There was a day when hardwood trees were logged, cut and manufactured into furniture right here in Pennsylvania. We harvested, manufactured and exported the final product. All that meant jobs for Pennsylvanians.
The steel industry, a shadow of its former self, once consumed natural resources, produced tons of steel and exported a valuable product. Again, that translated into jobs and economic activity here in Pennsylvania.
Once again, we are blessed with vast deposits of a valuable natural resource, the Marcellus shale gas. Now, we can produce the gas and export it to the world where others will maximize its value (and the jobs associated with that), or we can grow those businesses and industries (along with the jobs and economic opportunities) right here in Pennsylvania.
The large quantities of Marcellus shale natural gas within Pennsylvania’s borders have presented our state with challenges and opportunities unlike any we have seen since the high points of the steel and timber industries.
Much has been written about Royal Dutch Shell’s interest in building a petrochemical, or “cracker,” plant in Beaver County and the tax credits that have been offered by the governor and the General Assembly to attract the industry to Pennsylvania. This tax credit has prompted some to ask, “Why does our state have to offer tax breaks to big, profitable businesses in order to draw them here?” The answer is pretty straightforward.
There is a battle among states for new businesses, the jobs and tax revenue they bring with them. The competition among Pennsylvania, Ohio and West Virginia to land this tenant is serious.
Given the prospects of gaining thousands of family-sustaining jobs and the growth potential for spin-off industries across the state, the core of this issue goes well beyond the tax credit. At the heart of this issue is the potential to reindustrialize and revitalize an entire region of our state.
It is important to note that the tax credits offered here would be available to any company that builds ethane-processing facilities in our state — not just Shell. The credit is very carefully structured, with various safeguards in place, to protect our state and the taxpayers if a company does not deliver on its promises.
A key element is that a tax credit is not granted until the plant is built and begins production of the ethylene. The output of the cracker plant would trigger the credit. No tax credits would be received if a plant is not constructed and jobs created. Further, this tax credit will have no impact on the state budget until 2017 and then, only if billions are invested in the development and construction of a facility, natural gas is purchased and production of ethylene begins, and jobs are secured long into the future.
Few state issues manage to attract the support of both organized labor and private businesses. These groups, and many others, are in full support of this tax credit because they all see the future of our state in this industry and others like it.
According to the American Chemistry Council, the project in Beaver County would bring at least 400 to 1,000 jobs at the plant and approximately 15,000 to 17,000 more from spin-off industries. It is estimated that the average salary of a cracker plant worker would be $50,000. There is also potential for the creation of thousands of new jobs in the construction industry alone.
In our area, and in many regions of Pennsylvania, the rediscovery of natural gas has brought communities back to life and given struggling families hope for a prosperous future. While we must ensure that drilling activities do not jeopardize the health and safety of our citizens, we must also act deliberately to embrace the opportunities this industry holds for us. In this case, I strongly believe that the tax credit we have offered this industry will create jobs and economic growth here in Pennsylvania, rather than send those opportunities to foreign lands.
While the high points of the steel and timber industries may be behind us, we have an incredible opportunity ahead. Pennsylvania has a new, abundant natural resource that can be supported by a workforce and related businesses and industries within our borders. After many years, we are uniquely positioned to recapture and revitalize our manufacturing base.
The future is what we make it and it basically boils down to this: We offer a tax credit, forgo a portion of state taxes and get thousands of jobs in return; or we don’t offer a tax incentive and ship the gas to the rest of the world to use to create jobs and wealth. The choice is ours.
Smith is speaker of the state House of Representatives. His 66th District includes a portion of northern Indiana County.