Pennsylvania's chemical industry is fading

In the city's Bridesburg section, neighbors park cars in a surplus employee lot at the once-huge Rohm & Haas Co. plant, which employed 2,000 workers at one time. Later this year, the final two dozen workers will lose their jobs there when Dow Chemical Co. closes the plant for good.

Farther south on Independence Mall, 286 employees at the Rohm & Haas headquarters lost their jobs in the last six months - also laid off by Dow.

Several miles west, DuPont Co. has hung a "for sale" sign on the Marshall Labs, its technical facility in the 3400 block of Grays Ferry Avenue. The labs closed last summer. A four-person crew watches the heat and lights as DuPont looks for a buyer.

"They didn't even give the union the chance to offer concessions. We asked what we could do to stave this off and they told us there was nothing we could do," said David Gibson, a former DuPont employee in the purchasing department, where he worked since 1968.

Gibson was called into a conference room in May and told the news. His last day was in November. "The days go faster than I thought they would," Gibson said over a soft drink at the Penrose Diner on Wednesday.

A few DuPont guys found part-time jobs bartending, Gibson said, but he has not heard of anyone finding a full-time job in the highly specialized and well-paying local chemical industry - not a surprise for someone who has looked at the sector's vital signs.

Including the recent cutbacks, chemical companies have slashed 43 percent of their Pennsylvania workforces in the last 10 years as mergers wiped out corporate headquarters and companies closed higher-cost Pennsylvania plants. Chemical employment fell by 15,800 workers, to 20,600 in 2009 from 36,400 in 1999, according to state figures.

For the first time last year, Pennsylvania pharmaceutical companies employed more people than the state's historically robust chemical industry, which included, in addition to Rohm & Haas, companies such as PPG Industries Inc., Air Products & Chemicals Inc., and Arkema Inc.

Pennsylvania's decadelong slide in the chemical industry came in the midst of a commodity boom that boosted chemical and materials companies globally but cost the Pittsburgh and Philadelphia areas, the industry hubs, disproportionately, experts say.

Pennsylvania's manufacturing sector has famously slumped, but its employment decline over the period was 34 percent, substantially less than the chemical industry's, state figures show. The Pennsylvania economy itself lost 0.2 percent of its job base.

Pam Witmer of the Pennsylvania Chemical Industry Council, a trade group with about 65 member companies, said the industry "has had a difficult time the last 10 years." She blames consolidations, starting in the 1990s, and the high cost of doing business in Pennsylvania. She said cutbacks in the last decade "have been much worse than the preceding 10 years."

Legislators do not realize that Pennsylvania plants compete with facilities in other states and countries, Witmer said. If investments in other places yield higher profits because of lower taxes and regulatory costs, the investment flows to those places, Witmer said.

Pennsylvania water and clean-air regulations are sometimes more stringent than federal regulations, Witmer said, citing two specific problems.

Pennsylvania chemical plants also have lost geographic competitive advantages as manufacturing in the Northeast has faded. Chemical plants supply other manufacturers. Computer, cell phone, and other electronics manufacturing has migrated to Asia. So have the chemical plants that supply them.

And for many years, chemical plants have been built near sources of raw materials, mostly oil and natural gas. Chemical companies have set up facilities in Texas and along the Gulf Coast, close to U.S. sources of crude oil.

The Marcellus Shale gas wells could feed Pennsylvania chemical plants with inexpensive natural gas, but that is several years away, experts say.

"You wouldn't locate a chemical company in Pennsylvania if you were starting today," said Hal Sorgenti, a retired executive with Arco. "It's been pretty tough."

There is some cause for hope. Philadelphia has a base of crude-oil refineries that could supply chemical plants with raw materials.

Rohm & Haas' big factory in Bristol Township and the Spring House labs in Montgomery County were not touched by Dow Chemical's recent bloodletting. Dow bought Rohm & Haas for more than $16 billion April 1 after a contentious standoff between the two companies that was settled in a Delaware courtroom.

Andrew Liveris, Dow's chief executive officer and chairman, says specialty chemicals and innovation will drive the company's growth. He views the former Rohm & Haas labs in the Philadelphia area as important to transforming Dow into a specialty-chemical company.

Dow executive Jerome Peribere, who heads the former Rohm & Haas operation in Philadelphia, said at an investor conference in New York that he was aware "there is trauma in the Philadelphia headquarters," where about one-third of the employees were let go. But, he added, "I would be very surprised if the headquarters doesn't start growing again."

FMC Corp., a publicly traded chemical company, has its headquarters in Center City. Pierre Brondeau, a former Rohm & Haas executive who was uncomfortable with the deep employee cutbacks on Independence Mall, will run FMC. Arkema is based in Center City and has labs in the suburbs.

But that does not help people such as Gibson.

When Witmer lobbies for the industry, she notes that jobs offered by chemical companies pay $76,000 a year. Gibson said he and other DuPont workers earned about $50,000.

He thinks this is it for his chemical career. DuPont was all he knew. His father, also named David Gibson, worked for DuPont in West Philadelphia, beginning in the late 1930s.

"I wouldn't know how to look for a job. My Dad told me one day I would start at DuPont on Monday, and that was my job interview. Tell me to fill out a resumé," he said. "I don't know what the heck a resumé is."

Consolidations, plant closings, and employee cutbacks resulted in a 43 percent decrease in employment in Pa.'s chemical industry in the last 10 years.

Year Total Jobs*

1999 36,400

2000 36,700

2001 35,600

2002 33,800

2003 31,700

2004 30,150

2005 26,600

2006 24,600

2007 24,300

2008 23,400

2009 20,600

SOURCE: Pennsylvania Department of Labor

*Data for the month of September in each year.

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About one-third of the 800 to 1,000 headquarters jobs at Rohm & Haas in Philadelphia were eliminated after Dow Chemical Co. bought the company April 1.

Date Jobs Lost

July 8 3

July 15 1

July 31 56

Aug. 7 17

Aug. 10 6

Aug. 12 1

Aug. 14 1

Aug. 21 16

Aug. 30 1

Aug. 31 15

Sept. 4 1

Sept. 6 2

Sept. 12 1

Sept. 30 76

Oct. 3 1

Oct. 16 1

Oct. 31 17

Nov. 27 1

Nov. 30 10

Dec. 31 58

SOURCES: Pennsylvania Department of Labor; Dow Chemical Co.

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