Polystyrene Foam Manufacturing in The US Industry Report

Polystyrene Foam Manufacturing in the USDecember 2015 1
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Faltering foam: Increasing regulations and

minimal use of polystyrene will hurt the industry
IBISWorld Industry Report 32614
Polystyrene Foam
Manufacturing in the US
December 2015
Nick Petrillo
2 About this Industry
16 International Trade
Industry Definition
17 Business Locations
Main Activities
Similar Industries
19 Competitive Landscape
30 Industry Data
Additional Resources
19 Market Share Concentration
30 Annual Change
19 Key Success Factors
30 Key Ratios
3 Industry at a Glance
29 Industry Assistance
30 Key Statistics
19 Cost Structure Benchmarks

21 Basis of Competition
4 Industry Performance
21 Barriers to Entry
Executive Summary
22 Industry Globalization
Key External Drivers
Current Performance
23 Major Companies
Industry Outlook
23 Dart Container Corporation
10 Industry Life Cycle
24 Reynolds Group Holdings Ltd.
12 Products & Markets
26 Operating Conditions
12 Supply Chains
26 Capital Intensity
12 Products & Services
27 Technology & Systems
13 Demand Determinants
27 Revenue Volatility
15 Major Markets
28 Regulation & Policy
31 Jargon & Glossary
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About this Industry

Industry Definition
This industry produces a wide range of

polystyrene foam products including
expanded polystyrene (EPS) for food
containers and cups, foam ice chests and
Main Activities
The primary activities of this industry are
other packaging and insulation goods. The

industrys products are used by a wide range
of downstream industries in the construction,
manufacturing and hospitality sectors.
Expanded polystyrene foam product manufacturing

Expanded polystyrene food container manufacturing
Expanded polystyrene foam packaging manufacturing
Expanded polystyrene building insulation manufacturing
Expanded polystyrene insulation manufacturing
The major products and services in this industry are

Building and construction products
Consumer and institutional products
Packaging and storing products
Transportation products
Other
Similar Industries
32521 Plastic & Resin Manufacturing in the US

Companies in this industry manufacture resins, plastic materials (i.e. polymers) and synthetic rubber.
32611 Plastic Film, Sheet & Bag Manufacturing in the US
Companies in this industry convert plastic resins into plastic bags, films and sheets.
32612 Plastic Pipe & Parts Manufacturing in the US
Companies in this industry manufacture plastics pipes, pipe fittings and plastics profile shapes.
32615 Urethane Foam Manufacturing in the US
Companies in this industry manufacture plastic foam products (except polystyrene).
Additional Resources
For additional information on this industry

www.americanchemistry.com
American Chemistry Council
www.epsindustry.org
EPS Industry Alliance
www.icis.com
ICIS Chemicals
www.packaging-int.com
Packaging International
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Polystyrene Foam Manufacturing in the US December 2015
Industry at a Glance
Polystyrene Foam Manufacturing in 2015
Key Statistics
Snapshot
Revenue
Annual Growth 10-15
Annual Growth 15-20
Profit
Wages
Businesses
$9.2bn
0.8%
-3.4%
316
$411.9m $1.0bn
Consumer spending
Revenue vs. employment growth
Market Share
Dart Container
Corporation
14.4%
10
Reynolds Group
Holdings Ltd.
14.0%
% change
% change
-5
-10
-15
Year 07
09
11
Revenue
13
15
17
19
21
-2
Year
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 23
Products and services segmentation (2015)
8.4%
Consumer spending
4.1%
Other
Price of plastic
materials and resin
Demand from
construction
37.4%
Consumer and
institutional products
17.9%
Building and construction

products
World price of crude oil

Regulation for the
Polystyrene Foam
Manufacturing industry
p. 4
32.2%

SOURCE:
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SOURCE:
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Industry Structure
Life Cycle Stage
Regulation Level
Medium
Revenue Volatility
Medium
Mature
Technology Change
Medium
Capital Intensity
Medium
Barriers to Entry
Medium
Industry Assistance
Low
Industry Globalization
Low
Concentration Level
Low
Competition Level
High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
Polystyrene foam is used across a range

of products, including insulation, food
packaging containers and single-use
tableware, such as plates and cups. Over
the five years to 2015, revenue within the
Polystyrene Foam Manufacturing
industry is expected to increase at an
annualized rate of 0.8% to $9.2 billion.
While this growth is encouraging, much
of it is simply recovery from the
industrys recessionary lows. As
consumers held off on going out to eat
and limited their consumption of
manufactured goods, demand for
polystyrene foam from key buying
Polystyrene
foam product manufacturers have

endured rising raw material costs
industries, such as downstream
manufacturers, food service companies
and the construction sector, plummeted.
Furthermore, polystyrene foam product
manufacturers have volatile price
fluctuations for some of their most
essential material inputs and stricter
regulations regarding the use of
polystyrene-based plastic bags and
containers in grocery stores and
restaurants. According to Plastic News,
more than 70 municipalities in the United
States have adopted plastic bag bans, with
more expected to follow suit. To combat
rising costs and regulation, some
Consumer spending
Consumer spending influences demand
for packaging products, which are often
composed of polystyrene foam. As
consumer spending increases, spending
on products that are packaged in
polystyrene-based products, such as
personal computers and flat-screen
televisions, will rise. Consumer spending
is expected to increase during 2015,
operators have increased product prices,

while other companies have invested in
research and development to introduce
products that abide by new regulations.
The industrys largest companies
entered mergers and acquisitions that
reduced the number of operators over
the past five years, which will continue
to result in further company contraction
over the next five years. In the five years
to 2020, the number of polystyrene
foam manufacturers will decrease an
annualized 2.3% to 281 companies, with
many of which closing regional facilities.
With fewer companies, industry
employment is expected to contract at
an annualized rate of 3.0% over the
same period.
In 2015, revenue is expected to fall
5.8%, as downstream construction
industries experience gradual, albeit
very sluggish, growth. However, in the
wake of increasing regulation over the
manufacturing and use of polystyrene
materials, revenue will be threatened
over the five years to 2020. IBISWorld
projects the industry to decline at an
annualized rate of 3.4% to $7.7 billion
over the next five years. Steadily
increasing input costs and stabilizing
demand from construction industries,
when combined with tighter
regulations concerning the use of
polystyrene foam, will likely dampen
the industrys performance over the
next five years.
representing a potential opportunity for

the industry.
Price of plastic materials and resin
Prices of plastic resin and recycled plastic
feedstock, which are largely determined
by market forces, affect input costs and
the industrys competitiveness relative to
substitute products. As plastic resin
inputs become more expensive for
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industry manufacturers to purchase, this

price will be passed along to consumers
and ultimately reduce overall demand for
foam products. The price of plastic
materials and resin is expected to
decrease during 2015.
Demand from construction
The level of construction activity in the
United States affects demand for industry
products used as building materials. In
turn, this factor influences demand for
polystyrene foam-based insulation. The
construction industrys need for industry
foam products is expected to increase
during 2015.
World price of crude oil
Pellet material that is molded into
polystyrene products is derived from
crude coil. Crude oil is therefore a major
production input for industry
manufacturers, in that the cost of
manufacturing will increase as the price
of crude oil increases. Manufacturers
must either increase their prices or suffer

