, are taken into consideration by
customers; however, the price proves to
be the most important. Firms that can
adequately control their production costs
will be in a better position to offer better
prices to customers. Smaller companies
that cannot compete on the basis of price
look to carve out a niche market by
offering specialty compounds.
The industry also competes indirectly
with substitute goods such as metal and
wood, however, it seems as if plastic
manufacturers are winning the battle.
For example, an increasing number of
manufacturers are replacing steel and
aluminum with plastic parts. More
specifically, automobile manufacturers
are seeking to reduce as much metal as
possible and instead use plastic
components that make their cars lighter
WWW.IBISWORLD.CA
23
Basis of Competition
continued
and more fuel efficient. Overall,

competition is intensifying as the top
players consolidate and acquire smaller
Barriers to Entry
While no regulation exists barring new

operators from the industry, the financial
costs associated with starting a plastic
resin production facility are very high.
Therefore, the barriers to entry into the
Plastic and Resin Manufacturing industry
are very high. As with most
manufacturing industries, the initial
capital investment necessary to start a
company is a powerful barrier to entry.
The average size of production facilities
in this industry is very large and the
need to build a plant of similar size has
discouraged competitors from entering
the industry. New entrants will need to
purchase machinery for manufacturing
plastic resin, which easily runs into the
millions of dollars to procure. In
addition to these capital expenses, new
operators will need to hire engineers
and other skilled employees who have
intimate knowledge about how their
machinery operates and can identify
and fix any problems that arise with
that equipment. Established companies
in this industry also rely on strategic
manufacturing processes, patents,
trademarks and other technicalities
Level & Trend

arriers to Entry
B
in this industry
are H
ighand
Increasing
Industry
Globalization
Level & Trend
lobalization
G
in
this industry is
Highand the trend
is I ncreasing

industry in Canada has a very high level
of globalization, evidenced by the
industrys high trade figures. Exports
have increased annually by an average of
3.7% in the five years to 2016, driven by
an improving global economy. As a result
of strong export growth, exports are
expected to account for 95.8% of revenue,
up from 76.9% in 2011. Similarly, imports
have increased substantially as a result of
a strong Canadian dollar. A stronger
companies. These companies are growing

larger by the year, reinforcing their
dominance over the competitive landscape.
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Medium
Low
Mature
High
Medium
Medium
Low
SOURCE: IBISWORLD
that safeguard them from newcomer

competition. Plastic resin
manufacturing is very capital intensive,
especially in its early stages. New
operators will have to operate on thin
or negative margins for a while until
they understand the business, forge
supplier and customer relations and
gain experience. Establishing a strong
relationship with retailers, wholesalers
and other distribution networks is a
great barrier for new manufacturers, as
building these connections takes time.
In order to effectively compete, new
entrants should be prepared to
overcome these challenges.
dollar makes foreign goods relatively

cheaper on the domestic market. This has
only accelerated the number of imported
plastic crossing the border into Canada.
Over the five years to 2016, imports have
climbed at an annualized rate of 2.5%,
however, the dollar has weakened since
2014, adversely affecting industry
imports but aiding domestic producers.
The majority of larger firms operating
in Canada are owned by US and
European multinational firms that
WWW.IBISWORLD.CA
24
Exports offer growth

opportunities for firms.
However there are legal,
economic and political risks
associated with dealing in
foreign countries.
Import competition can
bring a greater risk for
companies as foreign
producers satisfy domestic
demand that local firms
would otherwise supply.
Trade Globalisation
200
Going Global: Plastic & Resin Manufacturing

2004-2016
Global
Export
150
100
Plastic & Resin

Manufacturing
50
0 Local
0
interest in MEGA S.A., an Argentinian

company that provides natural gas and
other feedstock to Dows petrochemical
plant in Argentina. Other Dow ownership
interests include a 42.5% stake in The
Kuwait Olefins Company K.S.C., a
Kuwait-based manufacturer of ethylene
and a 50.0% ownership in MEGlobal, a
Dubai-based manufacturer of
polyethylene and other resins.
Import
40
80
120
Imports/Domestic Demand
200 Export
Exports/Revenue
International trade is a
major determinant of
an industrys level of
globalisation.
operate subsidiaries or joint-venture

