Staffing the 'Plastics Manufacturing Renaissance'

Staffing the 'Plastics Manufacturing Renaissance'
Tens of billions of dollars in new US plastics manufacturing capacity could create hundreds of thousands of new jobs, a recent report concludes.

Nearly $47 billion in potential new manufacturing capacity investments over the next decade could translate into approximately 462,000 additional permanent jobs tied to the U.S. plastics industry, according to a recent report by the American Chemistry Council (ACC).

"A decade ago, the United States was among the highest-cost plastics producers," Steve Russell, ACC's vice president of plastics, said in a May 13 press release. "Today, America is one of the most attractive places in the world to invest in plastics manufacturing. Even after recent declines in oil prices, our nation has a decisive edge."

Motivated in large part by the wide availability of cheap domestically produced natural gas liquids (NGL), since 2012 plastics manufacturers have announced plans to build or expand more than 400 U.S. projects, according to ACC's report, "The Rising Competitive Advantage of U.S. Plastics." The estimated $46.8 billion in new investments falls into the following broad categories:

  • Plastic resins: $24.7 billion
  • Plastic products: $19.6 billion
  • Plastic compounding and additives: $2.5 billion

The investments will help manufacturers to meet anticipated increased demand from plastics-intensive industries such as automotive, building and construction and packaging. According to the report, the projects will propel total U.S.  plastics industry-generated employment past the 2.7 million mark – reflecting a more than 20-percent increase. ACC projects the following job growth breakdown:

  • 127,500 direct jobs in the plastics industry
  • 172,900 indirect jobs in industries that supply materials, utilities, parts and services to the plastics sector
  • 161,000 payroll-induced jobs supported by new employment in the plastics industry and its supply chain

In addition to the above permanent jobs, the investments should create approximately 97,000 temporary jobs during the peak of construction, according to ACC. 

Plastic Money, Source: American Chemistry Council
Plastic Money, Source: American Chemistry Council

Russell recently shared some insights about what he calls the "plastics manufacturing renaissance" with DownstreamToday. Excerpts from the conversation follow.

DownstreamToday: What effect(s) has lower crude oil prices had on the petrochemicals growth outlook in the U.S., and is the report somewhat less optimistic that it might've been when oil prices were higher? Haven't plants using naphtha-based feedstocks in Europe and Asia become more cost-competitive to natural gas-based facilities?

Steve Russell: Plentiful and affordable supplies of energy and feedstock from shale formations are helping to revive American manufacturing and increasing the competitiveness of the U.S. petrochemicals and plastics industries. U.S. producers continue to enjoy a strong advantage, even at current crude oil prices. We use the oil-to-gas-price ratio (Brent/Henry Hub) as a proxy for petrochemical competitiveness. At its peak, the ratio hit 40, and has since dropped to a little above 23. However, as long as the ratio remains above 7, the U.S. and natural gas have the advantage. In addition, the U.S. is an early mover on shale, which we believe will position the U.S. for long-term competitiveness.

Tripling US Plastics Trade Surplus, Source: Nexant Consulting
Tripling US Plastics Trade Surplus, Source: Nexant Consulting

DownstreamToday: The report states: "At the end of the day, barring any regulatory disruptions or other challenges, a total of more than 460,000 new jobs will be supported..." Which types of "regulatory disruptions or other challenges" could threaten this job growth, and are there any specific policy proposals under consideration or other factors currently at play that ACC members are monitoring?

Russell: To date, all permits have come through on a timely basis. Potential challenges could include regulatory disincentives for natural gas and/or NGL production and distribution, shortages of skilled workers or insufficient infrastructure investments to ensure that plastics can move smoothly to domestic and international markets.

DownstreamToday: Do you have a geographical breakdown of where the more than $130 billion in announced new chemical manufacturing capacity will be located?

Russell: Dramatic growth in investments, jobs, production and exports are expected over the next decade. A lot of projects are planned in the Gulf Coast, specifically in Texas, the Midwest (Wisconsin, Michigan, Illinois, Indiana) and the Ohio Valley (Ohio, Kentucky) regions.

Projected New Direct US Plastics Industry Jobs In the Next Decade, Source: American Chemistry Council
Projected New Direct US Plastics Industry Jobs In the Next Decade, Source: American Chemistry Council

DownstreamToday: With the upstream oil and gas sector in a downturn, are you seeing a significant increase in the number of qualified workers available to the petrochemicals sector – in other words, people jumping from the upstream to downstream and chemicals sectors? Are there any trades and other specialties that are still hard to find?

Russell: There may be some limited overlap between the skills needed in the oil and gas sector and in the petrochemicals sector. To the extent that there are skills that can be transferred to the petrochemical sector, companies would be interested in that.

DownstreamToday: How are chemical manufacturers helping to ensure that there will be enough qualified people to fill the estimated 127,500 new direct jobs over the next decade?

Russell: Chemical companies already have started working with communities through public-private partnerships with high schools, vo-tech schools and community colleges to build the kinds of manufacturing skills that will be needed to run these new facilities and help inform students and families about the types of opportunities that are becoming available.

As an example, Chevron Phillips Chemical has donated more than $100,000 to Lee College in Baytown, Texas, to start a workforce development program. And overall, Chevron Phillips Chemical has donated more than $1 million in cash and equipment to support educational programs at local colleges in communities where they operate. They also provide about $300,000 per year to four-year colleges and universities.

DownstreamToday: The report mentions that the trend of offshoring is being reversed in resin production. How is this reversal taking place?

Russell: The plastics manufacturing renaissance is primarily a story of new domestic growth, supplemented by reshoring. The 462,000 direct, indirect and payroll-induced jobs described in the report include both domestic growth and reshoring. Organic, domestic growth – that is, new steel in the ground – is expected to drive new jobs in producing plastics raw materials. In the sectors that process these raw materials to make parts and products, jobs growth is expected to include both new, domestic growth and the reshoring of manufacturing that had gone overseas and is coming back. Reshoring jobs are not likely to take full effect until significant new resin capacity has started up in the Unites States.

DownstreamToday: Would you like to add any comments regarding this report and the outlook for U.S. plastics manufacturing?

Russell: The plastics manufacturing renaissance is expected to create new jobs in many U.S. communities, and increased consumer spending will likely create demand for more plastics products in sectors such as packaging, automotive and building and construction. Additionally, we expect demand for stronger, lighter plastics to continue to grow as communities here and abroad work to achieve sustainability goals, such as saving energy, lowering greenhouse gas emissions, curbing waste and improving quality of life.

 


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