from lower profit margins when input
prices increase. However, the world price
of crude oil is expected to decline sharply
in 2015.
Regulation for the Polystyrene
Foam Manufacturing industry
This industry and its key buyers are
subject to changes in legislation and
public policy regarding the use and
disposal of polystyrene. Since
polystyrene takes an extremely long
time to decompose, some states and
cities have already enacted bans on its
use. Many US cities have banned the
use of polystyrene foam at restaurants
and grocery stores, which has
encouraged local businesses to create
various corn-based alternatives that
comply with municipal bans.
Regulation for the Polystyrene Foam
Manufacturing industry is expected to
increase in 2015, representing a
potential threat to the industry.
Price of plastic materials and resin
Consumer spending
6
280
260
Index
% change

continued
2
0
-2
Year
240
220
200
08
10
12
14
16
18
20
180
Year 06
08
10
12
14
16
18
20
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Volatile buying
markets
Over the five years to 2015, revenue for

the Polystyrene Foam Manufacturing
industry is expected to grow at a slow
average annual rate of 0.8% to $9.2
billion. Industry profit plummeted prior
to the five-year period as the recession
limited the buying power of the
industrys key construction and
manufacturing markets. In addition,
persistently high levels of
unemployment led to drops in consumer
spending, which caused consumers to
eat out less and spend less at the grocery
store. As a result, many of the industrys
restaurants and food and beverage
markets lowered their demand for
polystyrene foam-based packaging
products. The industry has also
weathered rising raw material costs and
stricter regulations concerning the use
of polystyrene-based plastic bags, even

as levels of consumer spending and
downstream construction industries
have gradually improved.
Polystyrenes light weight, low cost and

insulating properties have made it a
staple material for packaging and
insulation applications. Therefore, the
industry relies heavily on a few key
markets to drive its revenue: downstream
manufacturers, the construction sector,
food-service establishments and various
wholesale distributors. These markets
depend on consumer spending to drive
their growth.
Over the past five years, increasingly
vocal opposition to polystyrene materials
on behalf of both public figures and
consumers has posed a major challenge
for manufacturers. Even as levels of
consumer spending increase and housing
starts gradually improve, purchases of
polystyrene foam products may be on the
decline. IBISWorld anticipates industry
revenue to fall 5.8% over 2015, despite
aggregate construction activity and levels
of consumer spending anticipated to
increase over the year.
Polystyrene manufacturers heavily rely

on the health of the construction sector to
drive revenue. A key pillar of construction
activity and industry demand is housing
construction, as contractors demand large
amounts of polystyrene foam for the
insulation of walls, floors, roofs and
piping. The number of housing starts took
a nose dive following the subprime
mortgage collapse, and the number of
housing starts per year fell from 2.1
million in 2005 to just 554,000 in 2009.
As housing construction ground to a halt,
contractors and builders quickly
reduced their purchases of insulation and
other polystyrene-based construction
products. Although housing starts have
gradually recovered since 2010, the
existing stock of vacant homes and the
modest construction activity after the
recession have both limited the
industrys overall growth within the
residential construction sector over the
past five years.
Industry revenue
9
6
% change
Current
Performance
3
0
-3
-6
-9
Year 07
09
11
13
15
17
19
21
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Profit declines
Legislative changes
Polystyrene foam products are made

from plastic; therefore, the cost of
manufacturing is greatly affected by the
price of plastic input materials. Since
plastic is derived from petrochemical
feedstock, the price of crude oil plays a
large role in determining raw material
costs for the industry. Over the five years
to 2015, the world price of crude oil has
been very volatile. Likewise, the price of
plastic materials and resin is anticipated
to grow an annualized of 2.1% over the
five years to 2015. Unexpected
fluctuations in raw material costs can
prove very difficult for industry
manufacturing companies when
negotiating long-term supply contracts.
With many players unable to pass on all
the additional costs of increasing
materials to customers, profit margins for
the industry dropped, falling to just 3.8%
of revenue in 2010. In 2015, margins are
expected to total 4.5% of revenue, down
from the industrys peak of 5.2% in 2012.
To combat diminishing margins,
many industry manufacturers have
scaled back operations and employed

other cost-cutting measures. Over the
five years to 2015, the number of
establishments is expected to grow at a
minimal annualized rate of 0.1% to 459
locations. In addition, the total
number of employees declined by an
annualized 1.8% over the same period,
as operators have remained reluctant
to hire labor on any massive scale.
Industry employment is currently at
22,896 workers, a sharp decline from
25,047 in 2010. These cost-cutting
measures preserved margins during
the doldrums of the recession and
helped boost industry profit as
economic conditions and demand from
key buyers slowly improved.
In addition to changes in demand from

key buying industries, polystyrene foam
manufacturers have endured stricter
regulations regarding their products.
Over the past five years, concerns about
polystyrene and its effect on the
environment have risen because
polystyrene foam goods are often singleuse products that can take hundreds of
years to decompose.
Local municipalities across the
country have responded to this concern
by enacting plastic bag bans at grocery
stores and other food-service
establishments. Plastic News reported in
2012 that 54 cities and 12 counties had
adopted polystyrene-based plastic bag
bans, and Plastic News believes that
figure to have surpassed 70 cities by the

end of 2013. In December 2013, New
York City passed a bill that outlawed all
polystyrene cups and takeout containers,
although this ban was overruled by the
states Supreme Court in 2015.
Statewide bans are also being
considered, including in California,
which holds more industry
manufacturers than any other state.
Consequently, some companies have
experienced revenue declines as foodservice companies continue to switch to
products made of alternative materials.
As a result, IBISWorld estimates
revenue for the Polystyrene Foam
Manufacturing industry will show signs
of decline over the next five years.
The
cost of polystyrene
foam manufacturing is
greatly affected by the price
of plastic
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Industry
Outlook
Overall industry contraction may be on

the horizon for the Polystyrene Foam
Manufacturing industry. Minimal
expansion in residential and commercial
construction industries will likely slow
purchases of construction-brand
polystyrene, while increased regulation
over the sale and use of polystyrene will
pose an additional threat to industry
manufacturers. Over the five years to
2020, industry revenue is projected to
fall at an annualized rate of 3.4% to $7.7
billion. The industry is also expected to
experience employment reductions of an
annualized 3.0, with employment
projected to fall to 19,630 workers by
2020. In addition, the number of
establishments is forecast to decrease by
an annualized 2.4% during this period,
Polystyrene demand
weakens
The recovery of the housing market has

been very gradual; thus, demand for
polystyrene insulation is anticipated to
rise only modestly in the next five years.
The value of private nonresidential
construction is projected to increase at
an annualized rate of 3.0% in the five
years to 2020, representing a slower
pace than its annualized 5.2% growth
over the five years to 2015. This sliding
growth may hinder purchases of foam
insulation and other polystyrene-based
construction products from commercial
builders and contractors.
Demand from food-service
establishments is expected to gain
momentum over the next five years as
consumer spending increases and more
Americans eat out. Over the five years to
2020, revenue for the Chain Restaurants
industry (IBISWorld report 72211a) is
projected to grow at an annualized rate of

