Chemicals Industry Profile
Chemicals Industry ProfileChemical Industry Energy & Environmental Profile |
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Industry Analysis in BriefThe chemicals industry is critical to the U.S. economy and our very way of life. Chemical products are essential to the production of a myriad of manufactured products. The chemical industry greatly influences our safe water supply, food, shelter, clothing, health care, computer technology, transportation, and almost every other facet of modern life.
Economic
The United States is the largest chemical producer in the world, accounting for 26% of world production. With chemical shipments reaching nearly $460 billion in 2002, the chemical industry provides over $163 billion to the U.S. GDP, approximately 2% of the total. The industry exported a record $81.1 billion in chemicals in 2002. On a value-added basis, it is the largest U.S. manufacturing sector. The industry continues to grow, with after-tax profits in 2001 reaching $45 billion-an all—time high.
Geography
In 1997, approximately 13,400 chemical plants operated in the United States. Most of the basic chemicals production is concentrated along the Gulf Coast, where petroleum and natural gas feedstocks are available in refineries. Production of other products, such as plastics, pharmaceuticals, and fertilizers is more widely dispersed among the states.
Energy
The U.S. chemical industry consumed approximately 6.5 quads of energy in 2002, which represented about 6.6% of total U.S. domestic energy use. Energy for fuel, power, and electricity generation accounted for 3.2 quads, or approximately 49% of total chemistry industry energy use. The remaining 51% of energy consumption in the industry was used for feedstocks. Approximately one third of electricity used by the chemicals industry is produced onsite, primarily by means of cogeneration. The industry has made significant improvements in energy efficiency over the last few decades, reducing energy use per unit of output by over 39% between 1974 and 1995.
Markets
The chemicals industry is a keystone of the U.S. economy, converting raw materials (oil, natural gas, air, water, metals, minerals) into more than 70,000 different products. Chemicals are used to make a wide variety of consumer goods, as well as thousands of products that are essential inputs to agriculture, manufacturing, computing, telecommunications, construction, and service industries.
IT and E-Commerce
The chemicals industry has become increasingly dependent on information technology (IT) and e-commerce via the Internet. Chemical industry spending on IT was $9.5 billion in 2002, down slightly from the year before but still almost 67% more than 1990 levels. Sales via e-commerce jumped from $14.8 in 2001 (almost twice that of 2000) to $23.3 billion, or approximately 5.1% of U.S. sales. They are projected to exceed $135 billion by 2006, approximately one third of industry shipments.
Research and Development
The chemicals industry spent approximately $31.1 billion on R&D in 2002, with the largest share in life sciences. The bulk of chemical R&D dollars are spent on product development. Funding for basic research has been steadily decreasing, and only moderate increases have been seen for applied research. Fundamental R&D competes for research dollars with the increasing cost of environmental compliance and higher-payoff market-oriented projects.
Employment
Over 1 million people are employed directly by the chemicals industry. Nearly 40% of those people hold at least a university degree. Total compensation (wages plus benefits) of chemicals industry employees averaged $82,000 in 2002, nearly 50% higher than other manufacturing industries. Approximately 52% of employees are production workers, earning an average of $17.97 per hour in 2002, about 20% higher than the manufacturing average.