operations throughout the world. One of
the largest companies in this industry is
the Dow Chemical Company. The Dow
Chemical Company is an American
multinational company that has a
significant presence not only in Canada
but in over 160 countries. Dow Chemical
maintains ownership interests in several
foreign affiliates, including a 28.0%
Exports/Revenue
Industry
Globalization
continued
160
Global
150
100
50
0 Local
0
2016
2004
Import
40
80
120
160
Imports/Domestic Demand
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Major Companies
NOVA Chemicals Corporation | Other Companies
Major players
(Market share)
62.0%
Other
NOVA Chemicals Corporation 38.0%
Player Performance
NOVA Chemicals
Corporation
Market share: 38.0%
Industry Brand Names
ARCEL
SOURCE: IBISWORLD
NOVA Chemicals Corporation is a

multinational plastics and chemical
company that has a significant industry
presence in Canada. NOVA Chemicals is
the successor to the NOVA Corporation
of Alberta, which was incorporated in
1954. In 1994, the NOVA Corporation of
Alberta completely reorganized its
business structure, during which it
became a wholly owned subsidiary of
NOVA Corporation. At the same time,
NOVA Corporation also became the
parent corporation of NOVA Chemicals.
The company went on to merge with
TransCanada Pipelines Limited under the
TransCanada Agreement in 1998,
changing its name once again to the
NOVA Chemicals Corporation. On July 6,
2009, the NOVA Chemicals Corporation
was acquired by IPIC, and traded on the
New York and Toronto stock exchanges.
The company, however, is no longer
publicly traded, but is headquartered in

Calgary, AB, employing more than 2,500
workers across North America.
The NOVA Chemicals Corporation is
most notably known for developing linear
low-density and high-density
polyethylene at its St. Clair River site
using its SCLAIRTECH techniques.
SCLAIRTECH was originally developed
by DuPont and sold to NOVA in 1994.
Millions of dollars went into researching
and expanding SCLAIRTECHs
technology and the end result of their
investment was Advanced SCLAIRTECH
technology introduced in 1996. The
company claims the technology allows for
faster processing times of a vast array of
polymers. NOVA Chemicals Corporation
manufactures polyethylene of various
densities using Advanced SCLAIRTECH
technology and also licences the
technology to other corporations.
NOVA Chemicals Corporation (industry-specific revenue) - financial

performance*
Year
Revenue
($ million)
(% change)
Operating profit
($ million)
2011
3,450.7
N/C
655.8
N/C
2012
3,378.3
-2.1
562.7
-14.2
2013
3,601.6
6.6
617.6
9.8
2014
3,771.0
4.7
880.1
42.5
2015
3,137.0
-16.8
774.1
-12.0
2016
3,211.9
2.4
647.7
-16.3
*Estimates
(% change)
SOURCE: ANNUAL REPORT
WWW.IBISWORLD.CA
Major Companies
Player Performance
continued
NOVA Chemicals Corporation operates

under two business units, Olefins/Polyolefins
and Performance Styrenics, both of which are
included in this industry. The Olefins/
Polyolefins business unit produces and sells
ethylene, polyethylene and higher-value
polyethylene manufactured using their
Advanced SCLAIRTECH technology. The
Performance Styrenics unit manufactures
expandable polystyrene and foams.
Financial Performance
During the five years to 2016,
IBISWorld estimates that NOVAs
revenue from its Canadian operations
will decrease at an average annual rate
of 1.4% to reach $3.2 billion. Revenue
growth stopped in 2015 as the prices of
crude oil and natural gas plummeted,
lowering the sales price of finished
plastics and resins.
Other Companies
Dow Chemical Co.
IBISWorld estimates that the company

will generate $348.2 million in industryspecific revenue, giving the company a
market share of 4.1%.
Estimated Market Share: 4.1%

The Dow Chemical Co. is one of the
largest chemical companies in the world,
with $48.8 billion in revenue over 2015.
Based in Midland, MI, Dow produces
more than 6,000 products in 201
manufacturing facilities across 36
countries. The company employs about
53,000 people worldwide, with roughly
50.0% of workers located in North
America. From plastic materials to other
products in sectors such as electronics,
agriculture and energy, Dow is a highly
diversified company.
Dow manufacturers a range of
thermoplastics and thermosetting
plastics used in building and
construction, consumer goods,
electronics, packaging and transportation
applications. Dow restructured all of its
plastic businesses into one segment:
performance plastics. This new division
specifically focuses on innovative,
high-growth products. In late 2015, Dow
announced plans to merge operations
with DuPont. If completed, the new
company would represent one of the
largest enterprises in the world. The
companys industry-specific revenue is
derived from its Fort Saskatchewan and
Joffre (joint venture with NOVA
Corporation) facilities located in Alberta,
which manufacture products in the
performance plastics division. In 2016,
Hexion Inc.