2.0%. This growth, although slight, may
help prompt restaurants to purchase
more polystyrene food containers for
their customers. Food retailers and
distributors will also stimulate industry
demand. As consumer spending rises and
people regain confidence in the economy,
food purchases will continue to increase.
With more food purchases, distributors
will demand more polystyrene foam,
particularly with respect to shipping
products across the country.
The price of plastic materials and resin is

projected to continue climbing over the
next five years at an annualized rate of
2.2%. Since polystyrene foam

manufacturers use plastic as their main
input, the costliness of manufacturing
Raw material costs
to reach 407. Further exacerbating the

industrys struggles is the price of plastic
materials and resin, the index price of
which is anticipated to climb at an
annualized rate of 2.2% over the next
five years.
In 2016, revenue is projected to slide
to $8.8 billion, as a result of opposing
forces such as strong growth in consumer
spending and increasing regulatory
burdens against the production and use
of polystyrene. Housing starts are also
anticipated to increase an annualized
5.1% over the five years to 2020, despite
increasing at an annualized rate of 14.0%
over the five years to 2015. Consequently,
these factors will contribute to the
industrys anticipated decline over the
next five years.
Demand
for polystyrene
insulation is anticipated to
rise only modestly in the
next five years
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Raw material costs

continued
polystyrene products can easily be

estimated by observing fluctuations in the
market price for plastic materials and resin.
Industry manufacturers, in turn, will likely
raise their final product prices to offset the
effects of these higher costs on profitability.
Due to higher prices, some key buying
markets, such as food-service
establishments, may consider purchasing
alternative packaging materials.
Nonetheless, as raw material costs rise,
many operators will be unable to change
their prices quickly or significantly enough
to offset all the material cost changes. To
preserve profit margins and help offset
higher raw material costs, companies have
Foam regulation
In addition to the threat of rising raw

material costs, the industry is
anticipated to face opposition from local
and state lawmakers in the next five
years. The number of cities and counties
enacting bans on polystyrene-based
plastic bags will likely increase due to
environmental concerns related to their
slow decomposition. Increased
legislation will place heavy pressure on
industry revenue by both restricting the
use of polystyrene products and
fostering a poor image for the industry
among consumers.
To combat this, operators will provide
more resources and facilities for
consolidated and turned to other costcutting measures in recent years. As

overall demand for polystyrene goods falls
and the overall cost of manufacturing
these products rises, companies are likely
to continue consolidating to preserve
profit margins. Other operators that lose
market share and cannot weather the
increased cost are expected to leave the
industry, driving down company numbers
further. During the five years to 2020, the
number of industry operators is expected
to decline at an annualized rate of 2.3% to
281 companies. Employment is expected
to fall as well, declining at an annualized
rate of 3.0% to 19,630 workers.
The
industry is anticipated
to face opposition from
local and state lawmakers
in the next five years
polystyrene foam recycling and boost
their investments into research and
development for more eco-friendly
products. For example, major company
Dart Container Corporation has created
foam-collection and recycling centers and
invented a machine that condenses
polystyrene for easier transportation.
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Life Cycle Stage
Technological change is not high in this industry

The number of industry manufacturers
is steadily declining
% Growth in share of economy
The industrys product lines are

established and unchanged
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
Plastic & Resin Manufacturing

Commercial Building Construction
Plastic Film, Sheet

& Bag Manufacturing
Chemical Product
Manufacturing

Beef & Pork Wholesaling
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
The Polystyrene Foam Manufacturing

industry is in the decline phase of its
life cycle. The existence of clearly
defined, segmented product groups and
user industries are indicative of the
industrys maturity. For example, major
companies Dart Container Corporation
and Reynolds Group Holdings are
influential players in the single-use
products segment. The key buying
markets are the construction sector,
downstream manufacturers, food
service establishments and food
retailers and distributors. Industry
value-added (IVA), which measures the
industrys contribution to the economy,
is expected to fall at an average annual
rate of 2.0% from 2010 to 2020. In
contrast, US GDP is expected to grow
an average of 2.2% per year during the
same period. This comparison indicates
that the industry is contracting over a
period in which US GDP is experiencing
stable expansion.
As a mature industry, technological

change has been slow compared with
other plastic-converting industries. Most
technological changes are introduced by
the suppliers of polystyrene
manufacturing machines and raw
materials, rather than industry operators.
Meanwhile, paper products have made
some inroads into some food packaging
segments. This has been partly due to
environmental concerns relating to the
disposal of plastic materials, and
problems with biodegradability.
The industry has been consolidating,
which is also consistent with most
declining industries. Over the past five
years, the number of industry
manufacturers has declined from 314 in
2010 to an estimated 281 in 2020,
representing an average annual decline of
1.1%. Consolidation is expected to
continue as more companies struggle
with rising input costs and seek to reduce
profit pressures by improving efficiency.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

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

23622a
Commercial Building Construction in the US

Construction companies frequently purchase building insulation products.
42447
Beef & Pork Wholesaling in the US

Produce and animal product wholesalers are major users of EPS packaging.
44-45
Retail Trade in the US

Various retail industries purchase polystyrene packaging and food and drink containers.
56191
Packaging & Labeling Services in the US

Packaging companies purchase large volumes of polystyrene foam products.
KEY SELLING INDUSTRIES
Products & Services
32521
Plastic & Resin Manufacturing in the US

Plastic manufacturers use plastic and resin inputs to manufacture polystyrene foam products.
32599
Chemical Product Manufacturing in the US

Chemical product manufacturers supply chemicals used in the production of polystyrene
products such as solvents and plasticizers.
Products and services segmentation (2015)
8.4%
4.1%
Other
37.4%
17.9%
Total $9.2bn
32.2%

make up the industrys largest product
segment and are forecast to account for
37.4% of industry revenue in 2015. This
segment includes polystyrene foam cups,
plates, bowls and cutlery for household
and commercial use. Frequent users of
polystyrene foam dishware are fast-food,
take-out and other quick-service
restaurants. Naturally, the rise in
unemployment and the downturn in
consumer spending during the recession

reduced the frequency in which
consumers ate out. This led to a slight
decline in demand for polystyrene
foam-based dishware.
The packaging and storing product
segment will be the industrys second
largest product segment in 2015,
accounting for 32.2% of industry
revenue. This segment includes
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Products & Markets
Products & Services

continued
polystyrene foam-based food containers,

protective shipping pads and other foam
packaging supplies, such as expanded
polystyrene (EPS) foam packaging. EPS
is a white material used to cushion,
insulate and protect goods during
distribution. This includes customshaped materials used to package
electronic equipment and appliances,
loose-fill (peanuts) packaging, blocks of
foam that protect the corners of furniture
and appliances and shipping containers
used to help preserve perishable foods
and medicines. With manufacturing
output taking a hit during the economic
downturn, this product segments share
of industry revenue fell; however, gains
in consumer spending since 2010 have
bolstered demand for manufactured
goods and the foam packaging products
used to ship them.
At an estimated 17.9% of total industry
revenue in 2015, building and
construction products make up the third
largest product segment for the
industry. The major product for this
segment is wall and pipe insulation;
polystyrene is lightweight, requires little
structural support, is quick to install and
requires little to no drying time. These
features make polystyrene an ideal
solution for construction and renovation
projects. The decline in residential and
commercial construction in the United
Demand
Determinants
Demand from food

wholesalers and retailers
Demand for the Polystyrene Foam
Manufacturing industry is primarily
dependent on demand from wholesalers
and retailers for packaging and
distributing fruits and vegetables,
beverages and other food products.
Polystyrene is a lightweight,
States over the past five years has caused

this product segments share of industry
revenue to decline.
This product segment accounts for an
estimated 8.4% of total industry revenue
in 2015 and is primarily composed of
foam and padding for seating, as well as
insulation and padding for side panels
and rear and front bumpers. Polystyrene
is a popular material in these
applications due to its light weight,
resistance to rust, and ability to absorb
shock. Since polystyrene materials are
incorporated into cars during the
manufacturing process, demand is
heavily dependent on new-car sales,
which increased dramatically over the
past five years. In 2011 and 2012, new
car sales surged 10.8% and 13.4%,
respectively, causing this product
segments share of industry revenue to
grow. Although new car sales have
picked up over the past five years, it has
yet to reach the prerecessionary peak it
had achieved in 2005.
Other
Accounting for an estimated 4.1% of
industry revenue in 2015, this product
segment includes a wide range of
polystyrene foam products used in
furniture, cycling helmets and foam
seeding trays for plants. Granulated EPS
is also used as a soil conditioner to
promote aeration.
impenetrable, cost-effective and food

