Manufacturing Poised For a Breakthrough, Lawmakers Told

What a difference a year makes. A recent survey by the National Association of Manufacturers shows that 93 percent of American manufacturers feel positive about their economic outlook. Just a year ago, barely half, 56.6 percent of manufacturers, felt the same way.

“The numbers tell the story: there is new confidence amongst America’s manufacturers that hasn’t existed in decades,” PMA President David N. Taylor told state lawmakers during a joint hearing of the Senate Manufacturing Caucus and the Senate Economy, Business, and Jobs Caucus in Pittsburgh last week. “We in Pennsylvania must seize this moment by advancing a pro-growth, pro-production agenda.”

Taylor applauded manufacturing caucus co-chairs Kim L. Ward (R-Westmoreland) and James R. Brewster (D-Allegheny/Westmoreland) who hosted the hearing at U.S. Steel’s Mon Valley Works, and co-chair of the House Manufacturing Caucus Eli Evankovich (R-Allegheny/Westmorland), who attended the hearing, for their efforts in recognizing the central role manufacturing plays in the state’s economy.

“Manufacturing contributes more than $82 billion in gross state product every year,” Taylor said, “directly employing more than 565,000 hardworking Pennsylvanians on our shop floors, and sustaining millions of additional jobs through supply chains, distribution networks, and as suppliers of industrial services. Manufacturing is the sector that adds the most value and has the strongest spinoff effect on job creation.”

Manufacturers’ newfound optimism is centered along two fronts. The Shale revolution in Pennsylvania is delivering competitively priced, clean energy to manufacturers. It’s also delivering the building blocks of hundreds of manufactured products, principally in the form of the wet gases propane and ethane. That’s attractive to not only those companies that transform the wet gases into ethylene and propylene -- note the development of Royal Dutch Shell’s cracker plant near Pittsburgh -- but also the manufacturers who use these synthetics in their product production.

A growing optimism also exists in traditional manufacturing industries, including steel. Steel, especially in the Pittsburgh Region, remains a vital part of the economy, employing over 93,000 residents in southwestern PA, according to PA Steel Alliance co-chairs, Chris Masciantonio, General Manager Government Affairs for the United States Steel Corporation and Bob “Mac” McAulliffe, District Director for the United Steelworkers.

“Manufacturing impacts lives,” Masciantonio said at the hearing. “It can lift families up, open doors to prosperity and raise the standard of living for everyone around the world.”

Underlying this hopeful sentiment is the belief that government has a better understanding of where it’s needed and where it’s not. A big part of that has to do with the change of administrations in Washington, says Scott N. Paul, President of the Alliance for American Manufacturing, who also testified at the hearing.

“The first week in office, the president signed an executive order requiring an investigation into how to ensure that more American steel is used in our energy pipelines,” Paul said. “The results of that study are expected in the next few weeks. “

Other orders signed include how to reform our overly burdensome regulatory scheme and how well, or not so well, we are enforcing our trade laws. Here, steel dumping by foreign countries (pricing steel well below market value to support jobs at home) has had a devastating impact on the industry in the U.S., Masciantonio said.

“The nation's steel industry is at a crossroads as we continue to experience an alarming rate of unfairly priced foreign steel imports from China and other nations,” he said.  “Unfairly traded steel imports have reached historic levels in 2015 and 2016, taking almost 30% of the domestic steel market.  If not addressed by our government leadership, Pennsylvania's economy will continue to be among those states most harmed by this unfair trade activity.”

The Shale industry faces its own set of impediments outside its control.

At a monthly business meeting held at PMA headquarters this week, speaker Senator Pat Browne (R-Lehigh), Chair of the Appropriations Committee, said that one of the best ways to ensure that all of Pennsylvania benefits from an emerging economic recovery is to tap into the full potential of the Marcellus and Utica Shales. A severance tax on gas, endorsed by Governor Tom Wolf and some lawmakers, could smother that promise.   

“We are doing well in the Lehigh Valley and Philadelphia areas,” Browne said. “I just don’t understand the logic behind burdening an industry that has the power to uplift those regions in Pennsylvania that aren’t faring as well.”

Another impediment lies with getting the product to market. As Carl A. Marrara, PMA Vice President of Government Affairs said, “We need more infrastructure to support this level of natural gas production. Affordable gas and natural gas liquids are simply not getting to market because Pennsylvania lacks a sufficient pipeline network.”

The lack of infrastructure keeps us living in the past, unnecessarily reliant on other states for natural gas.

“We have pipelines that are directed toward the Gulf of Mexico because that’s where Pennsylvania purchased natural gas from in the time before the Marcellus Shale formation was developed,” Taylor said. “Even today, customers in southeastern Pennsylvania are buying natural gas from Louisiana and Texas because of insufficient pipeline from western Pennsylvania and northeastern Pennsylvania to the Philadelphia metropolitan area.  Because customers are paying for both the energy molecules and the cost of transmission, this means those Pennsylvania energy consumers are paying higher prices than they would if they were able to purchase natural gas from Pennsylvania.”

The message isn’t lost on lawmakers in the manufacturing caucuses.

Senator Kim Ward: “The speakers at today’s hearing provided great insight into both pro-growth ideas that support manufacturing as well as public policy that inhibits the sector. I firmly believe that we must continue to produce things in Pennsylvania in order to have vibrant and strong communities and will continue to do what I can to support the manufacturing sector.”

Senator Jim Brewster: “Since being elected to office, I have championed measures to support our manufacturing sector, including bills that I have introduced this session to require the use of American made steel. The manufacturing sector provides family-sustaining jobs that we as legislators must do our part to protect and grow.”

Rep. Eli Evankovich: “I want to thank the Senate Manufacturing Caucus for inviting the House Manufacturing Caucus to participate in the hearing hosted by United States Steel. The presenters today highlighted the need for Pennsylvania to take immediate steps to capitalize on new manufacturing investments that are anticipated over the next several years. We need our state to move as a partner at the speed of business to revitalize our state economy.”

Also speaking at the hearing was Rachel Gleason, executive director of Pennsylvania Coal Alliance, and Matt Smith, President of the Greater Pittsburgh Chamber of Commerce.