Hexion is a multinational chemical
company based in Columbus, OH in the
United States. The company operated as
Momentive Specialty Chemicals until
early 2015. Hexion claims to be the
largest producer of thermosetting resins
while being a global leader in the
production of adhesive and structural
resins. Momentive products are used in
more than 1,000 applications, such as
forest products, consumer and industrial
products and automotive coatings. The
company generated roughly $5.6 billion
in revenue in 2014. In 2016, the company
is expected to generate $215.0 million
from its Canadian operations.
Arclin Canada Limited

Based in Mississauga, Ontario, Arclin is a
chemical company that manufacturers
adhesive resins and overlay products
used in the construction, industrial and
automotive industries. Formerly known
as Dynea Canada Limited, the company
changed its name to Arclin Canada
Limited in 2007. Arclin employs more
than 500 workers in 15 manufacturing
WWW.IBISWORLD.CA
Major Companies
Other Companies
continued
facilities across the United States, Canada

and Mexico. Four of their manufacturing
plants are located in Ontario, British
Columbia and Quebec and revenue
generated by these locations is directly
related to this industry. IBISWorld

estimates that Arclin Canada Limited will
generate roughly $209.2 million in
industry-related revenue in 2016, giving
the company a market share of 2.5%.
WWW.IBISWORLD.CA
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is H
igh

industry exhibits a moderate-to-high level
of capital intensity. In 2016, the average
industry operator is expected to allocate
$0.37 toward capital expenditures for
every $1.00 spent on labour. Capital
investments consist of new plants and
equipment used to manufacture plastic
and resins. The typical processes plastic
may undergo during the manufacturing
process include extrusion, molding,
thermoforming, coating and recycling.
The more processes required in
manufacturing, the higher the
investment and replacement costs for
industry equipment. Manufacturers are
able to lower costs of production by
making one time or periodic investments
in equipment.
Capital intensity
Capital units per labour unit

1.0
0.8
0.6
0.4
0.2
0.0
Economy
Manufacturing Plastic & Resin

In Canada
Manufacturing
Dotted line shows a high level of capital intensity

SOURCE: IBISWORLD
The plastic and resin industry is very

capital and technology intensive,
resulting in a high level of output per
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labour skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Adhesive Manufacturing
Traditional Service Economy

Wholesale and Retail. Reliant
on labour rather than capital
to sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Chemical Product Manufacturing

Electric Power Transmission
Plastic Pipe & Parts Manufacturing
Plastic Bottle Manufacturing Old Economy
Plastic & Resin Manufacturing
Change in Share of the Economy
Capital Intensive
Labour Intensive
New Age Economy
Agriculture and Manufacturing.

Traded goods can be produced
using cheap labour abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Capital Intensity
continued
employee. Capital intensity is forecast to

increase over the next five years as firms
hope advances in technology will cut
Technology & Systems The Plastic and Resin Manufacturing

Level
The level
of
Technology Change
is M
edium
Revenue Volatility
Level
The level
of
Volatility is M
edium
labour costs, helping industry

establishments to remain competitive
with foreign competitors.
industry exhibits a medium level of

technology change. High volume resins,
such as polypropylene and polyethylene,
which together account for more than
half of all plastics manufactured in the
industry, are manufactured in largescale, highly capital-intensive facilities
that are often integrated with oil
refineries, and which generally operate
on a continuous basis. As such, most
technological development is aimed
toward increasing the efficiency of the
production process within these
complexes and increasing the
manufacturing assets of the firm.
Metallocene-catalyzed resins have
opened up many new products, each with
unique performance characteristics. In
the polyethylene realm, new advances
have been made to make the plastic
tougher while giving it incredible shrink
characteristics, heat-sealing properties
and clarity (less opacity) through
metallocene technology. According to the
ExxonMobil Chemical Company,
metallocene polyethylene can be
processed at high output rates with low
extrusion pressures when compared with
conventional LDPE.
Canada saw the first commercialization

of Advanced SCLAIRTECH technology.
The Advanced SCLAIRTECH process is
the result of SCLAIRTECH, first
developed by DuPont. NOVA Chemicals,
a Canadian company, bought the
technology from DuPont in 1994 for
$45.0 million and aimed to increase its
efficiency by hiring a team of scientists to
expand its capabilities. The Advanced
SCLAIRTECH process culminated from
this investment. The Advanced
SCLAIRTECH process is a complicated
process that improves upon plastic
properties, ranging from more efficient
processability, decreased glare and
increased strength and tear resistance.
Representing a very minute segment of
the industry is bioplastics, a type of
plastic derived from vegetable fats or oils.
Some manufacturing plants have been
exploring the use of bioplastics, however,
this type of plastic is significantly more
expensive to produce than petroleumbased plastic. The high costs associated
with bioplastics have slowed research
and development investments, as many
plastic and resin manufacturers opt to
focus their attention on more affordable,
petroleum-based products.

