Expert economists at top tier energy consulting firms, Boston Consulting Group and IHS, recently released reports predicting significant growth in U.S. manufacturing. One of the main reasons for this is the U.S. energy supply advantage.
For Mississippi, home to an extensive network of natural gas pipelines and diversity in electric power generation, what does this mean? The Mississippi Energy Institute recently began an analysis to answer this question. To help educate policymakers, economic developers, and the interested public, the Institute is working with Acadian Consulting Group of Baton Rouge to identify specific areas of opportunity to leverage in-state energy supply assets to attract energy-intensive manufacturing.
We think Mississippi may be well-positioned for the manufacturing of natural gas-derived chemicals and other electric power and natural gas intensive manufacturing like heavy metals and food processing. Through the years and growing with recent announcements, a large share of the energy-intensive industry has been, and will remain, in Louisiana and Texas, but those areas may be facing constraint making Mississippi an attractive option.
As the Boston Consulting Group and IHS have noted, the rapidly changed U.S. energy industry is having a dramatic effect on global manufacturing dynamics. For Mississippi’s economic sake, it’s important we try to understand how Mississippi can fit into this energy and manufacturing growth era over the next 5-10 years.
Bloomberg reports that cheap and bountiful natural gas is luring chemical industry operations back to the United States after they initially left for better access to cheaper materials and Asian markets. With proximity to Louisiana and Texas production and a myriad of natural gas pipelines, Mississippi should target these opportunities.
Plans were recently announced to construct a wood pellet plant in George County, Miss. European electric power utilities demand wood pellets and with our abundance of forest products, Mississippi will help meet that demand. Two existing wood pellet mills are in Wiggins and Aberdeen. Set to employ around 30, the George County plant will bring a $25 million investment and is significant in the way it shows European countries taking advantage of Mississippi’s manufacturing capabilities and abundance of resources.
Did You Know… Electricity costs in Europe are about 2.5 times higher than electricity costs in the southeast U.S.?
Raytheon, a leading provider of defense sensor systems, has a manufacturing plant in Forest, Mississippi. Rick Yuse, the company’s president, recently testified to Congress about how a skilled, well-trained and dedicated workforce is crucial to ensuring a strong manufacturing future for the nation.
Energy Intensive Manufacturing: The shale revolution has made America the most energy rich country in the world, when counting all domestic energy sources. Because of this advantage, energy intensive manufacturers worldwide looking to expand are looking in the U.S. and some are reshoring in the U.S. after stints overseas. With the myriad of interstate natural gas pipelines and robust electric power generation and transmission, Mississippi is uniquely positioned for manufacturing expansion. A reliable supply of energy is a critically important requirement for long-term investments, so how does Mississippi leverage its energy supply to attract industry? Related News:
Energy Workforce: Energy related jobs in Mississippi pay about twice the private sector average. While the national economy is sluggish, one of the bright spots is energy, and Mississippi has a good reputation as a place for energy investment. To keep up with workforce demand in an ever-changing and more technology-oriented energy sector, special attention to workforce development in the energy sector makes sense considering the high wages in this industry. If Mississippi’s goal is to expand its energy sector, including energy-consuming manufacturing, an adequate workforce pipeline system is required. Related News:
Nuclear Power Industry: In the early 1980’s, the federal government rightfully adopted a policy to establish a consolidated storage and management system for nuclear fuel used in nuclear power plants. Thirty years later, very little progress has been made. To position itself as a nuclear energy industry leader, Mississippi communities should consider the economic opportunities associated with consolidated fuel storage. Technology options today and on the horizon include fuel reprocessing, small modular reactors, and fast reactors or other advanced reactors. Wherever the location, consolidated fuel storage could attract tremendous investment and nuclear industry activity (i.e.high-paying jobs) and is worth serious consideration as a major economic development initiative. Related Commentary:
Research and Development: While the four Mississippi research universities perform well in various energy related research fields, Mississippi as a whole has had very little private R and D or technology commercialization in energy. For sustainable economic growth, innovation is required, and if Mississippi can stake a reputation in technology development over time, a long-lasting economic impact will be the result. Related News:
In 2004, steelmaker Nucor Corp. bought a plant next to alligator-infested Louisiana wetlands, took it apart and shipped it to Trinidad on ocean barges. This summer, after almost two years of construction, it will open the same type of plant at the same site at a cost of $750 million. Why? Natural Gas. Read more at the Wall Street Journal.
Manufacturing packs an outsize punch in the economy, so much so, that only though it only accounts for 12% of total GDP, it still contributed half of all GDP growth earlier this year. (SOURCE: Kiplinger Letter)
In the last two years, the EPA has passed four new rules (Cross-State Air Pollution Rule, Coal Combustion Residuals, Cooling Water Intake Structures, and Utility MACT Rule) that will severely impact the American economy. How? See the following:
The progression is clear. Higher costs lead to higher rates, which lead to fewer jobs. Nationwide net loss is projected to be 1.65 million jobs between 2012 and 2020. And those numbers account for jobs created in some sectors by new regulations.