Issue Date: June 19, 2017
Mostly good news for U.S. chemical makers
It’s a sign of the U.S. chemical industry’s current good health that the closing banquet at the American Chemistry Council’s annual meeting earlier this month had to be moved to a bigger room to accommodate the crowd.
Indeed, executives at the event, held at the Broadmoor Hotel in Colorado Springs, were almost uniformly in good spirits. Chemical companies posted strong first-quarter profits, and firms continue to invest in new facilities that make products out of low-cost natural gas extracted from shale.
Managers at the event were unnerved by only one thing: President Donald J. Trump. They are generally pleased with Trump’s pro-business policies but troubled by his isolationist tendencies and the cloud of turmoil that surrounds him.
Cal Dooley, chief executive officer of the trade association, told guests at the dinner that attendance was up 10% from a year ago to about 650. In opening remarks, he tried to explain the industry’s relationship with the new President.
“Sometimes I find myself struggling to find the right adjectives to describe what’s happening,” he said of Washington, D.C., where ACC is based. But Dooley advised executives to ignore the noise and appreciate a political environment that is better than the chemical industry has had in at least a decade.
At a briefing for reporters earlier in the day, Dooley and company executives emphasized that the U.S. chemical industry’s biggest asset today is not political support but rather the continued low price and ample availability of shale gas.
T. Kevin Swift, ACC’s chief economist, delivered the association’s midyear economic report, which forecasts U.S. chemical production growth of 2.1% this year and more than 4.0% in 2018 and 2019. By ACC’s count, more than 310 chemical projects valued at almost $185 billion have been announced in the U.S. to take advantage of shale gas. “This is the place to be,” Swift said.
CEOs sounded a similar tune. Peter Cella, chairperson of ACC’s board and CEO of Chevron Phillips Chemical, said his company is on pace to complete a $6 billion expansion project on the U.S. Gulf Coast. New polyethylene plants will be producing pellets this summer, Cella said, and an ethylene cracker should be up and running in the fourth quarter.
Corporate executives were less vocal on the subject of the Trump Administration, though Dooley tried to put a good face on it. At the press conference, he emphasized ways in which the Administration is behind the chemical industry, pointing to support for energy infrastructure such as the Keystone XL pipeline and favorable staffing changes at the Environmental Protection Agency.
One such move was the recent appointment of Nancy Beck, ACC’s former senior director of regulatory affairs, to a key role in the EPA office that oversees implementation of the Toxic Substances Control Act.
In response to questions from reporters, Dooley acknowledged that ACC considers Trump’s decision to withdraw from the Trans-Pacific Partnership, an international trade pact, a mistake. Preserving the benefits of the North American Free Trade Agreement, which Trump has lambasted, is also important to the industry.
“We’re concerned that there could be a backing away by the U.S. in providing aggressive leadership on global trade liberalization,” Dooley said, noting that the chemical industry is responsible for 14 cents of every dollar of U.S. exports.
Dooley demurred when questioned about Trump’s decision to leave the Paris Agreement to reduce emissions that contribute to global warming. ACC didn’t take a position on the pact, he pointed out, and opinions differ among association members.
In the wake of the withdrawal, a few chemical heavyweights, including Dow Chemical and Shell, publicly expressed their disappointment. But the ACC board members at the press conference—Cella; Bhavesh V. (Bob) Patel, CEO of LyondellBasell Industries; and Jerry MacCleary, head of Covestro in North America—avoided criticizing the Administration. They emphasized instead the chemical industry’s role in reducing greenhouse gas emissions through the sale of lightweight and insulating materials.
Speaking on condition of anonymity at receptions and other events at the meeting, executives from other chemical companies expressed a range of opinions about the Trump Administration.
None openly said they support Trump or his decision to leave the Paris Agreement. Some did agree with the President that aspects of the accord—including China’s status as a developing country and the U.S.’s commitment to spend billions of dollars helping developing countries affected by climate change—are unfair.
One manager observed that commodity chemical companies dependent on cheap energy tend to favor Trump, whereas the sentiment is different at specialty chemical makers whose products often help save energy or otherwise contribute to sustainability.
American executives working for European chemical companies spoke with amusement about the hostility toward Trump expressed by their home office colleagues. For the global chemical industry, the U.S.’s uniqueness, it seems, goes beyond the low cost of energy.
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