Plastic pushes up Dow Chemical profits

The headquarters of Dow Chemical in Midland, Mich.

TEXT OF STORY

Tess Vigeland: Today the Federal Reserve decided to keep short-term interest rates right where they are at record levels. And it indicated they'll stay that way for "an extended period." That helped send stocks up. And so did more strong profit reports from corporate America. Dow Chemical says its net income surged almost 2,300 percent. The reason? Just one word: plastics.

Jill Barshay reports.


PLASTIC MAN: The world's newest and greatest superhero. Plastic Man. He can spring. He can stretch. He can bounce.

If you want to see signs the economy is bouncing back, look no farther than plastic.

George Van Horn is a manufacturing analyst at IBIS World Industry Research. He says Dow Chemical's earnings are like a broad economic indicator.

GEORGE Van Horn: Because plastics find their way into every nook and cranny, really, of the economy.

Dow Chemical says it's been getting more orders for the kind of plastic that goes into cell phones and electronics. And for plastic wrap.

Bill Wood is a plastics market economist at Mountain Top Economics and Research. He says plastic packaging always recovers first. That's because consumer patterns start to shift in the supermarket.

BILL Wood: You could buy a head of lettuce, or you could buy prepackaged salad. You could buy a block of cheese, or you could buy pre-grated cheese. But as the economy recovers, consumers tend to purchase more of the preprocessed, packaged stuff.

A surge in plastic wrap is also a sign that companies are restocking their warehouses. New pallets are covered with rolls of it.

In New York, I'm Jill Barshay for Marketplace.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...