The manufacturing industry is starting to become a bit more vocal about the reality of its renaissance here in the U.S. In order to protect these green shoots, and its investment dollars, many in the industry are openly opposing any increase in liquefied natural gas exports. Instead, the industry sees vast potential to turn our natural gas resources into value-added products that it believes would be worth far more on the export market than simply selling our natural gas to the highest bidder.
At issue here is the fact that low-cost sources of natural gas form a competitive advantage to heavy users, an advantage that until recently was found outside our borders. Natural gas isn't just a fuel source for these companies, it's an important feedstock to a multitude of industries. While the petrochemical industry has been the most vocal, the expanded use of natural gas has the potential to create thousands of manufacturing jobs as companies invest to expand operations. Just last month the manufacturing industry added 29,000 jobs, more than double the rate from the past two months. It sees the potential for more jobs as its renaissance kicks into high gear.
One of the most vocal opponents of increasing the availability of natural gas exports is The Dow Chemical Company (NYSE:DOW) . According to CEO Andrew Liveris: "Rushing to sell natural gas to Europe and Asia risks damage to the U.S. economy." His company has $4 billion in planned investments on the U.S. Gulf Coast geared toward consuming low-cost natural gas with more likely in the future. Dow's fears are that as these projects come online between 2015 and 2017 too much natural gas will be making its way out of the country, which will increase the cost of the gas that flows into new plants.
Natural gas is critically important to Dow as a feedstock to make the basic building blocks for plastics. As you might imagine, plastics have an array of uses, and as the largest consumer of plastics in the world, there are a lot of synergies to be gained by producing more of them within our borders. Not only that, but these value-added products can later be exported at a higher net economic benefit, which is very good for Dow's bottom line and our economy as a whole. That's why the company is not alone in its quest to put a limit on how much gas can be exported.
Huntsman Corporation (NYSE:HUN) CEO Peter Huntsman has warned that we can't allow "our nation's natural gas advantage to be stripped and sent overseas to build a new manufacturing base that would otherwise be built here in the U.S." Instead he says that "real, sustained and broad-based growth in the U.S. economy will come from a balanced approach that considers the needs of American manufactures and consumers." In his view "completely unfettered U.S. exports many enrich a few LNG exporters in the short term." So, while his company recently committed $150 million to new capital projects aimed at taking advantage of low-cost natural gas supplies, there is enough caution weighing as the company evaluates additional opportunities worth another $250 million more.
According to Huntsman Corporation (NYSE:HUN): "Four years ago, 90% of our discretionary growth capital was spent outside the U.S. ... Today, 70% is being spent within the U.S., just because of gas. That is the same with virtually any company." In fact, industrywide there are at least 50 projects representing $40 billion of invested capital all devoted to taking advantage of the growth of shale gas. That, however, is just part of the equation with the overall manufacturing sector looking at upwards of $95 billion in capital being spent to take advantage of our cheap shale gas resources.
As important as natural gas is to the petrochemical industry, that's but one of its many uses as an industrial feedstock. It's also used in fertilizer production. CF Industries Holdings, Inc. (NYSE:CF) for example, uses natural gas to produce nitrogen fertilizer. Nitrogen is important for growing corn. Because of the importance of natural gas in the process, and its low cost, the company is spending $3.8 billion to expand its nitrogen capacity.