Boost to local manufacturing

As congressional dialogue on liquefied natural gas (LNG) exports advances and tankers in the Gulf of Mexico prepare for their inaugural deliveries this year, the Philadelphia region's manufacturing community should prepare to capitalize.

The progress in the gulf begins a new era in natural-gas end use as LNG exports, highly visible and often debated, are among the many niche uses providing new opportunities to regional makers. These multibillion-dollar infrastructure projects require an assortment of products, including tubular steel and fabricated metal products, power control and water purification systems, and cryogenic heat exchangers, as LNG exports make for the most striking example of what natural-gas end use means to manufacturing - principally, the local manufacturing community.

Ranging from enormous export facilities to smaller fueling stations, end-use projects can make development investments capable of empowering any manufacturing firm with a single contract. Complementing the buzz in Corpus Christi, Texas, and Cameron Parish, La., the Philadelphia region continues its own end-use investigation, signaling a key opportunity for regional manufacturers: Suppliers, be ready.

Manufacturing remains an economic powerhouse, driving private-sector research and innovation, employing neighborhoods, and contributing more than $2 trillion to the nation's economy. It's a sector offering an average salary of more than $69,000 in Pennsylvania and the highest multiplier in the economy, creating $1.37 for every dollar invested, according to the Bureau of Economic Analysis.

Despite this, local manufacturers face several well-acknowledged but often under-addressed challenges. Global competition is an ever-present factor, though recently one that has been mitigated due to the United States' growing energy advantage. Closer to home, a cumbersome business-tax environment, a shortage of job-ready candidates, development pressure, and a sincere want of entrepreneurial interest in making the transition from one generation to the next threaten Philadelphia's ability to retain large and small manufacturers alike. These are real issues that machine shops, dye and lubricant manufacturers, and plastic and rubber molding operators weigh daily.

A steady market can remedy these challenges, and therein lies Philadelphia's potential. Leveraging the resources of the Marcellus Shale has the region pursuing additional power generation capacity, proposing LNG and compressed-natural-gas fueling projects, expanding refinery operations, and supporting a burgeoning petrochemical community.

The LNG export example sends an indisputably strong message: Despite low prices, there is positive news from the natural-gas arena. Orders are placed, materials are manufactured, and infrastructure is going up - and if regional leadership continues its inquiry into energy projects, end-use infrastructure can be built here, too. Philadelphia can organically catalyze its own economic growth by employing its local manufacturers with local projects.

Southport is the marquee opportunity. Earlier this winter, six submissions were announced for consideration to redevelop up to 195 acres at the southeast end of the Navy Yard; two of the four seeking the rights to the entire space were energy-focused projects.

Further possibilities lie in harnessing underused Philadelphia Gas Works infrastructure in Port Richmond and Southwest Philadelphia; rehabilitating finger piers, industrial spaces, and other brownfields along the Delaware; and expanding industrial-use zoning to create districts for petrochemical manufacturing enterprises.

These aren't only opportunities to round out an economic profile. They are achievable developments with direct benefits for manufacturers.

The components of these developments are Philadelphia-made. Pipe, fittings, and flanges are supplied from Port Richmond. Pumping systems and check valves are fabricated in Malvern. High-performance steel plates and hot-rolled coils are manufactured in Coatesville, precision component parts in Wissinoming, and liquid coatings in Glen Mills.

Savvy manufacturers are reaching out to energy-industry contacts for a better understanding of project needs and a greater familiarity with the direction in which innovations are pushing product and workforce development. Shrewd firms are also getting active, reaching out for additional information and joining the dialogue on end-use development.

In response, regional leadership can assist the sector's growth by amplifying the call for quality projects, facilitating discussion between development authorities and investment partners, and doubling efforts to introduce local manufacturers to prospective developers.

Understandably, seeking end-use projects to cultivate procurement opportunities is only a part of the equation to find a stronger, well-supported manufacturing sector. But such projects can serve as a cornerstone: Each development has the potential to be transformative to a neighborhood firm employing members of the local community with family-sustaining jobs.

The potential is there, and the region's manufacturers stand ready to make the most of it.

Ned Rauch-Mannino is the director of strategic business initiatives for the Ridge Policy Group and the vice chair of the Marcellus Shale Coalition's Natural Gas Use Committee. @NedRauch nrauch-mannino@ridgepolicygroup.com