industry has exhibited a moderate
level of revenue volatility over the past
five years. Just prior to the period, the
economic struggles of the United
States and Canada caused revenue to
drop drastically. However, after
rebounding through 2011, falling
exports in 2012 caused revenue to drop

1.5% for the year, and the sharp
decline in the price of crude oil
constrained revenue over 2015. In the
next five years, revenue volatility is
expected to decrease at the prices of
key petroleum- and natural gas-based
feedstocks stabilize.
WWW.IBISWORLD.CA
A higher level of revenue

volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Volatility vs Growth
1000
Revenue volatility* (%)
Revenue Volatility
continued
Hazardous
Rollercoaster
100
10
Plastic & Resin

Manufacturing
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
SOURCE: IBISWORLD
Regulation & Policy

Level & Trend
he level of
T
Regulation is
Mediumand the
trend is I ncreasing
Manufacturers are regulated for the use,

storage, discharge and disposal of
hazardous chemicals during
manufacturing, research and
development. The Canadian
Environmental Assessment Agency
(CEAA) states that companies must
comply with federal, provincial and local
provisions regulating the discharge of
materials into the environment,
remediation agreements and other
actions relating to the environment.
Failure to comply with applicable
regulations could subject firms to
liability for cleanup efforts, personal
injuries, fines, or suspension or
cessation of a business. Manufacturers
in the chemical industry also
voluntarily follow guidelines addressed
by Responsible Care, an initiative set
forth by the Chemistry Industry
Association of Canada.
A great deal of plastic and resin is used
to produce films and bags that are used
for packaging purposes. The National
Packaging Protocol is a plan by the CEAA
to reduce the amount of packaging
material going to landfills by 50.0% by
the year 2000. Canada made good on this
promise, however, continues to develop

practices for minimizing the amount of
packaging and other materials destined
for the landfill. Polyvinyl chloride, a type
of plastic most used in the production of
PVC pipes, has also come under strict
scrutiny by environmental groups such as
Greenpeace. More specifically,
tetrabutyltin, a substance used in the
processing of PVC, is under regulation.
Ecological assessment reports published
by Canada revealed that tetrabutyltin is
entering the environment in quantities or
concentrations that may have immediate
and long-term, harmful effects on the
environment. The Canadian
Environment Protection Act (CEPA) of
1999, further revised on November 5,
2011 under the Code of Practice for the
Management of Tetrabutyltin in
Canada, regulates the release of
tetrabutyltin by implementing strict
management procedures for the
import, distribution, manufacture and
use of the substance. Operators who
manufacture PVC resins should
familiarize themselves with the code.
Environmentalists have increasingly
made their presence felt in this industry
WWW.IBISWORLD.CA
Regulation & Policy

continued
and the increasing amount of recycling

legislation has negatively affected their
operations. The higher costs associated
with these environmental regulations are
one of the reasons that companies are now

looking to partner with or manufacture in
countries with fewer environmental
regulations, such as China.
Industry Assistance
There are numerous tariffs levied on

products made by the industrys various
manufacturers. Depending on the
product, the country-of-origin tariffs
range from none to 40.0%. Low rates
apply to countries with normal trade
relations (NTR), whereas high rates apply
to non-NTR countries (Cuba, Iran and
Iraq). The United States claims 81.1% of
resin exported by Canada and 85.8% of

imports are from the United States.
Significant trade occurs between the two
countries and tariffs of plastic resins traded
between the two were completely eliminated
under NAFTA. As a result, tariffs do not
significantly influence demand or revenue,
but some independent organizations have
formed to assist their relevant segments.
Level & Trend

