MSC in Observer-Reporter: Natural gas driving force behind Pa. manufacturing growth

By David Spigelmyer, David Taylor and Gene Barr

Pennsylvania is steeped with a rich manufacturing history – boosted by a blue collar, hardworking spirit upon which Pittsburgh, Philadelphia and the surrounding communities was built and is hardwired into our DNA.

While manufacturing has ebbed and flowed for generations, Pennsylvania is making things again, and that is a story worth celebrating on National Manufacturing Day.

In no less than a decade, Pennsylvania manufacturing has transformed as we are seeing new job opportunities, growth and investment in a sector that is the backbone of our economy. Consider our manufacturing output. After bottoming out in 2010, output has increased by $12 billion with Pennsylvania’s chemical products industry leading the way, according to National Association of Manufacturers’ data.

Today, in fact, 95 percent of American manufacturers are optimistic about the future, according to a National Association of Manufacturers’ member survey released earlier this year. Across Pennsylvania we are seeing that optimism play out in the form of expansion and job creation from projects like the multibillion-dollar Shell petrochemical facility in Beaver County, Hershey’s expansion in Luzerne County and a titanium producer’s investment in Washington County.

What is the key driver behind our manufacturing growth in Pennsylvania? Affordable natural gas produced from shale.

Thanks to the technological innovation that combines horizontal drilling and hydraulic fracturing, energy companies have unlocked an abundance of clean, American-made natural gas. Pennsylvania has seen a 400 percent increase in natural gas production since 2011 and is now the nation’s second largest natural gas producing state.

Record-setting production is giving domestic manufacturers a competitive edge as the tri-state region is the most attractive location for petrochemical manufacturing investment, according to a recent HIS Markit analysis.

Natural gas and its associated liquids like ethane, butane and propane, are key feedstocks used in many advanced manufacturing processes. Petrochemical manufacturers, for example, require reliable, affordable access to ethane to create the plastic for producing everything from food packaging to diapers.

Nationwide, domestic chemical manufacturing investment linked to shale gas now tops $200 billion, with 333 chemical industry projects announced, under construction or recently completed, according to an American Chemistry Council analysis. Nearly two-thirds of those projects have foreign investors, demonstrating the global interest in investing and growing American manufacturing.

Looking to take full advantage of Pennsylvania’s resource abundance, some manufacturers, like Proctor & Gamble in Wyoming County and Kimberly & Clark in Delaware County, have invested in on-site natural gas power generators to produce their own electricity.

Alongside rising manufacturing confidence, we are seeing the good-paying jobs that are essential for a strong middle class. More than 500,000 Pennsylvanians work in manufacturing earn 47 percent higher compensation than the state’s average.

American manufacturing job growth has been on a tear, adding the most jobs for any 12-month period since 1995, according to federal data.

And, if we get the policy equation right, Pennsylvania’s outlook is even more promising. A recent study by McKinsey & Co., called Forge the Future, predicts that Pennsylvania could see a $60 billion increase in GDP over 10 years _ if we fully leverage our abundant energy resources to grow manufacturing and other key consumer natural gas uses.

Pennsylvania has much to celebrate on Manufacturing Day. Greater collaboration and commonsense policies can encourage natural gas production and use, moving us closer to realizing shale’s truly generational opportunity.

David Spigelmyer is president of the Marcellus Shale Coalition; David Taylor is president of the Pennsylvania Manufacturers’ Association, and Gene Barr is president & CEO of the Pennsylvania Chamber of Business and Industry.

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