Photo credit: Flickr/Bob Jagendorf
Manufacturing is coming back to America. The numbers are quite stunning, actually. Estimates suggest that nearly $100 billion is being spent to bring manufacturing back to America.
What's almost as surprising is this revival in the manufacturing sector isn't due to some new government program or business-friendly tax break. The single reason why manufacturing is coming back to America is because fracking has unlocked so much low-cost natural gas.
According to Energy in Depth, the cumulative known investment in manufacturing currently sits at 117 projects totaling $80 billion. But there are estimates suggesting the number is closer to $100 billion. Not only that, the employment impact of these projects is equally as staggering. Current estimates project 515,000 jobs being created from America's manufacturing rebirth.
From plastics to fertilizer plants, the manufacturing boom features several projects that are only possible with low-cost natural-gas supplies. That's because natural gas is an important feedstock used by these manufacturers to create the products we need for our everyday lives.
One word: plastics
A great example of this is the proposed world-scale ethane cracker that Sasol (SSL -1.40%) wants to build in Louisiana. The multi-billion-dollar project would produce ethylene, which would then be used to make products such as synthetic fibers, detergents, fragrances, paints, film, and food packaging.
This is actually one of two major projects that Sasol is planning to build as the company could invest up to $21 billion in the U.S. What's remarkable is that Sasol is a South African company, so this investment would be one of the largest foreign investments ever made in the U.S. The projects would create 1,200 permanent jobs, 7,000 construction jobs, and more than 50,000 indirect jobs. This is all thanks to the natural gas abundance unlocked by fracking.
American manufacturers like Dow Chemical (DOW) are investing billions to expand manufacturing capacity in the U.S. Dow Chemical is also planning a new ethane cracker along with three other projects. It sees these projects creating 600 permanent jobs along with 2,000 construction jobs and another 35,000 indirect jobs.
Fertilizing a boom
There are several new fertilizer plants planned, including two expansion projects from CF Industries (CF 0.90%). Strong and growing nitrogen demand, combined with low-cost natural-gas resources, makes these billion dollar investments by CF Industries possible.
That's also important to the American farmer as more than half of the nitrogen used in the U.S. is currently imported. Natural gas is a key input in creating nitrogen fertilizer, and it's so cheap thanks to fracking that it makes economic sense and cents to manufacture more nitrogen-based fertilizer products in the U.S.
Final thoughts
While fracking gets a bad name in the press, it has single-handedly brought a revival in manufacturing to America. What that means is that not only will the average American spend less on energy each year, but we'll also spend less on energy-intensive products as the manufacturing boom takes hold. Despite the doom-and-gloom headlines we see all the time, the future in America, thanks to fracking, is brighter than ever.
