Manufacturing and the Cracker Plant

Mar 18, 2020, 8:23am EDT

Ethylene Town? It’s not quite as catchy as Steel City and, even though metal manufacturing has gone down steadily over the past several decades, there’s little chance that Pittsburgh will change its iconic nickname.

Regardless, as the region prepares for the opening of Royal Dutch Shell’s Pennsylvania Petrochemicals Complex in Beaver County sometime in the next few years, could plastics manufacturing help fill the void left by the collapse of the steel industry?

David Taylor, president and CEO of the Pennsylvania Manufacturers’ Association, a nonprofit group based in Harrisburg, thinks it’s possible.

“The advent of the Shell facility is tremendously exciting,” Taylor said. “We’re seeing the huge surge in construction activity and all of the economic vitality that’s resulting from that.”

According to estimates from Shell, once operational, the ethane cracker facility, locally known as simply, “the cracker plant,” will provide about 600 permanent jobs.

Shell did not respond with a comment for this story.

According to Taylor, though, those jobs are just the start.

“The most exciting part is the work that will become possible because that facility is running,” Taylor said.

To understand the kind of businesses that could potentially pop up around an ethane cracker plant, it’s important to understand what it does.

Essentially, the plant will take natural gas harvested from the Marcellus Shale, separate the ethane, and “crack” a hydrogen molecule off of it to make ethylene, a main component of plastic.

“Ethylene is at the top of a value chain that, depending on how you process it, can yield an entire spectrum of different products,” Taylor said.

Shell estimates its facility will have the capability of producing 1.6 million tonnes of ethylene pellets per year.

“You have to remember, for the manufacturers that use that ethylene as an input, you’re paying not just for the molecules. you’re also paying for the cost of transporting them,” Taylor said. For this reason, Taylor says it makes financial sense for manufacturers to set up shop in the region.

And what kind of manufacturers could move to southwestern Pennsylvania?

“This is what’s exciting,” he said. “Depending on how you process it, the ethylene can yield every kind of paint, glaze, solvent, coating and adhesive, as well as every kind of plastic and rubber and Styrofoam. These are inputs that go into every single consumer good that you and I purchase and handle and use every day.”

Not everyone is as excited about the prospect of the petrochemical industry expanding its imprint in southwestern Pennsylvania.

While sources indicate that ExxonMobil Corp. has been scouting the area to put its own cracker facility in the region, Pittsburgh Mayor Bill Peduto has publicly expressed his displeasure with the industry.

“I oppose any additional petrochemical companies coming to western Pennsylvania,” he said at the Climate Action Summit held last October.

Peduto warned of the environmental impact of the industry, saying that businesses thinking of moving into the region are concerned about environmental quality.

“What they say is clean your air, clean your water,” Peduto said at the conference. “They’re not asking for free parking or tax breaks. They’re asking for the basics.”

But Taylor thinks the petrochemical industry could be a new dawn for the Pittsburgh area.

“We have a chance to resurrect Pittsburgh’s heritage of manufacturing,” Taylor said. “This is about bringing to life a whole new petrochemical manufacturing sector.”

While most of the new businesses Taylor expects to come to the region would be working with plastic, a possible boom in any sector of manufacturing would be welcome.

According to the U.S. Bureau of Labor Statistics, manufacturing jobs in the area have been on a steady downward slide. In the beginning of 2001, there were 128,000 manufacturing jobs, while at the end of 2019, there were only about 85,000 jobs in the Pittsburgh area.

Beaver County Commissioner Jack Manning is skeptical.

“A lot of people believe the end users are going to start moving to the area,” Manning said. “And I think that’s going to be very slow to materialize, quite frankly. If you’re on the West Coast, or in Illinois or you’re in Indiana, and you’re making product, there’s not much incentive to get that much closer to the supply. So, on the manufacturing side, I think that’s going to be slow to develop.”

Manning, however, is optimistic about the facility’s potential to have a positive impact on the region, both in terms of jobs and prosperity.

“I don’t see a lot of PPGs or folks that are making detergent jugs for Procter & Gamble, those kinds of things, coming into the area all that much,” he said. “But I can see compounders, trucking businesses boosting the business, all the maintenance and all that kind of stuff. And other businesses are more connected into the raw materials supply and the production, versus the end use.”

Manning said that the construction of the facility, along with the potential of the petrochemical industry in the region, has put Beaver County on the map.

“(Shell) is going to continue to pour an awful lot of resources into the local area,” Manning said. “They are bringing in a whole lot of permanent jobs, and there will probably be a 2-to-1 ratio of fairly permanent contact jobs to support that plant. I get a little upset when people say, ‘it’s only going to be 600 jobs;’ it’s going to be a lot more than that.”

Manning said the new jobs created will boost an area that’s seen a lot of economic depression.

“Those wages are second to none in this area when you talk about what that industry pays.”

The commissioner said the high wage jobs will impact the community as people spend more money in the area by going to restaurants and patronizing local stores.

“There’s a multiplying effect,” he said.

Abby Foster, president of the Pennsylvania Chemical Industry Council, said that whether it’s manufacturing or logistics, the cracker plant will be an economic booster.

“You need logistics and support,” she said. “You need warehousing, trucking companies and everything that goes along with it. That’s accountants, the labor needed for everything.

“It’s almost a multi-phased manufacturing opportunity so it’s not just the cracker. It’s all these other manufacturers that come with it. So that’s really why everyone keeps talking about this as a manufacturing renaissance because it will create so many layers of manufacturing. It has the potential to do that.”

Mike LarsonManaging EditorPittsburgh Business Times