Oregon’s Chemical Manufacturing Industry Changes to Meet Demand

by Brian Rooney

May 7, 2018

Oregon’s chemical manufacturing industry reflects the state in two important ways. First, many of its products are based on forest products or the state’s varied agriculture. Second, true to Oregon’s reputation for a clean environment and healthy lifestyles, organic and natural products are a growing segment of the market. While employment losses have occurred in some of the traditional wood-related chemical products, the industry has shifted over time to meet demand with new, environmentally conscious products.

Employment Trends

Employment numbers in chemical manufacturing declined for many years, but have recently picked up. Between 2001 and 2017, chemical manufacturing employment rose from 4,064 to 4,479, reaching a low point of 3,500 in 2010. The increase contrasts with the 12-percent decline in the entire manufacturing sector over the same period.
For the three years before the Great Recession, chemical manufacturing employment was rising. Then, like most industries in Oregon, it had a large drop from 2008 through 2010. Chemical manufacturing has since surpassed its pre-recession peak employment.

Product Mix Changes to Meet Demand

One reason chemical manufacturing has been successful compared with other manufacturing is that it is a diverse industry that changes over time to meet demand. In the past, products related to natural resources, especially wood, were more prevalent. Over time, employment losses in wood-related chemical products have been replaced by the production of other products.

One area that has experienced large losses is adhesive manufacturing. Although there is some variation, many companies in the resin and adhesive manufacturing industries are related to wood product manufacturing and, more specifically, plywood and particle board manufacturing. Resins are generally used to coat and bind plywood and adhesives are used for binding both plywood and particle board. These products are also related to wood products in another way. Formaldehyde is often used as an ingredient, and formaldehyde is derived from methanol (wood alcohol). Some of the employment decline is related to the overall decline in wood product manufacturing. Another issue contributing to the decline is that formaldehyde, used in both resins and adhesives, is emitted as a gas over time and has been linked to health problems like eye and throat irritation, asthma, and cancer in laboratory animals. As a result, the federal government has set limits on formaldehyde content.
The drop in printing ink manufacturing, and to some extent in all other chemical preparation manufacturing, is related to the shift from print to electronic media.

Other sub-categories of chemical manufacturing are growing. Other basic organic chemicals (+384) and toilet preparation manufacturing (+189) are two sub-categories that have helped to make up for losses elsewhere.

The other basic organic chemicals industry (organic in this case refers to chemicals whose molecules contain carbon), is a broad category that includes products from charcoal briquettes to amino acids used in drug development. But, biofuels have been the driving force for growth in this industry in recent years. In response to environmental concerns surrounding petroleum, several new biofuel refineries in Oregon have started to make ethanol from grains and food processing and agricultural waste.

A large portion of Oregon’s employment in the fertilizer manufacturing industry is in factories that produce forms of ammonia for large-scale agriculture, golf courses, and home lawn and garden uses. Again, concern with the environment and the origins of the food we eat has helped boost employment. In recent years, several companies have started up that produce organic fertilizer through distilling or composting a variety of inputs such as fish waste, agricultural waste, and peat.

With the aging of the population, almost everything related to health care is growing and pharmaceutical and medicine manufacturing is no exception. It has shown an increase of 22 percent since 2001, a gain of 167 jobs. Oregon’s pharmaceutical industry is characterized by chemicals for diagnostics including indicators, nutritional supplements, and plasma donation. True to Oregon’s reputation as natural and organic, several companies that produce organic, herbal, vegetarian, and vegan nutritional supplements are taking advantage of the state’s varied agriculture and are helping the industry to grow.

Industry Wages Are High in the Chemical Manufacturing Industry

Many occupations in the chemical manufacturing industry pay well. At $63,420, the annual average wage for the chemical industry is considerably higher than the all-industries annual average wage of $51,132.
Within the industry, resin and synthetic rubber manufacturing is the highest at $102,484. At the lower end is toilet preparation manufacturing at $38,609. Somewhat surprisingly, pharmaceutical and medicine manufacturing is below the industry average at $57,843, likely due to the prevalence of nutritional supplements manufacturing.

Occupations in the chemical industry are a mix of those common to manufacturing and those unique to chemical manufacturing. The table shows select occupations in chemical manufacturing. The wages listed are for all industries that include the occupation, not just chemical manufacturing. The two largest occupations are production jobs that have low- to mid-level wages and require only a high school education.
For the occupations unique to chemical manufacturing, wages and educational requirements are higher. The highest is chemical engineer, which has a median wage of $43.17 and requires at least a bachelor’s degree. Chemical equipment operators and tenders’ median wage is $21.38 an hour and requires a high school education and on-the-job training. Chemical technicians make a median wage of $18.97 an hour and require at least an associate’s degree.

Outlook

According to the Bureau of Labor Statistics, national employment in the chemical manufacturing industry is expected to decline by 6.2 percent between 2016 and 2026. Within chemical manufacturing, pharmaceutical and medicine manufacturing is expected to decrease by 1.8 percent.

Although there is no published projection for chemical manufacturing in Oregon, most occupations in the industry are expected to grow. In addition, with an aging labor force, increased replacement needs from retirements will help provide opportunity. All of these occupations have additional opportunities created by replacement openings.
The chemical manufacturing industry has shown resilience by diversifying into different products as they come into demand. With the aging population, pharmaceuticals and medicine will likely continue to grow. In addition, the demand for biofuels, organic fertilizers, and organic and vegetarian nutritional supplements should help bolster employment in the future.

 


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