Industry presence/growth

Enjoy the geographic advantagesof West Virginia’s PolymerAlliance Zone (PAZ), thehome of one of the highestconcentrations of resinproducers in the world, includingSABIC, DuPont and M&GPolymers. Twenty-eight of WestVirginia’s 134 polymer companies are located in theZone. The plastics industry employs nearly 7,000 work-ers statewide, making plastics the state’s fourth largestmanufacturing sector. West Virginia ranked first, fourthand 20th nationally in the number of plastics resin man-ufacturing, custom compounding resins and plasticsfabrication workers per capita according to the 2002Economic Census. Experience phenomenal growth inplastics fabrication, which increased from 1,300employees in 1990 to over 3,500 employees in 2004,for an average annual growth rate of nearly 8 percent.

Virtual Center for Polymer Excellence: The VirtualCenter of Polymer Excellence, created by the PolymerAlliance Zone, will showcase the capabilities of WestVirginia’s polymer industry, its member companies andthe Polymer Alliance Zone. If you have a question onwho produces a resin or who has the capability tomanufacture or mold a product in West Virginia, or ifyou are looking to locate or expand your business, youcan query www.polymervce.org. Other collaborative effortswill include identifying resources such as researchcapabilities of institutions and individual support forwork force training programs.

MARCEE Project: PAZ is working with West VirginiaUniversity’s Polymer Research Center and private sectorcompanies on the internationally recognized MARCEEProject. The MARCEE project is developing an economicallyfeasible world-class plastics recycling program in the

Polymer Technology Park located in Wood County,West Virginia. The partners include SDR Technologies,Amandi Services, Innovative Management & TechnologyServices (IMTS) and the National Center for ElectronicsRecycling. Each partner brings a different set of skills tothe table.

SDR Technologies and Amandi Services’ goals are todevelop new technology and integrate existing technologyto automate a process to recycle and remanufactureproducts found in end-of-life electronics (EoLE). TheNational Center for Electronics Recycling and IMTS areworking with industry and government to develop a self-sustaining national collection and transportation systemfor EoLE. The U.S. Environmental Protection Agency,the U.S. Department of Energy through the NationalEnergy Technology Laboratory and the state of WestVirginia are partners with the private sector in providingthe funding.

LaborTake advantage of the state's large supply of trainedproduction supervisors, chemists, chemical technicians,plant and equipment operators, molding, forming andextrusion machine operators numbering more than48,000 strong.

Affordability of the work force is ensured. The averageindustry wage in West Virginia is 90 percent of theaverage wage in the competing states and 83 percentof the national average.

The state ranked 10th nationally in plastic resin outputper worker and second in output per custom compounding

resins worker in the 2002 Economic Census, whichreflects strong labor productivity.

Any new company that creates 10 or more jobs qualifiesfor the award-winning Governor’s Guaranteed WorkForce Program, which provides training to new and/orexisting employees.

Advanced training and technical assistance in machining,composite fabrication and manufacturing technology isavailable from four Robert C. Byrd Institute forAdvanced Flexible Manufacturing training centers dis-tributed across the state. West Virginia StateUniversity in Institute and West Virginia University-Parkersburg offer extensive, industry-designedassociate degree programs in plastic technologiesspecifically to meet the work force needs of the industry.

West Virginia ensures a work force equipped to meetthe challenges presented by today's advancedtechnology, with computer literacy required in gradesK through 12. West Virginia's higher education systemoffers students degree programs in all facets oftoday's high-technology industries, including biometrics.Vocational facilities aid in meeting the expandingeducational needs of the work force.

Other TechnologyMATRIC is an emerging center of excellence forresearch and innovation in the disciplines of chemistryand chemical products, biotechnology and biosciences,and software systems, especially in the areas ofconfluence between two or more of these disciplines.Services include research incubation of new productsand processes, provision of facilities and technicaltalent for carrying out experimental work from laboratoryscale to production scale and the provision of otherspecialized technical services that meet regional, stateand national needs.

Raw materialsTake advantage of West Virginia’s vast supplies ofindustrial raw materials and gain access to many of thebase stock components necessary to produce plasticproducts, such as resins, cyclic crudes and organics.

More than 200 major plastic suppliers operate withinWest Virginia and immediate surrounding states.

ProfitabilityA typical West Virginia plastic manufacturer enjoys anaverage operating profit margin of 9.4 percent comparedto the national average of 4.4 percent and 6.1 percentfor competing states.

