The Boom In Oil And Gas Development Are Game Changers For The Manufacturing Sector
The shale revolution and a boom in other unconventional oil and gas development are game changers for the manufacturing sector, driving down both the cost of energy and the cost of important feedstocks like ethane. This abundance of affordable natural resources, combined with advanced manufacturing infrastructure, high-tech distribution networks and the ability to innovate quickly, puts America in a competitive position in chemical manufacturing for the first time in decades. The result has been a dramatic reversal from the mid-2000s, when the United States was one of the world’s most expensive locations for manufacturing chemicals, to today when it is among the most affordable. International chemical companies are taking notice and have announced planned or possible investments in the United States worth more than $91 billion.
According to IHS Global Insight, by 2025, nearly 3.9 million manufacturing jobs will be supported by unconventional oil and gas development and, along with energy-related chemicals activity, will contribute nearly $533 billion annually to the GDP.
Low-Cost Ethane Feedstocks Strengthen U.s. Global Position
A vibrant petrochemical manufacturing sector lifts the rest of the manufacturing sector, since petrochemicals are a key component of the supply chains for many other industries. The ripple effect continues as a strong overall manufacturing sector fosters a robust and stable economy, providing Americans with well-paying jobs that are key to our way of life.
According to the National Association of Manufacturers, every $1.00 spent in the U.S. manufacturing sector overall returns $1.48 to the economy, the highest multiplier effect of any economic sector. In addition, workers receive nearly 20 percent more in pay and benefits, compared to workers in non-manufacturing sectors.
AFPM members are committed to the realization of a manufacturing renaissance. After a decade of almost zero capacity expansion in U.S. petrochemicals manufacturing, shale development is spurring growth. Many of our members are investing billions of dollars in manufacturing capacity to harness vast new supplies of natural gas liquids for cost-effective petrochemical production and in new technologies to improve efficiency and reliability.
Laying The Groundwork For New Manufacturing Infrastructure
However, potential roadblocks, including capacity constraints in the U.S. construction industry and permitting processes, may impede our ability to realize the full potential of a manufacturing renaissance. In order to address potential barriers, AFPM has formed the American Shale and Manufacturing Partnership (ASMP). This group will lay the groundwork for the development of more than $100 billion in announced new manufacturing infrastructure across the nation during the next decade by identifying which policies should be addressed to bring manufacturing back to the United States.
This multi-stakeholder initiative brings industry, academia, non-governmental organizations (NGOs), labor and government together to focus on shale development and its impact on American manufacturing. To guide its efforts, the ASMP has identified five key areas that are crucial to spur economic growth, job creation and global competitiveness for years to come:
- Federal and State Policies that create an attractive business environment and eliminate regulatory uncertainty.
- Environmental Practices to ensure the industry continues to provide better products while meeting or exceeding environmental requirements.
- Infrastructure Plans supported by streamlined access to construction capacity, equipment and permits.
- Workforce Development to communicate the benefits of a career in the industry and ensure availability of a well-trained labor pool.
- Research and Innovation to continue developing new products and processes that will spur ongoing industry growth.
The ASMP will release its recommendations and roadmap to a renewed manufacturing sector in early 2015.
- Allegheny Conference
- American Fuel & Petrochemical Manufacturers
- America’s Natural Gas Alliance
- Carnegie Mellon University
- Claude Worthington Benedum Foundation
- Consumer Energy Alliance
- Cynthia and George Mitchell Foundation
- International Association of Bridge, Structural, Ornamental & Reinforcing Iron Workers
- National Association of Manufacturers
- Pennsylvania Environmental Council
- Society of Chemical Manufacturers and Affiliates
- Texas A&M Engineering
- U.S. Chamber of Commerce Institute for 21st Century Energy