AMERICAN CHEMISTRY: FUELING A U.S. MANUFACTURING RENAISSANCE - - PowerPoint PPT Presentation

October 17, 2017

AMERICAN CHEMISTRY: FUELING A U.S. MANUFACTURING RENAISSANCE

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*Based on estimates from best available data

2016 ESTIMATED

Production Costs* ($/lb.) HIGH LOW

MIDDLE EAST UNITED STATES IN 2016 CHINA WESTERN EUROPE OTHER NORTHEAST ASIA RELATIVE POSITION OF UNITED STATES IN 2006

PROMOTING POLICIES TO DRIVE A MANUFACTURING RENAISSANCE

Relat ive Posit ion of U.S. (2006-2016) (Petrochemical Product ion Cost s)

Oil-to-Gas Ratio: A Proxy for U.S. Petrochemicals Competitiveness

Current ratio remains very favorable for U.S. competitiveness Growth likely to slow but be offset by stimulative consumer effect

When the ratio is above 7, U.S. competitiveness is enhanced.

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30-year supply that can be profitably produced at $4.00 per million BTUs

• r less

U.S. chemical industry benefits from lower costs for energy and feedstock More than 310 projects and $185 billion in potential capital investment announced as of September 2017 … Up from 97 projects and $72 billion as

• f March 2013

62% is by firms based outside the U.S.

IHS data

U.S . S hale Gas Chemical Inves tment

ACC data

Project Status by Investment

6 new ethane crackers

are currently under construction in U.S.

Over $86 billion in new projects

have been completed or are currently under construction

20% 28% 45% 8%

Complete Under Construction Planned Delayed/ Uncertain

Manufacturing Construction Spending by Industry - 2016

$ billions

40 35 30 25 20 15 10 15 10

48%

• f

total

State of U.S. Manufacturing

Manufacturing renaissance due to increased access to natural gas from shale Growth in materials & downstream sectors Decrease in manufacturing costs encourages domestic expansion

Economic C

• ntributions

From Increas ed C hemical Indus try Inves tment

$310 billion 823,000

Permanent NEW j obs by 2025 throughout the U.S . economy from $95 billion in new chemical industry

• utput

Permanent NEW U.S . economic output by 2025 from $95 billion in new chemical industry output

Based on $179 billion in cumulative U.S. chemical investment planned, underway, or completed as of July 2017

U.S. Feedstock Advantage Will Grow Chemical Exports in the Years Ahead

Plastics Processor Projects

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• urce: Plast ics News, ACC analysis

NOTE: The data is based on publicly available information, which is believed to be accurate, but have not been independently verified by ACC.

• ACC is tracking nearly 700 plastics processor

projects.

• 1/3 New Construction
• 2/3 Expansions

— Adding capacity — New lines — New equipment

• Since June 2012, plastics processor projects

have been announced by over 550 companies in over 46 states.

New Construction Expansions

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Announced Plastics Processor Projects by State

S t at es where t en or more proj ect s have been announced since June 2012

10 20 30 40 50 60 70 MI IN OH TX WI S C NC KY TN IL GA PA MN CA MA AL VA NY FL CT MO Number of Announced Projects

S

• urce: Plast ics News, ACC analysis

NOTE: The dat a is based on publicly available informat ion, which is believed t o be accurat e, but have not been independent ly verified by ACC.

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The expected increases in production volumes will result in an additional 1.8M shipments annually

Annual number of additional shipments required to meet expected production volumes in 2020 By shipment mode

1,800k

Truck Rail Marine Total

270k rail cars 810k TEUs 720k FTLs

PwC | Transport ing growt h: Delivering a chemical manufact uring renaissance

Need for additional pipelines, ports & truck services to move shipments Recent success in Texas – ACC-supported legislation signed into law creating 30-35 mile corridor allowing heavier weights

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Rail, Transportation & Infrastructure (RTI)

Infrastructure Rail Plastic Pipes

Promoting choice &

• pen competition to

create new markets & business opportunities Promoting competition, minimizing fees & ensuring safety Ensuring access & reasonable practices for moving products:

• Ports
• Highways
• Pipelines

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• Pursuing federal & state

legislation requiring open, competitive bidding procedures for all materials

• Working with congress to develop

federal legislation to introduce later this year

• Pending legislation in MI & OH
• Enhance relationships & secure

support to demonstrate potential savings

By Steve Russell, Vice President, Plastics Division, American Chemistry Council on May 19 May 17, 2017

Open Letter to Congress: Support “Open Competition” in Infrastructure Projects

Open Competition

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Trade

Defending & creating open markets for the $100B+ potential in new plastics & chemical exports Global regulatory alignment to reduce compliance costs

Principles for a Modernized NAFTA

Maintain duty-free trade for all qualifying products Promote greater alignment on chemical regulation Modernize border measures & trade clearance disciplines Strengthen regulatory coherence Modernize the Rules of Origin

Promoting reform that protects chemical manufacturers Ensuring industry has seat at the table & is positioned as constructive partner Significant pressure to get tax reform done – critical victory for Trump Administration – draft plan released late Sept.

Tax

Guiding Principles for Corporate Tax Reform

Produce fair, simpler & internationally competitive system that promotes economic growth and job creation

Adopt competitive territorial system

Provide substantial tax rate reduction Recognize role of manufacturing and reflect importance of capital cost recovery and incentives for R&D Produce a “level playing field” concept so American companies can compete with foreign investors

Marketplace Challenges

Federal Regulation State Regulation Local Bans Marketplace Deselection Consumer Activism

Chemistry Remains Under Attack

Government chemicals management systems Chemical safety assessments Value Chain decision- making

ACC’s Fundamental Principle:

Risk, not hazard, should guide decision-making alongside lifecycle considerations & product sustainability impacts

Questions / Discussion