America's road to new manufacturing resurgence

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With the discovery of these abundant new resources, the United States is capable of never before realized realities, including new U.S. investments, job creation, and economic growth – at a time when economic growth is desperately needed. As President Obama recently stated during his acceptance speech in Charlotte, natural gas development will create 600,000 new American jobs. 

In the words of Daniel Yergin, co-founder and chairman of Cambridge Energy Research Associates, an energy research consultancy that is now part of IHS Inc., “The impact of the U.S. energy revolution is only beginning. It is already providing a foundation for a domestic renaissance in manufacturing.” In fact, PricewaterhouseCoopers recently predicted that shale gas development could add approximately 1 million jobs by 2025, encourage greater investments in U.S. plants and reduce U.S. manufacturers’ natural gas expenses by as much as $11.6 billion annually through 2025.

Fortunately, this long-term renaissance of energy-intensive manufacturing is occurring in America’s traditional rust-belt industries that were previously shuttering facilities and cutting jobs over the last several decades. According to the Boston Consulting Group (BCG), “chemical manufacturing employment increased in 2011 for the first time since 1997 and primary metal manufacturing (iron and steel) employment increased in two consecutive years (2010 and 2011) for the first time since the mid-1990s.”

For instance, the U.S. shale-gas revolution has created natural gas prices that are about three times cheaper here than in Europe – causing the U.S. chemical industry to reap the benefits through cheaper energy and feedstock. Record gas production has also driven down the cost of ethane, a component that is converted to ethylene, by 60 percent this year – giving U.S. chemical makers a competitive edge in making ethylene – an essential element to making everything from plastics to antifreeze.
 
Armed with information on the abundant energy opportunities now available across the nation, many companies are now deciding to restart domestic ventures as well as upgrade existing sites, rather than invest abroad. In fact, according to BCG, “a quarter of manufacturing companies responding in 2010 reported they returned some or all of their production back to North America from a low-cost country, and 22 percent of companies last year reported moving production home. Looking ahead, one out of every three U.S. manufacturing companies reported they are planning to research bringing production back home from low-cost locations in 2012.”
 
For example, this summer Nucor Corp created a new $750 million iron-processing plant in Louisiana. While there are many new projects planned to be completed across the South and Midwest, these are not the only areas benefiting from this surge. In fact, Dow Chemical noted that it had assembled a list of 91 announced manufacturing projects in the United States, representing $70 billion in potential investment and up to 3 million jobs that various companies have proposed or begun because of the depth and breadth of newly realized, low-cost, lower-carbon, natural gas resources. And many other major companies, including Bayer MaterialScience, Caterpillar, and Timken have also already shared plans for extensive investments in various locations throughout the U.S. With this growing list of companies committed to investing in the U.S, it is clear that the nation truly is on the brink of an energy and manufacturing boom.
 
With the strong performance of American manufacturing in 2011, it is possible that we are at the beginning of a great manufacturing resurgence in America. From affordable resource supplies to job creation, the prospects are endless – as long as we take deliberate steps toward actualizing these opportunities. We are on the brink of an energy and manufacturing renaissance, and the steps we take now will shape and determine the path for America’s future.

Kunz is a trustee with the International Union of Operating Engineers. 


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