AFPM: Executives weigh in on tariffs, immigration and US unemployment

Global trade set the tone and official theme for this year's American Fuel and Petrochemicals Manufacturers International Petrochemical Conference in San Antonio this week, as chemical interests from around the world met to conduct business and exchange information.

The official conference theme of global trade is underpinned by the resurgence of the US market's growth in exports in crude, refined products as well as petrochemicals and plastics. Topics of interest were around investment in new plant buildouts both in the US and around the world, and what competitive factors could make or break those projects, including the future curve for crude oil.

Timeliness of project execution, with the value of time as money principle, was also cited as a key element for success. Other topics addressed by some of the senior leaders speaking at AFPM, included tariffs and trade.

At a roundtable discussion featuring executives from Chevron Phillips, Albemarle and Ineos, all agreed with respect to trade that stability and predictability are critical.

Luke Kissam of Albemarle said that companies investing billions of dollars in a plant like to do that in an environment of certainty, but that's hard to get when you don't know if tariffs will be invoked or you may face retaliation from a customer country.

Managing tariffs should not be treated like a real estate deal, was the blunt assessment of one executive around the table.

"It's not the way we should do business," added another.

The potential for petrochemicals to get pulled further into the US-China tariff debate is a possibility, the industry leaders said, but they expect agriculture is more likely to be exposed.

Another challenge addressed at this year's event is the very tight US labor market, which could be a constraint on petchems projects. The labor market, which featured 4.1% unemployment in January and is expected to dip lower this year, coupled by a politically tightening of US immigration policies, have made it increasingly difficult for the US petrochemical industry to bring in skilled labor into the US.

Immigration red tape in Washington makes it inefficient to bring in labor legally to support project buildouts, the executives noted. This comes at a time when other countries are offering more flexible guest worker programs to make it easier to bring in labor for companies looking to build plants elsewhere.

Another component of the labor puzzle is training and developing talent, which all the executives noted is something their companies are focused on through sponsoring programs at local colleges and preparing workers for how their jobs might evolve over the coming decade. A golden age could extend for the next 25 years, an Albemarle executive said, adding that if quality talent isn't there, the US industry will "mess it up."

And it was noted that talent development extends beyond the industry's traditional focus on STEM education, to seeing employees growing in their ability to be educated so that they better understand government and policies, which in turn will hopefully prepare them to better make decisions.