UtilitiesSave with West Virginia’s attractive energy consumptioncosts. Industrial electric represent savings of 21 percent,in comparison to competitor states.

Advantages

Markets and Transportation

Highways

Six interstate routes traverse West Virginia, providing quick andeasy access to major population and industrial centers in theNortheast, South and Midwest.

The state’s highways represent an extensive and reliable trans-portation network in themselves. They also serve as links in anintermodal transportation system, providing strategic access totransshipment points by rail, water and air. These transportationmodes combine to offer West Virginia businesses unmatched ver-satility and convenience in serving regional, national and globalmarkets with the most advanced “just-in-time” delivery.

This intermodal transportation concept gives West Virginia ameasurable advantage: the capacity for overnight delivery tomore than 66 percent of the U.S. population and more than athird of the Canadian population.

Air travel and freight

Passengers and freight can fly from West Virginia airports tomajor destinations less than an hour away at Pittsburgh,Charlotte, Cincinnati, Roanoke and Washington, D.C. Directflights also connect the state to Baltimore, Cleveland, Detroit,New York, Chicago, Philadelphia and Atlanta. Major cities in thenorthern and eastern panhandles of West Virginia are serveddirectly by Pittsburgh International Airport and Dulles InternationalAirport. Private charters also are available to meet a variety ofbusiness needs.

Intercoastal and intracoastal shipping

Beyond U.S. shores ... Parkersburg is less than 200 direct inter-state highway miles from the international seaport at Cleveland.Martinsburg is less than 200 miles from the port at Philadelphia,less than 100 miles from the port at Baltimore and less than 50miles from the Virginia Inland Port at Front Royal.

The Ohio River inland port at Huntington, where West Virginiameets Ohio and Kentucky, is the nation’s largest inland port.

Rails for freight

More than 2,400 miles of railroad track carry almost 250 milliontons of freight each year in West Virginia, which is well served bymainline freight carriers CSX Transportation and NorfolkSouthern. Because of their proximity to river ports and truckingcenters, railroads remain an integral component in the state’sintermodal transportation system.

Overall profitability

Profitability is higher and operating costs are lower forplastic enterprises in West Virginia compared to thenational average and competitor states. A medium tolarge West Virginia establishment (with 150 to 250employees) would enjoy total operating cost savingsaveraging $753,024 versus the comparison states.Specific savings of $436,824 would accrue in laborexpenses and $316,200 in nonlabor operating expenses.Profitability in West Virginia would average 3.3percentage points higher than in the comparison states.

Analysis

Labor costs

Labor-related costs in West Virginia are very low.A typical company in West Virginia could expect to savean average of $436,824 in payroll and related expensesin comparison to competitor states. This is directlyattributable to West Virginia’s low average annual wagefor the industry cluster, $41,131. This is less than 83percent of the national average of $47,637 and 90percent of the competing state average of $43,514.West Virginia’s low cost of living also helps to keeplabor costs low. Labor costs are defined as the combinedannual costs of wages, workers’ compensation,

unemployment insurance and other fringe benefits fora national average operating establishment in the indicatedNAICS group. Wages are based on 2004 BLS data forthe U.S. and the respective states.

Profitability U.S. Region W.Va. W.Va. advantagevs. region

Plastic

NAICS 325211 - Plastic material and resin manufacturing 3.6% 4.0% 2.6% -1.4%

NAICS 325991 - Custom compounding of purchased resins 4.5% 5.8% 8.5% 2.7%

NAICS 562920 - Plastic recycling 5.5% 11.0% 17.5% 6.5%

NAICS 3261 - Fabricated plastic 4.1% 3.5% 8.8% 5.3%

Average 4.4% 6.1% 9.4% 3.3%

Source: West Virginia Development Office Cost Model

Labor costs U.S. Region W.Va. W.Va. advantagevs. region

Plastic

NAICS 325211 - Plastic material and resin manufacturing $22,190,694 $20,265,033 $24,630,232 $4,365,199

NAICS 325991 - Custom compounding of purchased resins $14,120,128 $12,490,764 $10,096,946 ($2,393,818)

NAICS 562920 - Plastic recycling $7,565,607 $6,412,133 $5,174,267 ($1,237,866)

NAICS 3261 - Fabricated plastic $11,869,610 $12,018,177 $9,537,365 ($2,480,812)

Average $13,936,509 $12,796,526 $12,359,702 ($436,824)