grade safe packaging material and is
therefore most typically used to transfer
perishables under stable temperature
conditions. Packaging materials are also
common at the retail level for
restaurants and fast food chains, which
use a considerable amount of
polystyrene-based packaging for food
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Products & Markets
Demand
Determinants
continued
and beverage products. Demand for

polystyrene-based food packaging is
linked with consumption-based
economic indicators, such as consumer
spending, which typically declines
during recessionary periods. When
consumers scale back grocery budgets
and cut back on dining, demand for
polystyrene packaging drops among
both wholesalers and retailers. However,
consumer spending has been on the rise
since 2011, surpassing prerecession
levels in 2011. In 2015, consumer
spending is expected to grow 3.1%.
Manufacturing
US manufacturing is a central driver of
demand in the Polystyrene Foam
Manufacturing industry, as furniture
manufacturers, automobile makers and
other downstream manufacturing
industries incorporate polystyrene foam
into their products. Industrial
production in the United States, which
includes manufacturing, fell significantly
during the recession, causing a
reduction in overall demand for related
polystyrene inputs. Many polystyrene
materials are also used in the packaging,
distribution and storage of goods from
downstream manufacturers.
Construction
Polystyrene foam is a major component
of wall, roof, floor and pipe insulation in
homes and commercial buildings due to
its light weight and relatively simple
installation. It is also used as a
lightweight additive for road and railway
construction due to its strength and
shock-absorbing properties. When
construction activity is high, demand for
polystyrene foam rises. In contrast, when
construction activity slows, industry
demand falls. In the wake of the

subprime mortgage collapse and
subsequent wave of foreclosures,
residential development ground to a halt,
significantly reducing demand for
polystyrene foam. In addition, high
unemployment and weak consumer
spending took its toll on the commercial
construction sector. However, overall
construction activity began its recovery in
2011, representing the first year of overall
growth since 2006.
Government regulation
Polystyrenes petrochemical ingredients
are inherently difficult to biodegrade,
and political leaders frequently invoke
disposable polystyrene products as the
key culprits of hazardous litter. Aside
from a failed 2012 attempt to
symbolically ban polystyrene food and
beverage containers within House of
Representatives cafeterias in Washington
DC, federal proposals to ban polystyrene
are uncommon. However, local and
municipal governments have successfully
implemented outright bans on expanded
polystyrene containers. In 2013, the city
of San Jose approved a ban that will
prevent its local businesses from using
polystyrene food containers, joining 30
cities across Californias Bay Area that
have already instituted similar
legislation. San Jose was the largest city
in America to institute a ban on
polystyrene until the City Council of New
York City imposed a ban on polystyrene
food and beverage containers that was
ultimately overturned by a New York
Supreme Court judge several months
later. An increasing number of
municipal bans could pose a major
threat to consumers access to
polystyrene products.
WWW.IBISWORLD.COM
Products & Markets
Major Markets
Major market segmentation (2015)
11.9%
Household consumers
41.4%
22.6%
Retailers
Construction companies
Total $9.2bn
24.1%
Wholesalers
Downstream retailers are the largest

purchasers of polystyrene foam products.
These retailers range from food retailers,
food-service establishments, fast food
restaurants, supermarkets, product
packagers and other establishments. This
segment represents 41.4% of the industrys
total customer base, and this segment most
commonly buys foam cups, plates, bowls,
containers and packaging shapes.
Wholesalers represent 24.1% of the
industrys total sales. These companies
purchase bulk quantities of polystyrene
foam products and distribute them to
the retail sector. Wholesalers play a key
role in coordinating and maximizing
efficiency of transport between the
industrys manufacturers and their
ultimate end users. As a result,
wholesalers have consistently
represented a major market for the
industry. In some cases, however, the
industry may prefer to sell their
products in large quantities directly to
the retail sector. This has been an
increasingly common practice over the
past five years, largely due to the thin
profit margins that can be obtained
from bulk sales of polystyrene. In many
cases, manufacturers may wish to
maximize their profit by coordinating
their own shipping practices rather
than pay a portion of their profit to

wholesalers that may charge a premium
for their services. Sales to wholesale
distributors are anticipated to decline
over the next five years.
Construction firms are major
purchasers of polystyrene foam
products. These companies represent
22.6% of the industrys clients and
typically purchase large quantities of
foam for insulation uses in residential
and commercial construction projects.
Although the housing crisis and the
subsequent decline in housing starts
crippled sales of insulation to
construction firms, the gradual
resurgence in construction activity has
benefited the Polystyrene Foam
Manufacturing industry over the past
five years. Both housing starts and
nonresidential construction activity are
expected to pick up, which will likely
increase this segments size in the
coming years.
Direct sales to household consumers
represent 11.9% of the industrys
customer base, and this figure has been
increasing over the past five years.
Growing levels of online commerce have
made it easier for industry
manufacturers to ship their products
directly to individual households and
WWW.IBISWORLD.COM
Products & Markets
Major Markets
continued
end users. Major online retailers may

have allowed manufacturers to sell their
goods to consumers directly through the
retailer website. This sites have typically
allowed manufacturers to advertise and
sell their products on the retailers
website, although the retailer would
require that they be in charge of
warehousing and order fulfillment.
Recently, however, online retailers have

allowed manufacturers to sell their
products through the retailer and ship
the sold product directly to the customer
directly in exchange for a listing fee paid
to the retailer. This has become a
growing trend for small businesses as
well as major manufacturers of low-cost,
low-margin goods.
International Trade
The United States International Trade

Commission does not record imports and
exports of polystyrene products, as it
deems the total value of the industrys
international trade to be insignificant. The
market for polystyrene foam products
tends to be limited to localized markets,
due to the prohibitive freight costs
involved in transporting these bulky, low
unit-priced products over large distances.
There may, however, be indirect import

competition in some rare circumstances.
For example, some domestic downstream
manufacturers may choose to move their
operations abroad and continue to source
their polystyrene products locally. The
result would be reduced demand for
domestically produced polystyrene
products. The incidence of such a practice,
however, is believed to be negligible.
WWW.IBISWORLD.COM
Products & Markets

Business Locations 2015
West
New
England
AK
0.5
Great
Lakes
WA
ND
MT
1.4
Rocky
Mountains
ID
OR
0.2
West NV
0.2
2.1
SD
0.2
WY
0.9
MN
0.0
0.2
Plains
CO
1.6
KY
0.9
OK
0.7
NC
3.7
TN
AZ
NM
1.4
0.7
Southwest
TX
6.9
HI
0.2
Additional States (as marked on map)

1 VT
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.0
1.1
0.7
1.8
2.3
0.5
SC
Southeast
1.6
MS
AL
1.1
2.1
GA
6.4
1.8
LA
0.0
FL
4.6
Establishments (%)
0.2
0.9
AR
0.0
2.1
14.7
WV VA
2.1
0.9
3.2
CA
West
5.0
MO
KS
1.6
OH
3.2
3.0
4.1
IN
IL
0.5
UT
PA
4.8
1.6
0.2
1 2
3
NY
3.4
5 4
MI
2.5
IA
NE
0.0
WI
ME
MidAtlantic
9 DC
0.0
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
WWW.IBISWORLD.COM
Products & Markets
Distribution of establishments vs. population

