Despite the drop in oil prices, investment in new factory and plant construction in the United States has steadily increased for the last four quarters. According to a recent article inBloomberg Business Week, How Cheap Oil is Fueling a Surge in New Factory Construction, capital investment in new manufacturing facilities surged at a 95% pace from January to March 2015.
“While the drop in oil prices has lead to a decrease in investments related to oil drilling, there has been an increase in capital investment in oil refining and chemical production facilities,” said Brian Gallagher, Director of Marketing for O’Neal, Inc., an integrated design and construction firm that specializes in process chemical and manufacturing facilities. “The United States is enjoying a manufacturing renaissance.”
Over the last four quarters, capital investment in factories increase by an average of 64%. That represents the strongest level of investment since 1958. The automotive and chemical sectors are the leading segments for new plant construction. Bloomberg cited data from the Census Bureau and the Bureau of Economic Analysis in their report.
“There’s a manufacturing boom underway tied to the chemical industry” building new plants that refine oil and natural gas into other products, said Joe Carson, director of global economic research at AllianceBernstein LP in New York. “The gift is long term. The energy renaissance triggers a manufacturing revival.”
A recent report by PriceWaterhouseCoopers (PwC), predicts the shale gas revolution could add one million U.S. manufacturing jobs by 2025 and reduce manufacturing expenses by $11.6 billion a year through that time. One industry that stands to benefit significantly is the chemical industry. PwC reported chemical companies are investing more than $15 billion in capital to upgrade and build facilities in North America due to natural gas availability.
