We regularly report on major construction projects in the Pacific Northwest to keep our readers informed of upcoming opportunities in the region. Two upcoming projects fit this category:
1. Billion-Dollar Methanol Plants Planned by Chinese Backed Joint Ventures on the Columbia River
Both located on the Columbia River, the towns of Clatskanie, OR and Kalama, WA are two sleepy communities that are about to get a whole lot busier with the upcoming construction of new methanol plants. A joint venture, backed by the Chinese government, has plans to build two $1 billion plants near the Port Westward in Oregon and the Port of Kalama in Washington.[i] One thousand workers will be employed in the construction of each plant. Over time, indications suggest that the investment could grow adding a second $800 million phase at each plant. These plants would be the largest capital investments in the region in over 20 years.
Each plant will require another 120 employees to convert the natural gas into methanol. Instead of exporting the natural gas as a raw material, the plants are going to convert the natural gas into the “value added” product of methanol. An alternative to coal and petroleum, converting natural gas to methanol is commonly done to make chemicals that then go into plastics and rubber for consumer goods. The methanol will then be transported to China from the Port Westward and the Port of Kalama.
The Chinese government has made no secret of its desire to ensure that China, which lacks many natural resources, has sufficient natural resources at its disposal for its rapidly expanding economy. These plants will be the key to China’s plan to convert the methanol into olefins at its Dalian facility. Dalian is a Chinese city located on China’s east coast across from South Korea where petrochemical are transformed into complex olefins, which are the building blocks used to make rubber and plastics. The Chinese investors believe that converting the methanol into olefins is better accomplished in China, instead of the Northwest, due to the cheaper labor and land.
2. Boeing Will Invest $4 Billion to Build the 777X Facility and Will Remain in Seattle for Decades
Since World War II, Boeing has had a large presence in Puget Sound. Soon the region will see the construction of another facility that will be used to fabricate composite wings of the 777X aircraft. Boeing anticipates investing about $4 billion dollars to construct the plant. Boeing has not identified the site that will get the investment, which will also bring nearly 3,000 jobs (at peak production) to the Puget Sound area by 2024. Washington politicians are giddy with excitement. “We know the 777X will bring tremendous economic activity for the state of Washington” said Alex Pietsch, director of Governor Jay Inslee’s aerospace office.
This news comes on the heels of the International Association of Machinists’ vote to accept major concessions. The machinists’ vote, a 51 to 49 decison, split the ranks of its membership and the concessions were not well received by many. The deal leaves the International Association of Machinists in disarray and likely diminished the bargaining power of the union. Boeing developed maximum leverage by negotiating outside the normal schedule of contract talks when it threatened to located new airplane plant elsewhere. The union was left with few alternatives other than to give into the slow tide of concessions. Nevertheless, the future of Boeing in the Puget Sound area is guaranteed for many decades – as Rich Michalski, who represented the union in the 777X negotiations, gushed: “Boeing is going to be here forever now.”
[i] The investors are the Chinese Academy of Sciences (a branch of the Chinese government) and British Petroleum.