30
20
10
Southwest
Southeast
Plains
New England
Rocky Mountains
Establishments
Mid-Atlantic
Great Lakes
0
West

industry relies heavily on demand from
downstream manufacturers, various
construction sectors, restaurants and
grocery establishments; therefore, it
comes as no surprise that business
locations are concentrated in close
proximity to regional manufacturing
hubs and heavily-populated metropolitan
areas. The Southeast and Great Lakes
regions of the United States account for
nearly half of all establishment locations
at 26.5% and 18.5%, respectively.
Additionally, these two regions, especially
the Southeast, are home to a number of
oil refineries, placing industry facilities in
proximity to raw material suppliers. The
Southeast is also the nations most
populous region and is a major market
for residential housing developers.
The West and Mid-Atlantic regions of
the United States hold the next-largest
concentration of polystyrene foam
manufacturers; collectively, these regions
account for more than a quarter of industry
establishments. In addition to being close
to raw material suppliers, these regions
Business Locations
Population
benefit from having large representative

states. For example, California, in the
Western region of the United States,
accounts for 14.7% of industry plants alone.
Similarly, Pennsylvania, representing the
Mid-Atlantic region, houses 4.1% of
industry establishments.
WWW.IBISWORLD.COM
19
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:
Cost Structure
Benchmarks
IBISWorld estimates the three largest

polystyrene foam manufacturers will
account for 32.1% of industry revenue
in 2015. This industry produces a
variety of products and each product
segment has its own set of producers.
For example, companies that produce
single-use food products like cups and
plates are within a highly concentrated
segment. Similarly, companies that
manufacture insulation also operate in
a concentrated market, with the Dow
Chemical Company being the largest
manufacturer of construction
insulation products.
Industry concentration has remained

fairly stable over the five years to 2015,
with Dart Container Corporation,
Reynolds Group Holdings Ltd. and The
Dow Chemical Company possessing the
largest percentage of the industrys
market share. Following Darts 2012
acquisition of plastic food and beverage
products manufacturer Solo Cup
Company, Dart has taken a commanding
lead of the industrys polystyrene
production activity. Reynolds remains a
strong competitor as the company
continues to expand its Pactiv brand of
polystyrene products.
Compliance with required

product standards
Manufacturers must closely monitor and
follow legislation on environmental
controls, product safety, raw materials
and best practices.
Output is sold under contract incorporate long-term sales contracts

Manufacturers must have the ability to
negotiate long-term supply contracts
with large customers to whom they
regularly sell their products.
Proximity to key markets

Manufacturers need to be located close to
their key customer base. Due to the bulky
nature of industry products, transport
costs can be reduced by locating plants
close to customers.
Supply contracts in place for key inputs

It is important for manufacturers to
have access to a reliable supply of key
inputs (such as plastic resin) at a
competitive cost.
Development of new products

Operators need to develop new
applications for plastic foam products
through R&D activities to achieve success.
Economies of scale
Manufacturers with larger plastic
resin requirements may be in a
stronger position to negotiate lower
prices with suppliers.
Profit
Industry profit margins, measured as
earnings before interest and taxes, have
historically been minimal for polystyrene
manufacturers, and turbulent input
prices for both crude oil and plastic resins
often constrain industry profit even
further. Although the world price of crude
oil has recently experienced significant
decline, the oil market is historically very
volatile and often creates substantial

uncertainty for industry manufacturers. In
2015, average industry profit is expected
to total 4.5% of revenue, an
improvement from 3.8% in 2010.
Fortunately for the industry, cost-cutting
measures, increasing consumer spending,
and improvements in overall
employment spurred significant profit
gains from 2010 onward.
WWW.IBISWORLD.COM
20
Purchases
Raw material inputs constitute the bulk
of the industrys purchase costs.
IBISWorld estimates that the cost of
materials will represent 59.6% of
industry revenue in 2015. The main
ingredient in the manufacture of
polystyrene is benzene, a type of plastic.
In the United States, roughly 50.0% of all
benzene produced is used to manufacture
polystyrene. Benzene is a natural
constituent of crude oil; thus, any future
escalations in oil prices may have a direct
impact on the industrys total costs.
Labor and capital
Wages for the industry are slightly higher
than other manufacturing industries due to
the technical nature of mixing and molding
polystyrene foam. In addition, some of the
industrys employees are highly trained
workers focused on the research and
development of new products. Lower
demand and uncertain economic

conditions initially forced polystyrene
manufacturers to cut wages and overall
employment, although the industrys labor
force has largely stabilized in the five years
to 2015. Although wages as a share of
revenue have fallen from 12.3% in 2010 to
10.8% in 2015, the average industry wage
has improved from $43,403 to $44,207
over the five-year period.
IBISWorld estimates that depreciation
will represent 2.3% of industry revenue
in 2015. The manufacture of polystyrene
products is somewhat more capital
intensive than the manufacture of
products in other industries, and
depreciation costs are slightly higher in
this industry than for the overall sector.
Other
Other costs include rental payments,
utilities, freight and insurance
premiums. Rent and utilities are
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2015)
100
Industry Costs
(2015)
7.1
10.7
4.5
10.8
56.1
59.6
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
80
Percentage of revenue
Cost Structure
Benchmarks
continued
60
40
20
2.3
2.6
20.3
0.9
1.5
2.3
1.0
20.3
0
WWW.IBISWORLD.COM
21
Cost Structure
Benchmarks
continued
expected to consume 1.5% of revenue

in 2015. The industry also incurs
advertising costs, which are
anticipated to make up a slim 1.0% of
revenue. Other expenses, not including

rent, utilities and advertising costs, are
expected to account for 20.3% of
revenue in 2015.
Basis of Competition
Industry participants compete amongst

themselves and with suppliers of
substitute products. Since polystyrene
products made from competing
manufacturers are largely identical in
appearance, industry operators must
aggressively compete on price. Some
other factors are important to
guarantee overall success, such as
consistent quality, reliability of delivery
times to distributors and continual
efforts to reduce input costs. Industry
companies that manufacture endproducts must also compete on product
design, although changes in the
appearance of most polystyrene
products are minimal.
Other various competing factors include

the performance, reliability, safety,
hygiene, presentation and recyclability of
the product. Industry manufacturers are
under constant pressure to maintain
stringent quality standards and also calm
individual consumers concerns
surrounding their products environmental
impact. As a result, industry establishments
compete with external industries that
manufacture alternative products.
Polyurethane, fiberglass, and phenolic
foam manufacturers compete with the
industry across its insulation markets,
while cardboard packaging products are a
constant competitive threat to polystyrene
packaging materials.
Level & Trend

ompetition
C
in this
industry is H
ighand
the trend is S
teady
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are

