Overall Profitability
Profitability is higher and operating
costs are lower for plastic enterprises
in West Virginia compared to the national
average and competitor states.
A medium to large West Virginia establishment
(with 150 to 250 employees) would enjoy
total operating cost savings averaging
$753,024 versus the comparison states.
Specific savings of $436,824 would
accrue in labor expenses and $316,200
in non-labor operating expenses.
Profitability in West Virginia would
average 3.3 percentage points higher
than in the comparison states.
| Profitability |
U.S. |
Region |
W.Va. |
W.Va.
advantage
vs. 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
Labor-related costs in West Virginia
are very low.
A typical company in West Virginia
could expect to save an average of $436,824
in payroll and related expenses in comparison
to competitor states.
This is directly attributable to West
Virginia’s low average annual
wage for the industry cluster, $41,131,
which is less than 83 percent of the
national average of $47,637 and 90 percent
of the competing state average of $43,514.
West Virginia’s low cost of living
also helps to keep labor costs low.
Labor costs are defined as the combined
annual costs of wages, workers' compensation,
unemployment insurance and other fringe
benefits for a national average operating
establishment in the indicated NAICS
group. Wages are based on 2004 BLS data
for the U.S. and the respective states.
| Labor
Costs |
U.S. |
Region |
W.Va. |
W.Va.
advantage
vs. 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 Utility Costs
A cost analysis reveals that a West
Virginia facility would achieve utility
cost savings averaging $193,379 annually
compared to the competing states.
West Virginia can offer significant
savings in electricity costs, with the
third-lowest industrial electric rates
in the nation.
| Utility
Costs |
U.S. |
Region |
W.Va. |
W.Va.
advantage
vs. 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 Approach
A comparative analysis of operating
costs and profitability was prepared
for an average national plastic establishment
in West Virginia versus the 10 surrounding
states considered 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
operating and financial characteristics
derived from the most current Annual
Survey of Manufactures, published by
the U.S. Census Bureau; Annual Statement
Studies, published by Robert Morris
Associates; and national input/output
coefficients for various factor costs.
This information was used to develop
a detailed annual operating expense
statement, which served as a baseline
for estimating costs for West Virginia
and the comparison states.
These national baseline costs were
adjusted by state-specific cost differentials
for various factors (wage rates, utility
rates, etc.) to derive operating costs
for West Virginia and the comparison
states.
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