he level of
T
Industry Assistance
is L owand the
trend is S
teady
WWW.IBISWORLD.CA
32
Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
($m)
11,642.7
11,658.3
7,299.4
8,102.2
8,782.6
8,653.9
8,879.9
8,729.9
8,387.7
8,445.3
8,650.6
8,786.9
8,938.4
9,103.2
9,248.9
Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
(%)
0.1
-37.4
11.0
8.4
-1.5
2.6
-1.7
-3.9
0.7
2.4
1.6
1.7
1.8
1.6
Industry
Value Added Establish($m)
ments
1,045.7
164
1,176.7
162
1,250.3
144
1,666.3
139
1,607.0
141
1,671.9
144
1,746.6
133
1,742.9
127
1,684.4
121
1,713.5
121
1,717.9
123
1,723.0
123
1,736.4
125
1,760.3
126
1,788.7
128
Enterprises Employment
163
6,298
162
6,515
141
5,038
135
5,611
129
5,439
122
5,399
123
5,489
122
5,455
120
5,305
120
5,352
121
5,435
122
5,515
123
5,579
124
5,675
125
5,742
Exports
($m)
7,826
7,759.4
5,324.9
5,980.6
6,756.1
6,504.1
7,190.0
7,958.9
8,198.4
8,087.9
8,306.9
8,291.6
8,328.1
8,354.0
8,412.0
Imports
($m)
7,069.2
7,073.1
5,619.0
6,619.3
7,110.5
7,154.7
7,170.4
7,982.0
8,178.9
8,060.2
8,165.5
8,145.4
8,064.8
8,044.4
8,060.9
Wages
($m)
524.1
543.2
439.9
446.6
427.2
440.1
449.5
444.9
430.0
433.9
442.4
449.7
456.2
465.0
471.6
Domestic
Demand
10,885.9
10,972.0
7,593.5
8,740.9
9,137.0
9,304.5
8,860.3
8,753.0
8,368.2
8,417.6
8,509.2
8,640.7
8,675.1
8,793.6
8,897.8
Industry
EstablishValue Added
ments
(%)
(%)
12.5
-1.2
6.3
-11.1
33.3
-3.5
-3.6
1.4
4.0
2.1
4.5
-7.6
-0.2
-4.5
-3.4
-4.7
1.7
0.0
0.3
1.7
0.3
0.0
0.8
1.6
1.4
0.8
1.6
1.6
Enterprises Employment
(%)
(%)
-0.6
3.4
-13.0
-22.7
-4.3
11.4
-4.4
-3.1
-5.4
-0.7
0.8
1.7
-0.8
-0.6
-1.6
-2.7
0.0
0.9
0.8
1.6
0.8
1.5
0.8
1.2
0.8
1.7
0.8
1.2
Exports
(%)
-0.9
-31.4
12.3
13.0
-3.7
10.5
10.7
3.0
-1.3
2.7
-0.2
0.4
0.3
0.7
Imports
(%)
0.1
-20.6
17.8
7.4
0.6
0.2
11.3
2.5
-1.5
1.3
-0.2
-1.0
-0.3
0.2
Wages
(%)
3.6
-19.0
1.5
-4.3
3.0
2.1
-1.0
-3.3
0.9
2.0
1.7
1.4
1.9
1.4
Domestic Price of plastic

Demand materials & resin
(%)
(%)
0.8
9.7
-30.8
-11.3
15.1
10.1
4.5
9.4
1.8
2.3
-4.8
4.3
-1.2
4.8
-4.4
-9.2
0.6
1.2
1.1
3.8
1.5
3.1
0.4
1.7
1.4
1.2
1.2
1.2
Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
IVA/Revenue
(%)
8.98
10.09
17.13
20.57
18.30
19.32
19.67
19.96
20.08
20.29
19.86
19.61
19.43
19.34
19.34
Figures are in inflation-adjusted 2016 dollars.
Imports/
Demand
(%)
64.94
64.47
74.00
75.73
77.82
76.90
80.93
91.19
97.74
95.75
95.96
94.27
92.96
91.48
90.59
Exports/
Revenue
(%)
67.22
66.56
72.95
73.81
76.93
75.16
80.97
91.17
97.74
95.77
96.03
94.36
93.17
91.77
90.95
Revenue per
Employee
($000)
1,848.63
1,789.46
1,448.87
1,443.99
1,614.75
1,602.87
1,617.76
1,600.35
1,581.09
1,577.97
1,591.65
1,593.27
1,602.15
1,604.09
1,610.75
Wages/Revenue
(%)
4.50
4.66
6.03
5.51
4.86
5.09
5.06
5.10
5.13
5.14
5.11
5.12
5.10
5.11
5.10
Employees
per Est.
38.40
40.22
34.99
40.37
38.57
37.49
41.27
42.95
43.84
44.23
44.19
44.84
44.63
45.04
44.86
Average Wage
($)
83,216.89
83,376.82
87,316.40
79,593.66
78,543.85
81,515.10
81,891.05
81,558.20
81,055.61
81,072.50
81,398.34
81,541.25
81,770.93
81,938.33
82,131.66
Price of plastic
materials & resin
195.9
215.0
190.8
210.1
229.9
235.2
245.3
257.0
233.3
236.0
244.9
252.4
256.6
259.7
262.8
Share of the
Economy
(%)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Jargon & Glossary
Industry Jargon
EXTRUSIONA process in which material is forced