Mediumand S
teady
The major barriers to entry in this

industry can vary from market to
market. Larger existing players can
negotiate lower bulk prices for raw
plastic and resin inputs. Since material
input purchases represent a large
percentage of total industry purchase
costs, having large accounts enables the
industrys biggest manufacturers to
purchase necessary materials at a lower
unit cost when buying in major bulk
orders. In addition, significant
investments are necessary to acquire
plant and equipment, and the industrys
preexisting companies are often more
readily equipped to make substantial
capital expenditures. Larger operators
can fund state-of-the-art machinery that
is often larger and better suited to
produce polystyrene products at a lower
per-unit cost.
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
High
Low
Mature
Medium
Medium
Medium
Low
Existing operators possessing large

economies of scale will often negotiate
term contracts with both their input
supplies and with their largest customers.
Under these contracts, major foam
manufacturers can lock in guaranteed
input prices to shield their company from
any sudden changes in the price of crude
oil, plastic resins or other materials.
WWW.IBISWORLD.COM
22
Barriers to Entry
continued
Contracts can also be negotiated with

major companies that wish to purchase
polystyrene products in large quantities
at a fixed price over a long-term contract.
Existing operators will have established
far stronger relationships along the
supply chain in comparison to new
entrants. Additional investment in

research and development or technology
transfer agreements expands market
opportunities to compete and achieve
growth. Joint ventures or strategic
alliances with large overseas operators
may assist to reduce this barrier.
Industry
Globalization

industry has a low level of globalization.
According to the United States
International Trade Commission, there
is virtually no international trade of the
industrys products. Since the industry
also possesses a very low level of market
share concentration, many small- and
medium-sized companies focus their
efforts only on specific regions in the
United States. However, Dart Container
Corporation, a private company that

manufactures a broad range of singleuse products for food-service, retail,
and food packaging industries, claims to
be the worlds largest manufacturer of
foam cups. Dart operates subsidiaries in
Argentina, Australia, Canada, Mexico
and the United Kingdom, although
revenue from these foreign operations
are not included in the industrys
overall revenue.
Level & Trend

lobalization
G
in this
industry is L owand
the trend is S
teady
WWW.IBISWORLD.COM
Major Companies
Dart Container Corporation | Reynolds Group Holdings Ltd. | Other Companies
Major players
(Market share)
Reynolds Group Holdings Ltd. 14.0%
71.6%
Other
Dart Container Corporation 14.4%
Player Performance
Dart Container
Corporation
Market share: 14.4%
Dart Container Corporation, established

in 1937 in Mason, MI, is a private
company that manufactures a broad range
of single-use products for food-service,
retail and food-packaging industries. The
company makes more than 600 different
products, including foam cups, lids,
dinnerware and cutlery. Dart is a vertically
integrated company and manufactures its
own equipment and raw materials and
operates its own distribution service. The
company operates 20 production
facilities throughout the United States,
Canada, Mexico, Argentina, Brazil,
Australia and the United Kingdom and
claims to be the largest foam-cup producer
worldwide. Due to increasing concerns
surrounding solid waste over the past five
years, Dart has created a network of foam
collection recycling centers. At these
centers, postconsumer food-service
products, product-protecting foam, egg

cartons and other foam goods are
gathered and processed for recycling.
Since many companies are still reluctant
to recycle because of the additional time
and costs, Darts foam collection machines
also compact the recycled products for
easier transportation.
In May 2012, Dart completed its $1.0
billion acquisition of Solo Cup Company, a
Chicago-based global manufacturer of
single-use products for the home, quickservice restaurants and the food and
beverage industry. The companys products
include cups, lids, food containers, plates,
bowls and cutlery. These goods are
available in varying materials, including
plastic, paper and foam. IBISWorld
estimates that a third of Solo Cups North
American revenue is derived from
polystyrene-based foam products.
Dart Container Corporation (US polystyrene foam products) - financial

performance*
Year
Revenue
($ million)
(% change)
Employees
(People)
(% change)
2010
1,223.2
10.8
7,411
-3.6
2011
1,423.8
16.4
7,532
1.6
2012
1,270.0
-10.8
11,450
52.0
2013
1,341.5
5.6
11,532
0.7
2014
1,361.6
1.5
11,590
0.5
2015
1,321.7
-2.9
11,250
-2.9
*Estimates
SOURCE: IBISWORLD
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Financial performance
As a private company, Dart does not
publicly disclose financial information.
However, IBISWorld estimates that
industry-specific revenue has grown at
an annualized rate of 1.6% over the past
five years to $1.3 billion in 2015. A large
share of the companys growth is due to
the Solo Cup acquisition, although these
products largely exist outside of the
industrys polystyrene product
manufacturing activities. Also

contributing to strong growth are
postrecession improvements in
consumer spending, which have
increased demand for food-service and
food-packaging products from
restaurants and grocery stores.
Continual increases in consumer
spending are expected to help fuel
steady revenue growth for Dart
Container over the next five years.
Player Performance
Founded in 1919, New Zealand-based

Reynolds Group Holdings Ltd. is a
leading manufacturer and supplier of
consumer food, beverage and foodservice packaging products. It is most
famous for its Reynolds Wrap Aluminum
Foil brand. The company operates
primarily through five business
segments: Evergreen, closures, Reynolds
consumer products, Pactiv foodservice
and Graham packaging. The company
intends to phase out its SIG aseptic
carton packaging system segment over
the next year. The SIG and Evergreen
segments focus on carton packaging for
beverage and liquid food products, while
Evergreen produces paper products, such
as coated groundwood pulp used for
catalogs, magazines and other

commercial printing applications. The
companys closures segment
manufactures plastic beverage caps and
other closures primarily for carbonated
and noncarbonated soft drink and bottled
water industries. The Reynolds consumer
products segment produces aluminum
and plastic foils, wraps, waste bags and
disposable table and cookware, while the
Graham packaging division focuses on
blow-molded plastic containers used for
branded consumer products, such as
yogurts, dish detergents and motor oil.
Reynolds operates within the industry
through its foam division, a division of
the companys Pactiv foodservice
segment, which the company acquired
Reynolds Group
Holdings Ltd.
Market share: 14.0%
Reynolds Group Holdings Limited (US Pactiv Foodservice segment) financial performance*
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2010
646.0
-5.2
-10.9
-518.1
2011
698.0
8.0
29.7
373.3
2012
1,171.0
67.8
77.0
159.3
2013
1,220.0
4.2
58.8
-23.6
2014
1,230.0
0.8
57.0
-3.1
2015
1,279.9
4.1
54.8
-3.9
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Other Companies
from its purchase of Pactiv Corporation

in 2010. Upon the purchase of Pactiv,
Reynolds acquired Hefty, another
noteworthy brand widely regarded for its
durable trash bags. The foam division of
Pactiv manufacturers polystyrene foambased trays, cups, microwaveable
containers and display packaging in over
50 production facilities throughout North
America, Europe and China.
Financial performance
Over the five years to 2015, Reynolds US
industry-specific revenue is expected to
decline at an annualized rate of 14.7% to
$1.3 billion, representing an industry
market share of 14.0% over the period. As

with other food packaging
manufacturers, the companys revenue
experienced volatility over the past five
years. However, the volatility was largely
the result of its Pactiv acquisition early
on in the period, which yielded 67.8%
revenue growth in 2012 and significantly
expanded the companys presence in the
industry. The companys revenue
generated from polystyrene products is
anticipated to continual to grow in 2015.
IBISWorld estimates Reynolds to
experience 4.1% growth in Pactivs
foam-based revenue.
The Dow Chemical Company

