Business
4:51 am
Thu March 28, 2013

Manufacturing Redux Benefits Texas Gulf Coast

Originally published on Thu March 28, 2013 8:18 am

Transcript

DAVID GREENE, HOST:

And let's stay on the topic of energy. Millions of Americans have lost factory jobs over the past decade, but U.S. manufacturing is coming back to life, in large measure because of abundant supplies or cheap natural gas. From member station KUHF in Houston, Andrew Schneider reports on how the Texas Gulf Coast is booming as companies build new plants.

ANDREW SCHNEIDER, BYLINE: Welcome to Cedar Bayou, a 3D maze of silver pipes and round towers in the Houston suburb of Baytown. And for the first time in more than a decade, this Chevron Phillips chemical-making complex is growing. Just ask Perry Cessna.

PERRY CESSNA: With my hiring group, we had over 20 individuals. This last hiring group they just hired, it was over 20 individuals, as well. There's been a lot of growth in a short period of time.

SCHNEIDER: Perry grew up in the petro-chemical industry. His grandfather worked for Exxon, his father worked for a smaller company in his hometown of Hardin, Texas, and since June, the 28-year-old has been a plant worker at Cedar Bayou. Chevron Phillips Chemical Company is upgrading its chemical manufacturing facilities both here and down the coast in Old Ocean at a cost of $5 billion.

Peter Cella is CEO of Chevron Phillips Chemical.

PETER CELLA: For most of the last 20 years, the best places for growth capital have been in the Middle East.

SCHNEIDER: Cella says the main factor for any chemical company in deciding where to build a plant is the affordability of raw materials, chiefly the liquids that can be extracted from natural gas. A chemical plant is able to break these fluids down into their chemical building blocks and use those to make everything from food packaging to pharmaceuticals.

To build up their own chemical industries, countries like Saudi Arabia provided government subsidies to hold down the costs of these kinds of liquids. When natural gas prices started climbing in the 1990s, U.S. companies stopped investing in plants at home.

CELLA: What you saw for about a 15-year period of time was zero growth in the industry.

SCHNEIDER: Earl Shipp worked at a Dow Chemical plant in Freeport, southeast of Houston, and saw the industry's decay firsthand.

EARL SHIPP: You did not see plants being built. You saw a slow, steady decrease in employment.

SCHNEIDER: To stay with the company, Shipp moved to Dubai for five years. Now he's back in Freeport, where he runs all of Dow's Texas operations. He says what brought him back and what triggered the multi-billion dollar building boom is the availability of those cheap natural gas liquids. The industry refers to them as feed stocks.

SHIPP: We have low-cost, affordable feed stocks again in North America. So it's the start of what some of us in the industry call a renewal of our industry in the United States.

(SOUNDBITE OF WHISTLE)

SCHNEIDER: Dow Chemical and Chevron Phillips Chemical plan to hire more than 1,000 workers to staff the new plants, and building those facilities will take more than 10,000 construction workers and engineers. That's just the start. Again, Chevron Phillips CEO, Peter Cella.

CELLA: For every one direct chemical job in one of our plants, there are six additional indirect or induced jobs to serve that job.

SCHNEIDER: Economists generally put the multiplier effect at three jobs. But whatever the exact number, it's a lot of new paychecks. But there are long-term concerns. One is the volatility of natural gas prices, and many environmentalists raise serious questions about the impact of fracking on water resources. The industry itself worries about staffing, because petro-chemical workers tend to be older. Many will soon retire. A generation of weak hiring took a huge toll on training programs for engineers and skilled workers, according to Dow's Earl Shipp.

SHIPP: Now what we're seeing is that our training and development pipelines are too small to meet the projected needs of the industry.

SCHNEIDER: But in the short run, the Gulf Coast is benefiting, as workers pour in from all over the country. And it means locals like Perry Cessna can carry on the family tradition.

CESSNA: When a company's, you know, investing back in itself, it makes you feel, you know, that you can grow.

SCHNEIDER: That's all the more important, because Perry's family is growing, too. He just became a father for the first time. For NPR News, I'm Andrew Schneider, in Houston. Transcript provided by NPR, Copyright NPR.