Supply Chain and Industry Linkages

Figure 1. Backward and Forward Linkages of the Plastics Industry

Plastic Industry Manufacturing Stages

The Philippine plastics industry can be categorized according to the following manufacturing stages:

  • Upstream manufactures the basic raw materials called monomers from naphtha which is an oil refinery by-product.
  • Midstream produces the plastic resins or polymers from monomers represented by the Association of Petrochemical Manufacturers of the Philippines (APMP). However, developments took over with the production capacities of the midstream industries. The NPC Alliance Corporation (formerly Bataan Polyethylene) produces 275,000 MTPY of Polyethylene (PE), the Petron Corporation (formerly Philippine Polypropylene Inc.) utilizing its Fluidized Bed Catalytic Converter boosted its Polypropylene (PP) production capacity to 160,000 MTPY, and JG Summit Petrochemical Corporation with its Naphtha Cracker Plant Project is set to increase its production of PE to 380,000 MTPY and PP to 190,000 MTPY. The supply of Polyvinyl Chloride (PVC) from the Philippine Resins Industries Inc. (PRII) at the current capacity is 160,000 MTPY and Polystyrene (PS) by Chemrez Technologies at 30,000 MTPY would likewise remain stable. The Polyethylene Terephthalate (PET) supply would continue to be imported.
  • Downstream represents the local plastic fabricators and converters who use the plastic resins to manufacture packaging, industrial and consumers’ plastic products. There are only a few large downstream facilities. Majority are small and medium scale enterprises with varying and wide degrees of equipment sophistication. The industry is categorized into subsectors based on their finished products such as: Flexible plastics, Net, twine and sack, Pipes and fittings, Plastic bags, PVC products, Recycled plastics, Rigid plastics, Styro products, Tapes and Others. Based on industry survey, there are more than 1,000 plastic fabricators and converters nationwide. The labor force in the industry is estimated at 600,000 direct and indirect workers as production of plastic products have to go through many labor-intensive stages. These include the preparation of the plastic resins i.e. mixing with additives/colorants or compounding before extruding, molding, forming or laminating the plastic products, and additional workers or cutting, printing, labeling, packing and warehousing stages. The raw materials consumed by the downstream plastic industry are mostly imported as local midstream petrochemical companies still has to meet this requirement.

The industry lacks an upstream sector to provide the midstream with ethylene and propylene. The midstream which manufactures synthetic resins (polyvinyl chloride (PVC), polystyrene (PS), polypropylene (PP) and polyethylene (PE) for the downstream sector, had to import and are vulnerable to foreign exchange fluctuations and tariff rates. This part of the industry has not grown very large due to the insufficient supply of inputs from its upstream sector.

The current shape of the industry is central to the downstream industry. There are 1,600 companies in the downstream industry. Some of the companies, particularly the small ones, have encountered problems that force them to close and sell their business to larger plastic manufacturing companies.