Estimated Market Share: 3.7%
The Dow Chemical Company (Dow) is a
global manufacturer of chemical products
used primarily as inputs in the
production of a variety of downstream
manufacturing, agricultural,
construction, electronics and
pharmaceutical industries. Founded in
1947, the company operates in 36
countries spread across North America,
Europe, the Middle East, Africa, South
America and Asia. In the United States,
which accounts for 24.9% of the
companys total revenue, Dow operates
60 manufacturing plants in 22 states.
Dow is divided into five operating
segments: agricultural sciences,

consumer solutions, infrastructure
solutions, performance plastics and
performance materials and chemicals.
The company operates within the
industry through its Styrofoam brand of
insulation products, which are
categorized within the Dow Building and
Construction business of its
infrastructure solutions segment. In
2014, the company announced that it
planned to shut down its Charleston, IL
Styrofoam facility. Revenue generated
from sales of Dows US-produced
Styrofoam products is expected to total
$337.2 million, giving the company a
3.7% industry market share in 2015.
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is M
edium
The US polystyrene manufacturing

industry has a medium level of capital
intensity. The capital intensity of this
industry is determined by the ratio of
capital to labor expenditures, as
represented by depreciation and wage
costs. IBISWorld estimates that for
every dollar spent on labor, the
industry spends $0.21 on machinery
and equipment. This industry is
moderately capital intensive due to the
chemical processing and machinery
needed to produce and mold
polystyrene products. Manufacturers
essentially convert unused and recycled
plastic into low-value (although rather
bulky) items, through the use of capitalintensive and highly mechanized
production-line processes.
Capital intensity
Capital units per labor unit

0.5
0.4
0.3
0.2
0.1
0.0
Economy
Manufacturing
Polystyrene
Foam
Manufacturing
Dotted line shows a high level of capital intensity

The industrys capital intensity has

declined in the past five years due to
overall stabilization in the industrys
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 labor 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.
Commercial
Building
Construction
Capital Intensive
Labor Intensive
New Age Economy
Plastic Film,
Sheet & Bag
Manufacturing
Chemical
Product Manufacturing
Traditional Service
Economy
Wholesale and Retail. Reliant Beef & Pork
Wholesaling
on labor rather than capital to
Plastic & Resin Manufacturing
Polystyrene Foam
Manufacturing
sell goods. Functions cannot

be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Change in Share of the Economy
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
WWW.IBISWORLD.COM
Capital Intensity
continued
labor force. In 2010, the industry spent

$0.23 on machinery and equipment for
every dollar spent on labor. As the
industry continues to shift production
towards a dwindling number of facilities,
investments in capital and equipment
will likely surpass the industrys
investment in human capital. The
industry maintained 457 establishments
Technology & Systems Production systems tend to be

Level
The level
of
Technology Change
is M
edium
Revenue Volatility
Level
The level
of
Volatility is M
edium
which employed an estimated 25,047

people in 2010, while in 2015 the
industry holds 459 establishments that
include only 22,896 employees. Given the
cumbersome amount of work required to
reduce the amount of polystyrene
manufacturing machinery in stock,
reducing variable costs such as labor was
a more effective cost-cutting solution as
demand for polystyrene products wanes.
purchased off-the-shelf from plastic

machinery manufacturers. Upon
purchasing these systems, expanded
polystyrene foam products are
produced in three stages. Mass
quantities of granular plastic resin go
through a heating process in which
large quantities of steam cause the fine
grains to expand; next, the heated
material goes through a 24-hour aging
process to strengthen the material to its
given product specifications; finally, the
material is molded into the desired
final shape via an intense injection of
heat and steam. Sturdy polystyrene
foam insulation is extruded under
pressure, creating a dense mass of tiny,
closed cells that ensure that water
cannot penetrate the insulation and the
insulating air cannot escape from the
cells. Depending on how much heat is

applied to the material, polystyrene can
be light enough to serve as packaging
material or durable enough for use as
permanent building insulation.
Technological advances in products
can produce competitive advantages and
even create entirely new markets. For
example, Pactiv Corporation offers a
technologically advanced extended
shelf-life (ESL) tray for the red meat case
market. The proprietary technology
significantly improves sealing time,
resulting in faster throughput speed and
efficiency for meat processors. Some
applications require high safety and fire
retardant performance, good mechanical
properties and high strength to weight
ratios. Research and development
activities are regularly undertaken to
improve performance.
This industry has a medium level of

volatility, with revenue increasing as
much as 7.7% in 2013 after falling
2.6% in 2012. This industry supplies a
large number of downstream
industries that experience different
business cycles, which has a stabilizing
effect on industry revenue. The
transportation of some products, such
as medicines and appliances, relies
heavily upon polystyrene packaging.

Therefore, these products are in
perennial high demand even during
periods of economic instability.
Conversely, the polystyrene
manufacturing industry suffers when
demand for certain cyclical consumer
goods falls. High-end tech products like
flat-screen televisions and personal
computers are commonly packaged in
WWW.IBISWORLD.COM
polystyrene, and recessionary periods

sharply reduce the volume of fragile tech
products consumers order. Future industry
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.
revenue volatility levels are forecast to be

lower, as the industry continues experience
gradually waning use in packaging.
Volatility vs Growth
1000
Revenue volatility* (%)
Revenue Volatility
continued
Hazardous
Rollercoaster
100
Polystyrene Foam
Manufacturing
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
Regulation & Policy

Level & Trend
he level of
T
Regulation is
Mediumand the
trend is I ncreasing
Industry players are subject to federal,

state, local and foreign environmental
laws and regulations, including those
relating to the use, handling, storage,
discharge and disposal of hazardous
substances, the discharge or emission of
materials into the environment, and the
remediation of environmental
contamination. As a result,
manufacturers are occasionally involved
in administrative and judicial
proceedings and inquiries relating to
environmental matters.
The EPS Molders Association aims to
increase the use of expanded polystyrene
products in the construction industry,
while the Polystyrene Packaging Council
(PSPC) aims to educate the public about
the benefits of polystyrene food
packaging. A business unit of American
Plastics Council, PSPC includes members
who are major resin suppliers as well as
manufacturers of polystyrene products.
In 1991, more than 80 companies,
representing every major manufacturer
of EPS protective foam packaging, their

raw material suppliers and equipment
manufacturers, joined to form the
Alliance of Foam Packaging Recyclers
(AAFR). AFPR works to facilitate EPS
recycling between EPS manufacturers
and original-equipment manufacturers.
AFPR members also provide community
drop-off services at their manufacturing
facilities. Currently, more than 110 plant
locations serve as collection centers,
which together receive millions of
pounds of post-consumer foam
packaging each year.
Over 70 US cities have instituted some
form of ban on the use of polystyrene
foam containers in restaurants. In
December of 2013, New York City
became the largest American city to ban
its restaurants from serving food and
drink in polystyrene containers, passing
San Jose only months after the California
city instituted a similar ban earlier in the
year. A New York Supreme Court judge
ultimately overturned the ban in 2015.
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Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
The industry does not receive any form of

direct government assistance; however,
industry operators directly benefit from
trade organizations, such as the Extruded
Polystyrene Foam Association (XPSA).
The XPSA is based in the District of
Columbia, and represents manufacturers
of extruded polystyrene foam products
and related raw material suppliers. In
addition to organizing conferences and
educational programs, XPSA serves as a
lobbying arm for the industry in matters
of federal and state laws and regulations.
In 2012, the EPS Molders Association
(EPSMA) and the Alliance of Foam
Packaging Recyclers (AFPR) merged into

