As with many other US post-industrial cities, Pittsburgh – once dubbed a steel-making capital of the world– has been trying hard to rebrand itself as a tech city ever since its manufacturing jobs sailed away overseas. Unlike many cities, however, instead of just talking about its potential for investment, Pittsburgh already has impressive investors written into its Rolodex, with Google and Apple among the names present in the city.
Yet a 'once in a generation' investment, as local authorities call it, came not from hot tech Silicon Valley firms, but from Shell Oil Company, an oil giant with a history dating back to Pittsburgh's manufacturing glory days. In early June the company announced its final investment decision to construct its ethane cracker plant in Monaca, a borough located 40 kilometres north-west of Pittsburgh.
“This announcement signals Shell’s re-entry into the North American polyethylene market. The plant will be one of the largest of its kind in North America – the largest single 'from the ground up' industrial investment in the Pittsburgh region in a generation – and the first major US project of its type to be built outside the Gulf Coast region in 20 years,” Dennis Yablonsky, CEO of the Allegheny Conference on Community Development, a local economic development entity, said on the day of Shell's investment announcement.
Shell's commitment to the region has been known since 2012. Yet Mr Yablonsky's enthusiasm is not just pure PR trick to 'reheat' old news. While previously Shell planned to employ between 400 and 500 people, now, according to an official statement by the company, Shell has increased that number to 600. The main construction is expected to start in the next 18 months and will bring 6000 construction jobs, and while Shell does not comment on details regarding the financial magnitude of its investment, local media estimate the overall cost of the project to be between $2bn and $6bn.
A good fit
Why has Shell bet so big on Pittsburgh region? “Early on, we looked at various factors before selecting the Pennsylvania site for further evaluation. Those factors included good access to natural gas resources, water, road and rail transportation infrastructure, power grids, and sufficient acreage to accommodate facilities for a world-scale petrochemical complex,” says Michael Marr, the spokesperson for Shell Pennsylvania Chemicals Project. He adds that other locations such as Ohio and West Virginia were also considered for the Shell investment.
Apart from accessible infrastructure, factors such as tax incentives and local legislature support were also important to Shell's investment decision, according to Mr Marr. “From a state government perspective, the ethane manufacturing tax incentives legislation passed by [local authorities] was instrumental in helping Shell reach a positive final investment decision,” he says. “The local property tax legislation unanimously passed by Beaver County, Potter Township and the Central Valley School District represented an essential piece in the final investment decision.”