Source: West Virginia Development Office Cost Model

Key occupations required W.Va. W.Va. W.Va. US W.Va.supply Employment Average Average as Ratio

Concentration Wage Wage of USRatio1/

Plastic

Chemical plant and system operators 1,150 3.53 $52,600 $45,830 1.15

Chemical equipment operators and tenders 570 2.29 $43,430 $39,560 1.10

Extruding and drawing machine setters, operators and tenders, metal and plastic 1350 2.79 $27,150 $28,370 0.96

Molding, coremaking and casting machine setters, operators and tenders, 360 0.43 $22,300 $26,490 0.84

metal and plastic

Packers and packagers 2,630 0.57 $17,590 $18,760 0.94

Cutting, punching and press machine setters, operators and tenders, metal and plastic 1,200 0.87 $26,610 $27,240 0.98

Laborers and freight, stock and material movers 13,620 1.06 $19,490 $22,190 0.88

Industrial truck and tractor operators 2,770 0.82 $26,260 $28,390 0.92

Truck drivers, heavy and tractor-trailer 11,170 1.31 $29,240 $34,920 0.84

Truck drivers, light or delivery services 5,480 1.10 $21,670 $26,640 0.81

Machine feeders and off bearers 1,360 1.75 $19,010 $23,700 0.80

Coating, painting and spraying machine setters, operators and tenders 230 0.43 $27,080 $27,880 0.97

Chemists 590 1.40 $61,660 $62,400 0.99

Chemical engineers 330 2.15 $78,490 $78,030 1.01

Mechanical engineers 450 0.38 $63,480 $69,480 0.91

Chemical technicians 790 2.40 $43,950 $40,040 1.10

First-line supervisors/managers of production and operating workers 3,740 1.02 $47,510 $48,290 0.98

First-line supervisors/managers of helpers, laborers and material movers 700 0.75 $37,710 $40,770 0.92

Total Plastics Workers 48,490 1.06 $36,957 $38,277 0.96

Source: Bureau of Labor Statistics 2006 State Occupational Employment and Wage Estimates West Virginia1/ An employment concentration ratio greater than 1.0 indicates the occupation has a relatively greater presence in the state’s work force than in the nation’s.

Approach

A comparative analysis of operating costs and profitabilitywas prepared for an average national plastic establishmentin West Virginia versus the 10 surrounding statesconsidered to be the state’s principal competitors: Ohio,Pennsylvania, Maryland, Virginia, Kentucky, Indiana,Michigan, Tennessee, North Carolina and South Carolina.The average was based on industry average operatingand financial characteristics derived from the mostcurrent Annual Survey of Manufactures, published bythe U.S. Census Bureau; Annual Statement Studies,published by Robert Morris Associates; and nationalinput/output coefficients for various factor costs.

Wood County’s SABIC Site

Utility costs U.S. Region W.Va. W.Va. advantagevs. region

Plastic

NAICS 325211 - Plastic material and resin manufacturing $5,251,349 $5,353,294 $4,848,674 ($504,620)

NAICS 325991 - Custom compounding of purchased resins $1,079,804 $1,061,243 $958,350 ($102,894)

NAICS 562920 - Plastic recycling $704,540 $711,001 $666,160 ($44,841)

NAICS 3261 - Fabricated plastic $927,153 $859,839 $738,678 ($121,161)

Average $1,990,712 $1,996,344 $1,802,965 ($193,379)

Source: West Virginia Development Office Cost Model

utility rates, etc.) to derive operating costs for WestVirginia and the comparison states.

Utility costs

A cost analysis reveals that a West Virginia facilitywould achieve utility cost savings averaging $193,379annually compared to the competing states. Energy

Transportation costs U.S. Region W.Va. W.Va. advantagevs. region

Plastic

NAICS 325211 - Plastic material and resin manufacturing $7,148,929 $7,889,982 $7,717,056 ($172,925)

NAICS 325991 - Custom compounding of purchased resins $3,265,197 $3,622,042 $3,538,772 ($83,270)

NAICS 562920 - Plastic recycling $449,918 $494,602 $484,175 ($10,427)

NAICS 3261 - Fabricated plastic $2,120,701 $2,368,730 $2,310,852 ($57,878)

Average $3,246,186 $3,593,839 $3,512,714 ($81,125)

Source: West Virginia Development Office Cost Model

Transportation costs

Outbound transportation costs are a function of distanceto markets, transportation mode(s) used and rateschedules. Because of the complexity of calculatingdifferential modal transportation costs by state andbecause trucking is the dominant transportation modefor the industry cluster, only motor freight costs wereassumed to vary. Outbound motor freight costs for therespective states were estimated by indexing nationalaverage motor freight costs to the average weighted distanceof each state to the national market. Well-positioned WestVirginia is within 66 percent of the U.S. population onovernight delivery. Transportation costs for a typicalfacility in West Virginia are estimated to be below thecompeting states’ average, representing average annualsavings of $81,125.