the EPS Industry Alliance (EPS-IA), a
singular and more comprehensive
association designed to cater to the
interests of all polystyrene market
segments and their clients. The EPS-IA
and its member companies collaborate
on key initiatives that benefit the
polystyrene manufacturing industry as a
whole. Sustainability committees,
harnessing renewable energy sources and
providing information on the various
benefits of polystyrene products are all
key components of the industrys public
relations campaign.
WWW.IBISWORLD.COM
30
Key Statistics
Industry Data
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Industry
Value Added
($m)
2,070.5
1,997.7
1,469.0
1,387.4
1,668.8
1,699.1
1,695.6
1,706.6
1,727.5
1,624.5
1,565.7
1,502.4
1,466.2
1,426.9
1,369.1
143/195
786/1373
Establishments
543
554
524
478
457
460
436
478
470
459
444
437
426
420
407
129/195
1001/1373
Enterprises Employment
386
32,756
396
32,229
376
28,026
336
25,330
314
25,047
317
24,947
303
23,492
329
24,151
323
23,931
316
22,896
306
22,041
301
21,348
294
20,854
290
20,346
281
19,630
141/195
119/195
1006/1373
758/1373
Exports
---------------N/A
N/A
Imports
---------------N/A
N/A
Wages
($m)
1,405.1
1,387.9
1,172.8
1,045.7
1,087.2
1,096.6
1,027.5
1,065.0
1,057.0
1,002.1
959.2
923.8
900.7
875.6
840.5
130/195
771/1373
World price
Domestic of crude oil
Demand ($ per barrel)
N/A
64.3
N/A
71.1
N/A
97.0
N/A
61.8
N/A
79.6
N/A
104.0
N/A
105.0
N/A
104.1
N/A
96.2
N/A
51.7
N/A
53.3
N/A
58.6
N/A
63.3
N/A
65.8
N/A
66.6
N/A
N/A
N/A
N/A
Industry
Revenue Value Added
(%)
(%)
-6.9
-3.5
-1.3
-26.5
-5.4
-5.6
0.6
20.3
5.2
1.8
-2.6
-0.2
7.7
0.6
-0.1
1.2
-5.8
-6.0
-4.3
-3.6
-3.9
-4.0
-2.2
-2.4
-2.8
-2.7
-3.9
-4.1
131/195
105/195
1160/1373
970/1373
Establishments
(%)
2.0
-5.4
-8.8
-4.4
0.7
-5.2
9.6
-1.7
-2.3
-3.3
-1.6
-2.5
-1.4
-3.1
138/195
1163/1373
Enterprises Employment
(%)
(%)
2.6
-1.6
-5.1
-13.0
-10.6
-9.6
-6.5
-1.1
1.0
-0.4
-4.4
-5.8
8.6
2.8
-1.8
-0.9
-2.2
-4.3
-3.2
-3.7
-1.6
-3.1
-2.3
-2.3
-1.4
-2.4
-3.1
-3.5
118/195
123/195
1097/1373 1153/1373
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
-1.2
-15.5
-10.8
4.0
0.9
-6.3
3.6
-0.8
-5.2
-4.3
-3.7
-2.5
-2.8
-4.0
116/195
1108/1373
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue
($m)
10,081.4
9,381.6
9,257.0
8,761.0
8,812.4
9,268.6
9,028.8
9,721.7
9,716.5
9,153.8
8,759.1
8,416.4
8,234.8
8,002.8
7,686.7
136/195
668/1373
Annual Change
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Key Ratios
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
IVA/Revenue
(%)
20.54
21.29
15.87
15.84
18.94
18.33
18.78
17.55
17.78
17.75
17.88
17.85
17.80
17.83
17.81
133/195
1060/1373
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Figures are in inflation-adjusted 2015 dollars. Rank refers to 2015 data.
Revenue per
Employee
($000)
307.77
291.09
330.30
345.87
351.83
371.53
384.34
402.54
406.02
399.80
397.40
394.25
394.88
393.34
391.58
115/195
522/1373
Wages/Revenue
(%)
13.94
14.79
12.67
11.94
12.34
11.83
11.38
10.95
10.88
10.95
10.95
10.98
10.94
10.94
10.93
110/195
971/1373
Employees
per Est.
60.32
58.18
53.48
52.99
54.81
54.23
53.88
50.53
50.92
49.88
49.64
48.85
48.95
48.44
48.23
81/195
217/1373
Average Wage
($)
42,895.96
43,063.70
41,846.86
41,283.06
43,406.40
43,957.19
43,738.29
44,097.55
44,168.65
43,767.47
43,518.90
43,273.37
43,190.75
43,035.49
42,817.12
164/195
849/1373
World price
of crude oil
(%)
10.7
36.4
-36.3
28.9
30.6
1.0
-0.9
-7.5
-46.3
3.1
10.1
8.0
3.9
1.3
N/A
N/A
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
143/195
786/1373
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Jargon & Glossary
Industry Jargon
EXPANDED POLYSTYRENE (EPS)A light-weight

packing product made of small polystyrene balls.
POLYSTYRENEA widely used plastic polymer that can
be molded when heated. It is used in plastic cutlery, CD
cases, food packaging and many other products.
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 INTENSITY Compares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. 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
labor; medium is $0.125 to $0.333 of capital to $1 of labor;
low is less than $0.125 of capital for every $1 of labor.
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 the US Bureau of Economic
Analysis implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, 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 seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed
and keeps management accounts. Each enterprise
consists of one or more establishments that are under
common ownership or control.
ESTABLISHMENTThe 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 US companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in the
United States.
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%.
STYROFOAMA trademarked name for The Dow

Chemical Companys polystyrene foam insulation
product. Styrofoam is often erroneously associated with
EPS food packaging products.
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 (IVA)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 ESTABLISHMENT Businesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
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. The cost of benefits is also
included in this figure.
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Polystyrene Foam Manufacturing in the USDecember 2015 1

Faltering foam: Increasing regulations and

IBISWorld Industry Report 32614

2 About this Industry

19 Market Share Concentration

19 Key Success Factors

19 Cost Structure Benchmarks

Key External Drivers

23 Dart Container Corporation

10 Industry Life Cycle

24 Reynolds Group Holdings Ltd.

12 Products & Markets

12 Products & Services

27 Technology & Systems

28 Regulation & Policy

31 Jargon & Glossary

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

Polystyrene Foam Manufacturing in the USDecember 2015 2

About this Industry

This industry produces a wide range of

The primary activities of this industry are

other packaging and insulation goods. The

Expanded polystyrene foam product manufacturing

The major products and services in this industry are

32521 Plastic & Resin Manufacturing in the US

For additional information on this industry

Polystyrene Foam Manufacturing in the US December 2015

Annual Growth 10-15

Annual Growth 15-20

Revenue vs. employment growth

Products and services segmentation (2015)

Key External Drivers

Building and construction

World price of crude oil

Packaging and storing products

Life Cycle Stage

Polystyrene Foam Manufacturing in the USDecember 2015 4

Executive Summary | Key External Drivers | Current Performance

Polystyrene foam is used across a range

foam product manufacturers have

Key External Drivers

operators have increased product prices,

representing a potential opportunity for

Polystyrene Foam Manufacturing in the USDecember 2015 5

industry manufacturers to purchase, this

must either increase their prices or suffer

Key External Drivers

Polystyrene Foam Manufacturing in the USDecember 2015 6

Over the five years to 2015, revenue for

of polystyrene-based plastic bags, even

Polystyrenes light weight, low cost and

Polystyrene manufacturers heavily rely

Polystyrene Foam Manufacturing in the USDecember 2015 7

Polystyrene foam products are made

scaled back operations and employed

In addition to changes in demand from

figure to have surpassed 70 cities by the

Polystyrene Foam Manufacturing in the USDecember 2015 8

Overall industry contraction may be on

The recovery of the housing market has

projected to grow at an annualized rate of

The price of plastic materials and resin is

2.2%. Since polystyrene foam