More on Investment Climate

This writing involves an article in the December 19 issue of Chemical and Engineering News entitled, "US Firms Detail Investments".

A 3.3 billion pound per year cracker will be constructed at Cedar Bayou, Texas. A 1.1 billion pound polyethylene plant will be constructed at Cedar Bayou or Sweeney, Texas. Expansion of ethylene capacity by 850,000,000 pounds will be made at Laporte, Texas. A 1.7 billion pound methanol plant will be restarted in Channelview, Texas. A propylene-producing metathesis unit will also be constructed at Channelview.

Two companies are studying a polypropylene oxide/tertiary butyl alcohol plant for China.

If the US investment climate is bad, why these several major investments in Texas? The answer is a combination of favorable investment climate and proximity to markets. In spite of the fact that the Obama Administration is antagonistic to business with its various regulations and high taxes, Texas has offered compensating factors. It has no state income tax, so that in spite of high federal taxes, the total tax burden is less significant. The products produced in Texas are also available to various parts of the US at freight costs considerably less than materials produced abroad.

Unfortunately, the petrochemical nature of these high-dollar value investments do not produce many jobs. Many of the individual operations are automated, but those few jobs available are high-paying. However, the low-cost availability of these products to other customer-manufacturers in the US does contribute materially to secondary jobs. If these basic petrochemical investments were made abroad rather than in the US, those secondary jobs would likely also not be available.

The bottom line is that a favorable investment climate not only promotes investment, but also results in jobs. We now have in the US high unemployment, because the investment climate is more favorable to production overseas.