This information was used to develop a detailed annualoperating expense statement, which served as abaseline for estimating costs for West Virginia and thecomparison states.

These national baseline costs were adjusted by state-specific cost differentials for various factors (wage rates,

costs are particularly important. West Virginia can offersignificant savings in electricity costs, with the lowestindustrial electric rates in the nation.

Source: Dun and Bradstreet, March 2006

Raw materials consumed in the plastics production process Number of producers within 250 miles

Plastic resins consumed in the form of granules, pellets, powders, liquids, etc. 50

Acrylates and methacrylates, monomers 18

Vinyl chloride, monomer 8

Other cyclic crudes and intermediates 42

Synthetic organic dyes, pigments, lakes and toners 69

Phenol 1

Styrene 3

Alcohols, except ethyl 9

Ethylene 5

Propylene 1

Butadiene 2

Vinyl acetate, monomer 1

Formaldehyde 4

Total 213

Major products

The plastic cluster consists of four North AmericanIndustrial Classification System (NAICS) groups:Recycling is the common thread in the four NAICSgroups of the plastic segment: plastic materials andresins (325211), specialty resins (325991), plastic recycling(562920) and fabricated plastic (3261).

Raw materials

The availability of raw materials and supplies is a primaryconsideration in locating plastic manufacturers. Theamount of raw materials used may vary from companyto company; an industry average is more than 60 percentof total production costs. These materials are comprisedprimarily of polymer building block chemicals (monomers),catalysts and additives, many of which are produced inWest Virginia.

Wood County’s - DuPont Washington Works Site

Come see for yourself why West Virginia hasbecome a location of choice for plastic companies.Visit our workplaces. Travel our highways. Meet ourpeople and discover why we wish you were here.

Discover West Virginia

West Virginia offers unparalleledadvantages for location and operationof plastic businesses:

> Strong industry presence, growth andtechnical capacity

> Plentiful, affordable, experienced labor with industry-specific skills

> Plentiful raw materials

> Advanced telecommunications infrastructure and abundant, affordable energy

> Low operating costs and high profitability potential

> Strong work ethic with high productivity, low absenteeism and low turnover

The state also offers a competitive development assistance program to lower your costof startup and operations:

> Training grants are available to existing and new employers through programs such as the award-winningGovernor’s Guaranteed Work Force Program.

> For qualified companies that create at least 20 new jobs (10 jobs in the case of qualified small business) as a result of their business expansion project, the State’s Economic Opportunity Tax Credit Program can offset up to 80 percent of specified business taxes for a period of up to 13 years. If a qualified company that creates the requisite number of jobs pays an annual median wage higher than the statewide average non-farm payroll wage, then the qualified company can offset up to 100 percent of the specified taxes for up to 13 years.

> The state offers a Strategic Research and Development Tax credit. Direct R&D expenses are eligible for a state tax exemption.

> Low-interest, direct business loans are available from the West Virginia Economic Development Authority(WVEDA) for business location or expansion projects. Loans are available at rates as low as 4 percent, with 15-year terms available. Loan guarantees are also available through the state’s capital access program in conjunction with participating commercial banks.

> Special financing may be available to public or private entities through the West Virginia Infrastructure and Jobs Development Council for infrastructure improvements (land, building and machinery acquisition or improvements; utility improvements, etc.) that will support job creation. Emphasis is placed on development in business and industrial parks and projects resulting in immediate job creation.

Discover West Virginia where industry, technology andeducation thrive. Acquaint yourself with a state where astrong work force is ready to deliver a remarkable profitmargin. Get to know the hills and valleys where resourcesabound and a good quality of life is guaranteed. Welcometo West Virginia, a state that’s home to good business.

West Virginia Development Office1900 Kanawha Blvd. E., Charleston, WV 25305-0311

(800) 982-3386 www.plasticswv.com

Polymer Alliance Zone, Inc.One Polymer Way, Davisville, WV 26142

(888) 711-1143 www.pazwv.org