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Made in America: How Shale Is Bringing Back Steel and Jobs to Appalachia

For decades, Ohio, Pennsylvania and West Virginia have watched an overwhelming number of manufacturing jobs — particularly steel manufacturing jobs — leave the United States, which led to the region being nicknamed the Rust Belt. During the same time period, the middle class started to shrink and union households that boasted generations of laborers increasingly started filing for unemployment. The outlook was bleak for these communities for many years — but then came the Marcellus and Utica Shale development, which has proven to be an answer to the prayers of communities up and down the Ohio River. These communities are now reporting that union halls are empty due to a surge of oil- and natural gas-related work. Shale has not only been a game-changer — it’s been a life-changer for thousands of families in some of the hardest hit regions of the country. Manufacturing is starting to come back, and we are even making and shipping domestically produced steel again along the Ohio River. It’s hard to imagine now, but the Rust Belt may soon shed its longtime persona and emerge as a new hub where domestically produced products proudly display “Made in America.”

Union Halls Reported Empty in Ohio

For the past few years, the building and construction trade unions have been aggressively fighting against fringe environmental activists and the “keep it in the ground” agenda. From a political perspective, this trend played out on the national stage in November: For the first time in years, a majority of Ohio union households voted Republican in a presidential election. President Trump won the union vote by 9 percent over Hillary Clinton in the Buckeye State. Why? Because the building and construction trades are going back to work thanks to shale development, which Trump unabashedly supports.

Today, there are 3,000 Ohio laborers working on various stages of oil and gas development. To further put that into perspective, that’s 4.2 million work hours over a 16-month period. In June, Rocco DiGennaro, President of the Western Reserve Building Trades said that “almost every [union] hall is empty” as a result of the millions of work hours taking place, largely driven by pipeline and natural gas power plant construction projects. To date, Ohio has more than $10 billion in natural gas power plants in various stages of development and the Appalachian Basin has more than $23 billion in planned investment for more than 3,200 miles of pipeline in Ohio, Pennsylvania and West Virginia.

When built, these pipelines will move more than 17 billion cubic feet of Marcellus and Utica natural gas and 345,000 barrels of natural gas liquids per day. Collectively, these projects are slated to create more than 100,000 jobs for local residents, and the vast majority of the pipelines under construction are utilizing union labor.

Manufacturing Hits 13-Year High

In 2012, The Wall Street Journal reported that U.S. steel companies could experience a revitalization as a direct result of local, affordable and bountiful natural gas. That forecasting is starting to become a reality in the Appalachian Basin, where the Marcellus and Utica Shale region is boasting the lowest natural gas prices in the developed world, giving energy-intensive industries — like steel manufacturing — a global cost advantage.

Over the past 30 years, Ohio has seen many of its steel jobs moving overseas. Plants have closed in Steubenville, Youngstown, Lorain and Cleveland, just to name a few. Mingo Junction, a town that was built around its steel mill, was one such place where residents saw their mill shut down completely in 2009.

After being closed for eight years, that Ohio steel mill is now open for business and shipping tons of domestically produced steel on the Ohio River — thanks to low natural gas prices made possible from shale development ― with a goal of ultimately producing 10,000 tons per day. The town’s Mayor, Ed Fithen, told a local TV channel, “After being down for [eight] years — I worked there for 35 — I said this place will never start up. It’s too down.”

This sentiment is one shared by communities along the Ohio River that represent a large percentage of the 48,000 U.S. steel manufacturing jobs lost since 2000. These communities have shared a feeling of hopelessness that they would never start up again. However, thanks to Marcellus and Utica Shale development, that’s all starting to change. In 2017, we are in fact making and shipping domestically produced steel along the Ohio River again. As Mingo Junction Councilman George Irwin Jr. told WTOV9, “It’s kind of like an answer to a whole bunch of prayers.”

Notably, during his campaign last fall, President Trump forecasted the very thing that has become a reality during his speech at the Shale Insight conference, saying, “The development of the Marcellus and Utica Shales will fundamentally change the landscape of this region. More jobs, higher wages, a larger tax base, and dollars flowing into our country for a change, instead of out of our country. … Under a Trump administration, we are going to bring back steel jobs and we are going to rebuild this nation.”

In fact, academics and media outlets have been touting how shale development could help bring steel jobs back to the region for years. In 2015, the Harvard Business School stated that The Boston Consulting Group’s report Made in America, Again highlighted “low-cost energy as the most significant emerging advantage for U.S. manufacturing competitiveness.” And now — with shale development thriving in Ohio and throughout the U.S. — CNBC reported in October that U.S. manufacturing activity surged to a more than 13-year high in September!

The Appalachian Basin could see even more incredible economic transformations with ethane crackers sprouting up along the Ohio River. Shale and affordable natural gas have given the U.S. an incredible competitive edge, which has trickle-down impacts on manufacturing, including steel, petrochemicals, transportation, and lighting and appliances, among other applications. This opportunity provides hope that Americans will once again predominantly see labels that say “Made in America” on their clothes and toys.

Could the region be on the cusp of another industrial revolution? Time will tell, but, for now, we know that for the people of the Ohio Valley, this news is certainly “an answer to a whole bunch of prayers.”

 

About the author: Jackie Stewart is a Senior Director in FTI Consulting’s Strategic Communications segment. She is also part of the segment’s Public Affairs practice and Energy and Natural Resources industry practice. Based in Ohio, she is also Field Director for Energy in Depth. Stewart has more than a decade of experience in government and community relations, public policy and event management.

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