It’s a new year and America’s chemical industry is ready for lift off, thanks to the competitive advantage provided by natural gas from shale, which is driving domestic investment and creating jobs. Check out ACC’s Year End 2013 Chemical Industry Situation and Outlook if you haven’t already.
Kevin Swift, ACC’s chief economist, summarized the good news:
American chemistry is back in the game. After a decade of lost competitiveness, American chemistry is reemerging as a growth industry. We’re seeing growing end-use markets; strengthening employment; surging exports; and an influx of tremendous capital investment. Put simply, the U.S. is now the most attractive place in the world to invest in chemical manufacturing.
Consider just a few data points. Over the next five years, chemical industry shipments are expected to grow by almost 25 percent, pushing industry shipments to $1 trillion by 2018. Chemical industry exports are expected to jump tenfold in just five years, from $2.8 billion in 2013 to almost $30 billion in 2018.
Over the next five years, the ACC projects chemical industry capital spending to reach $60 billion. As of early December, chemical companies have announced 136 planned or possible investments in the United States worth $91 billion, with more than half of those projects proposed by non-U.S. companies.
Employment in the chemical industry is expected to have grown by 1.3% in 2013 with continued additions through 2018 — in contrast to a continuous decline in employment from 1999-2011. And because chemical industry workers are among the highest paid in the manufacturing sector, we can expect growing payrolls to strengthen local economies.
As the Houston Business Journal reported, “chemical companies spent much of 2013 thanking their lucky stars for shale gas, which is single-handedly reviving the U.S. chemical industry.”
The chemical industry boom echoes throughout America’s manufacturing sector and growth in the chemical industry is a harbinger of economic good times in the supply chain and signifies “likely trends in the wider economy,” the ACC report noted.
Consumers are benefiting as well from affordable natural gas. A new study by the Boston Consulting Group (BCG) has found that the average U.S. household will save as much as $1,200 annually by 2020 – roughly equal to a boost in U.S. disposable income of nearly 10 percent. BCG partner Justin Rose, a co-author of the study, said:
Our research shows that cheap natural gas is already having a bigger impact on family budgets than many Americans think. Those benefits should grow in the years ahead as more of the cost savings from low [natural] gas prices are passed along to the end consumer.
Best of all, the economic advantages of natural gas are increasingly likely to endure. In its annual report, the Energy Department’s Energy Information Administration projects natural gas production jumping 56 percent from 2012 to 2040. Now that merits a New Year’s toast.