New National Report Highlights Shale’s “Incredible Impact” on American Manufacturing

New supplies of clean and affordable domestic natural gas are driving an American manufacturing revolution, according to the new study commissioned by the U.S. Conference of Mayors (USCM).

Like similar studies, this new report details the overwhelmingly positive impact natural gas has had – and is having – on our nation’s manufacturing sector, job growth and enhanced competitiveness in the global marketplace. “The energy intensive industry…has been a key component in the manufacturing expansion and has played a key role in the country’s overall economic recovery,” said Waterbury, CT Mayor Neil O’ Leary, Vice-Chair of the USCM’s Manufacturing Task Force.

Here are several report highlights [press release & key findings]:

  • Since the end of the recession, the nation’s manufacturing sector has been a keystone of economic growth. … Over the last three years, metro area manufacturing employment has expanded by an average annual rate of 1.7%. Energy intensive industry…has been a key component in manufacturing’s expansion.
  • The profusion of available natural gas and oil resulted in a surge in plastic, rubber, resin and chemical manufacturing thanks to lower costs and increased refining volume; as a result these industries saw a combined employment increase of 2.6% across all metropolitan areas.
  • These energy intensive sectors will continue to boost the US economy for years to come as exploration and extraction fuel the iron, steel, machinery and fabricated metals industries, and cheaper natural gas stimulates demand from organic chemicals, resins, and plastics.
  • Cheaper natural gas will also benefit the housing market recovery as it lowers the costs for construction and building materials such as flat glass and cement.
  • Domestic demand as well as that from growing global economies, combined with a regained competitive advantage will lead to extra capacity, higher output, job growth, decreased unemployment for the US, and an improved trade balance.
  • In the coming years, energy-related chemicals manufacturing in the US will gain a significant competitive advantage in world markets via the abundance of cheap natural gas.
  • Natural gas plays a key role in manufacturing both as fuel for plants and feedstock in the production of petrochemical products; it is also heavily used in the agriculture, pharmaceutical, transportation and construction industries. That natural gas is now available at a fraction of the price of its oil equivalent presents enormous market opportunities for the US.
  • Energy intensive manufacturing has played a key role in the recovery of our nation’s metropolitan economies, and the recently new availability of inexpensive natural gas and unconventional oil plays will support long term economic growth in a variety of industries.

Here’s what others are saying about the report:

  • Natural Gas has “Incredible Impact” on Manufacturing, National Economy: Energy-intensive manufacturing employment will increase by more than 1 percent a year in the United States through 2020. … The U.S. Conference of Mayors report on the economic impact of the domestic oil and natural gas boom said manufacturing employment in metropolitan areas has expanded by 1.7 percent per year on average over the past three years. …  Energy-intensive manufacturing sectors added more than 196,000 jobs in metro areas from 2010 to 2012. … “We’re all aware of the incredible impact the energy revolution is having on our national economy,” Virg Bernero, mayor of Lansing, Mich. … “The growing competitiveness and increase in employment from these manufacturing sectors are important to our cities and metro economies.” Manufacturing industries including steel, iron, fabricated metals and machinery have benefited from the natural gas boom, the report said. … Mayor Neil O’Leary said savings from cheaper natural gas has helped manufacturers in Connecticut fund retraining programs. “All that equates to jobs.” (Reuters, 3/20/14)
  • “U.S. Manufacturing is Coming Back—Thank Shale”: The shale mining industry’s rising demand for materials and equipment along with the abundance of cheap fuel are fueling a modest renaissance in American manufacturing. … The shale extraction industry is itself driving growth through its hunger for steel pipeline, extraction machinery and other materials needed at domestic shale deposits, including…the Marcellus shale in Pennsylvania. The availability of cheap fuel has in turn allowed these energy intensive manufacturing industries to cut costs and compete better with foreign imports. … Cheaper energy is allowing many types of manufacturing to grow in the U.S. The report credits shale gas with lowering production costs for everything from feedstock to building materials. Cheaper energy will constitute a competitive advantage for U.S. companies, attracting foreign buys for U.S. products and improving the trade balance. (CNBC, 3/20/14)
  • Affordable, Abundant Shale has “Ignited a U.S. Manufacturing Surge”: Sinking natural gas prices have stung U.S. energy producers, but they are linked to more than 196,000 new manufacturing jobs in major metropolitan areas and a $124 billion boost to sales for energy-intensive products like fabricated metals and plastics. … Industrial sectors have pushed the national economy further in its recovery from the recession that began in 2007, and will probably underpin economic growth through 2020, according to the report. Through the end of the decade, manufacturing employment could jump 1 percent each year in the United States, led by fabricated metals, machinery and iron and steel manufacturing. (Houston Chronicle, 3/20/14)
  • Natural Gas “Reigniting American Manufacturing”: A surge in natural gas production could lead to a modest increase in manufacturing jobs in the Scranton/Wilkes-Barre metro area, according to a report by the U.S. Conference of Mayors. The report forecasts a net gain of 994 manufacturing jobs in the region between 2012 and 2020. The report credits a nationwide demand for pipelines and machinery to produce and transport oil and natural gas, coupled with cheap natural gas as a fuel and chemical feedstock, for reigniting American manufacturing. … Fabricated metals and plastics and rubber are the two highest-employing manufacturing sectors in Scranton and Wilkes-Barre, the report states. In 2012, those industries employed 4,164 and 3,078 people, respectively. By 2020, 4,785 people will work in fabricated metals and 3,437 will work in plastics and rubber, an increase of about 15 percent and 12 percent, respectively, the report states. (Scranton Times-Tribune, 3/21/14)

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