Since joining the American Chemistry Council (ACC) in 2008, President and CEO Cal Dooley has enhanced member value and strengthened the competitive position of U. S. chemical manufacturers by advocating for a business and regulatory climate that drives innovation, supports job growth and enhances safety. BIC Magazine recently visited with Dooley to learn more about capital investment happening across the U.S., new issues and regulations affecting the chemical industry, and what the U.S. has to do to remain globally competitive.
BIC: Can you elaborate on the new projects and capital investment taking place in the chemical industry?
DOOLEY: Thanks to robust production of natural gas from shale formations, the U.S. has the most competitive chemical industry in the world. Companies from around the globe are investing heavily in building new facilities or expanding production capacity here.
At last count, 310 chemical and plastics industry projects cumulatively valued at $185 billion are on line or in some stage of development. The investment could lead to $95 billion per year in new industry output and 823,000 permanent new jobs across the economy by 2025.
BIC: How important is the chemical industry to other industries such as manufacturing and construction?
DOOLEY: More than 96 percent of U.S. manufactured goods are touched by chemistry, and every manufacturing industry depends on chemistry somehow. Chemistry is key to a number of major consumer products, including apparel, appliances, furniture, home furnishings, light vehicles, sporting goods, and building and construction. In 2016 , the chemical industry accounted for 48 percent of all manufacturing construction spending, outpacing even transportation and health care.
BIC: How and why do you think the Appalachian region could become a second major chemical and plastics manufacturing zone in the U.S.?
DOOLEY: The Gulf Coast region is the birthplace and longtime center of the U.S. chemical industry, and much of our new investment has been concentrated there. So far, 220 chemical and plastics projects worth $131 billion have been announced for the Gulf Coast. By 2025, they are expected to create and support 317,000 jobs and $76 billion in tax revenue annually. The Gulf Coast investment is well underway, with 53 percent completed or under construction.
The Appalachian region could be next to join in. It enjoys distinct benefits such as proximity to a world-class supply of raw materials from the Marcellus/Utica and Rogersville shale formations and to the manufacturing markets of the Midwest and East Coast. Several companies have announced projects, and there is potential for a great deal more.
ACC
An ACC report, "The Potential Economic Benefits of an Appalachian Petrochemical Industry," examined the quad-state region of West Virginia, Pennsylvania, Ohio and Kentucky. It found that increased chemical industry investment could lead to 100,000 permanent new jobs, including 25,700 chemical and plastics products manufacturing jobs, 43,000 jobs in supplier industries and 32,000 "payroll-induced" jobs in communities where workers spend their wages, as well as $2.9 billion in new federal, state and local tax revenue annually.
New energy infrastructure will be key. What's needed is a storage facility and pipeline distribution network -- a hub -- for NGLs and chemicals. Lawmakers have introduced legislation that could help make the hub a reality. These bills would study the hub's benefits, make the hub eligible for existing DOE loan programs and improve federal regulatory permitting for energy infrastructure.
BIC: Could you give an update on the Toxic Substances Control Act?
DOOLEY: Enactment of The Frank R. Lautenberg Chemical Safety for the 21st Century Act (LCSA) last summer was a watershed moment for our industry. Since then, ACC has been constructively engaging with EPA in its effort to meet the stringent but achievable statutory deadlines for completing several essential rulemakings.
The inventory reset, prioritization and risk evaluation rules, which were finalized in June, establish a strong framework for implementation of LCSA and are essential to the efficient, high-quality chemical risk evaluations envisioned by Congress when the law was written. The on-time completion and delivery of these final rules was a welcome sign that the agency, under Administrator Scott Pruitt's leadership, is following through with its public commitment to the successful implementation of LCSA.
Getting the framework rules in place was only the beginning, though. ACC and our member companies will continue to engage with the agency in constructive ways to help ensure the efficient and effective implementation of LCSA. Our goal is to make sure it achieves what Congress intended: protecting human health and environment, enhancing public confidence in the federal chemical regulatory system, and enabling our industry to continue to innovate, create jobs and grow the economy.
BIC: What other policy issues is ACC keeping an eye on in Washington?
DOOLEY: We want to help policymakers address infrastructure problems. Our industry is a major user of the transportation network, and our companies make many of the innovative materials needed to modernize America's decaying infrastructure, especially its water systems. The federal government must adopt policies that use market-based solutions to improve the efficiency of the freight rail network and enhance the capacity of ports and highways. We're urging Congress to approve legislation that ensures all federally funded infrastructure projects require an open, competitive bidding process for all materials.
Congress also needs to use a once-in-a-generation chance to achieve tax reform. Our country needs a simpler and fairer system that is more conducive to economic growth in the 21st-century global marketplace. Reform must reflect the vital role of manufacturing and the jobs it creates. Since manufacturing is capital- intensive, tax treatment of costs to invest in factories and equipment is important. Because advanced manufacturing relies on research, the tax system needs to support incentives for R&D expenses.
BIC: How will modernizing NAFTA affect the industry? Do you think the changes will benefit or hurt the industry?
DOOLEY: The North American Free Trade Agreement (NAFTA) has provided enormous benefits for the chemical sectors in Canada, Mexico and the U.S. Since it entered into force, trade in chemicals among NAFTA countries has more than tripled, from $20 billion in 1994 to $63 billion in 2014.
The U.S. trade surplus in industrial chemicals is $28.2 billion and is likely to grow as new chemical industry investment comes on line. The increased chemical production capacity cannot all be consumed domestically. To maximize its competitive edge, the U.S. needs to strengthen and expand access to key foreign markets. Our goal is a modernized NAFTA that creates efficiencies that enhance economic integration and make North America's co-produced goods and services more competitive.
BIC: What will be the biggest breakthroughs in the U.S. chemical industry in the next 1-2 years?
DOOLEY: Chemistry companies are at the forefront of innovation, from developing solar-powered aircraft to pioneering artificial skin, chlorinating drinking water, and protecting our soldiers and first responders in the line of duty. In 2016, chemical companies invested $91 billion in R&D, more than leading industries such as electronics, automobiles and health care.
The innovative people and products of chemistry are proving essential to creating the solutions that help us live healthier, longer and more productive lives. Solutions to the challenges facing our world will come from chemistry. Our vehicles, homes and offices will continue to become more energy-efficient; we'll keep making products that enable an abundant, safe food supply and clean drinking water for a growing population, and we'll continue advancing technologies that help reduce emissions and improve the environment.
BIC: How has this administration benefited America's global competitiveness through the chemical industry?
DOOLEY: The U.S. enjoys a global competitive edge in regulation. Today's regulatory and policy environment is more favorable to advancing an agenda that meets the needs and goals of our industry than any in recent memory. Early actions by this Congress and administration include decisions that could fundamentally shift U.S. energy policy by expediting the permitting of energy infrastructure, reconsidering regulations that stifle domestic development, expanding access to resources on federal lands and evaluating rules regulating greenhouse gas emissions.
American chemistry accounts for 15 percent of the world's chemical shipments and is poised for growth over the next decade and beyond. We are among the lowest-cost producers of several key building-block chemicals. The administration's approach will help ensure that our nation has the pipelines and the ability to access -- in an environmentally responsible way -- our vast supplies of affordable natural gas, which is the key to maintaining our longterm competitive advantage.
For more information, visit www.americanchemistry.com or call (202) 249-7000.