through a series of dies (similar to wire drawing) in order
to form it into its desired shape.
INJECTION MOLDINGA manufacturing process for
forming objects, as of plastic or metal, by heating the
molding material to a fluid state and injecting it into a
mold.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that

new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labour; medium is $0.125 to $0.333 of capital to
$1 of labour; low is less than $0.125 of capital for every
$1 of labour.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using
Statistics Canadas implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within Canada, regardless of their country of
origin. It is derived by adding imports to industry
revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
ESTABLISHMENT The smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by Canadian companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in Canada.
METALLOCENE TECHNOLOGYMetallocene is a type of

catalyst used for producing polyethylene resins that
offer better plastic properties over resins produced with
conventional Ziegler-Natta or Philips catalysts.
TETRABUTYLTINA chemical additive used to stabilize
polyvinyl chloride resins.
INDUSTRY CONCENTRATIONAn indicator of the

dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED The market value of goods
and services produced by the industry minus the cost of
goods and services used in production. IVA is also
described as the industrys contribution to GDP, or profit
plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%; medium is 5% to 20%; and high is more
than 20%. Imports/domestic demand: low is less than
5%; medium is 5% to 35%; and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
WWW.IBISWORLD.CA
Jargon & Glossary
IBISWorld Glossary
continued
PROFITIBISWorld uses earnings before interest and tax

(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding interest
and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
WAGESThe gross total wages and salaries of all

employees in the industry. Benefits and on-costs are
included in this figure.
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Plastic & Resin Manufacturing in CanadaMarch 2016 1

Breaking the mold: Rising input costs will

IBISWorld Industry Report 32521CA

Plastic & Resin

2 About this Industry

20 Market Share Concentration

20 Key Success Factors

33 Jargon & Glossary

20 Cost Structure Benchmarks

Key External Drivers

25 NOVA Chemicals Corporation

10 Industry Life Cycle

29 Technology & Systems

12 Products & Services

30 Regulation & Policy

www.ibisworld.ca | 1-800-330-3772 | info @ibisworld.ca

Plastic & Resin Manufacturing in CanadaMarch 2016 2

About this Industry

This industry manufactures resins, plastic

The primary activities of this industry are

and synthetic rubber. Raw material inputs

Thermoset resin manufacturing

The major products and services in this industry are

32552CA Adhesive Manufacturing in Canada

For additional information on this industry

Plastic & Resin Manufacturing in Canada March 2016

Annual Growth 11-16

Annual Growth 16-21

Demand from manufacturing

Revenue vs. employment growth

Products and services segmentation (2016)

Key External Drivers

World price of crude oil

Polyethylene resins and plastic materials

Life Cycle Stage

Plastic & Resin Manufacturing in CanadaMarch 2016 4

Executive Summary | Key External Drivers | Current Performance

The Plastic and Resin Manufacturing

for operators, downstream users of

Key External Drivers

Demand from manufacturing

in 2016. As a result, the industry is highly

manufacturing is expected to increase

Plastic & Resin Manufacturing in CanadaMarch 2016 5

appreciation of the Canadian dollar makes

World price of crude oil

Demand from manufacturing

Key External Drivers

Plastic & Resin Manufacturing in CanadaMarch 2016 6

The Plastic and Resin Manufacturing

since, benefiting industry operators.

Plastics are an integral part of society, as

Automobile manufactures, for example,

Plastic & Resin Manufacturing in CanadaMarch 2016 7

into large-scale investments.

This industry is characterized by a high

health of the global economy is extremely

Industry profitability has increased

operators to increase prices, benefiting

infrastructure. The construction

Plastic & Resin Manufacturing in CanadaMarch 2016 8

The Plastic and Resin manufacturing

Over the next five years, downstream users,

like natural gas will likely rise over the next

32521CA Plastic & Resin Manufacturing in Canada Industry Report

32521CA Plastic & Resin Manufacturing in Canada Industry Report