Shale Development Boosting Ohio Chemical Industry
Ohio has endured tough times. High energy costs caused much of the pain: between 1999 and 2005, natural gas prices quadrupled. The United States lost more than 5.5 million manufacturing jobs — 140,000 just in the chemistry industry. New investment was stifled. Just two years ago, Ohio was mired in the Great Recession and my industry faced the challenges of high and unpredictable costs of raw materials and electricity.
Fast-forward to the present. Fueled by abundant and affordable supplies of natural gas from the Marcellus and Utica Shales, the chemical industry is experiencing an economic renaissance that will help grow Ohio’s manufacturing base. Ohio’s chemical manufacturers are critical to finding solutions to the challenges of economic growth, jobs and energy security. If we adopt policies that maximize energy and chemical feedstock production, we can encourage job creation and community revitalization in the state.
The chemistry industry currently employs 42,000 people in Ohio. A study by the American Chemistry Council found that a new petrochemical plant in Ohio could trigger the construction of new chemical facilities here that would create 17,000 permanent, high-paying jobs in the chemistry and supplier industries, put $1 billion into the pockets of workers and increase state revenue by $169 million. These new plants would also provide 2,500 plastics companies with a reliable and inexpensive supply of chemicals in their products.
Nationally, increases in shale gas production-rich in ethane that is the feedstock of the chemical industry — could mean more than 400,000 jobs in the chemical and supplier industries.
Stable and inexpensive supplies of shale gas are absolutely essential to chemical industry growth in Ohio. Chemical manufacturers use natural gas to produce heat and power. More important, chemical companies also use natural gas as the primary ingredient needed to create the chemicals that go into the products Americans use everyday. Natural gas is to the chemical industry as flour is to a bakery.
Over 96 percent of all manufactured goods are directly touched by the business of chemistry, from tires and plastics to innovative, high-technology products of chemistry such as lithium-ion batteries and solar panels shipped to sophisticated companies around the world.
Chemical manufacturers have expanded because inexpensive and stable supplies of natural gas have given the industry a competitive edge in the global marketplace for the first time in years, especially over foreign companies reliant on expensive petroleum-based feedstock. The link between a stable and plentiful supply of shale gas and Ohio’s economic growth and prosperity is clear. Thanks to shale gas, chemical companies are planning new investment, restarting idled plants and planning new facilities — some even replacing chemical plants overseas.
The chemical industry’s growth is mirrored by other manufacturing success stories tied to shale gas. The Timken Co., a Canton manufacturer, recently said it employs 2,000 people, up 200 from the depths of the recent downturn. Republic Steel created 450 jobs in Ohio rather than moving to Mexico. And Whirlpool, according news accounts, moved 65 jobs from Asia to Ohio. “Its boom times once again for Ohio’s manufacturing industry,” pronounced recently.
Testimony at the recent U.S. House Subcommittee on Energy and Mineral Resources held in Steubenville touted the real-world benefits of shale gas on Ohio jobs and manufacturing. One example may suffice: Roland Taylor, business manager of the United Association of Plumbers & Pipefitters Local 396, noted that since 2008, new economic development projects in Ohio have produced $1.5 billion in new investments, nearly 5,100 new jobs and retained 7,840 others. Most important, the union’s local went from nearly 40 percent unemployment two years ago to full employment today.
For Ohio, the future is now. The sensible development of the Buckeye State’s shale gas resources represents a once in lifetime economic opportunity for Ohioans to reverse decades of misfortune that have plagued our manufacturing industry, and opens the door for an economic renaissance in Ohio.