Industry lost fewer jobs in January, but still bleeding

“Right now, we're in a vicious cycle where everybody is holding back,” said Martha Moore, senior economist with the Arlington-based American Chemistry Council.

“Throughout the supply chain, companies aren't purchasing as much and are working off inventory.”

The number of U.S. chemical jobs lost in January was 2,400 — a drop of 51 percent from the 4,900 workers let go in December.

That drop reversed the trend seen by the overall U.S. economy, which shed 598,000 jobs in January after cutting 577,000 in December, for an increase of almost 4 percent.

January was the worst month for U.S. job losses since December 1974. The U.S. unemployment rate now stands at 7.6 percent, its highest level since September 1992.

In a Feb. 6 phone interview, Moore said the January chemicals job loss number was “within expectations,” but she added that it's too early to tell if the trend will continue. The industry's inventory-to-sales ratio remains higher now than it was at this time last year.

“At some point, inventory will be worked off and there may be some bump up in [chemical and plastic] output,” Moore said.

A number of chemicals and plastics makers — including Dow Chemical Co., DuPont Co., BASF Corp. and LyondellBasell Industries AF SCA — have announced major global layoffs since late 2008. Moore pointed out that the full impact of those actions has not yet been felt, since some of them will be phased in throughout 2009.

The chemicals sector has fared better than other U.S. industries, in spite of losing 21,900 U.S. jobs since December 2007. That total represents less than 1 percent of the U.S. total of 3.6 million lost jobs. By comparison, manufacturing — including most plastic processing — has lost 1.1 million jobs, making up 31 percent of the total.

Major slowdowns in the construction and automotive markets also have had a substantial impact on U.S. chemicals, Moore said. Every new house built in the U.S. contains $16,000 in chemical products, while each new vehicle made has $2,400 in chemical value, according to ACC.

ACC also is urging the U.S. government to involve the chemicals industry in efforts to jump-start the nation's sagging economy through a stimulus package. The industry can participate in the American Recovery and Reinvestment Act of 2009 through a number of energy efficiency projects and “green technologies,” ACC President and Chief Executive Officer Cal Dooley said in recent letters to the Senate's appropriations committee.

“We have never before seen an economic slowdown of this magnitude,” Dooley said. “We believe a never-before-seen response from the government is urgently needed.”

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