I am Dennis Bailey, director of energy purchasing for PPG Industries. Thank you for inviting us to provide testimony on this very important topic.
PPG is a $9-billion global supplier of paint, glass, fiber glass and chemicals, with manufacturing assets in 23 states and 22 countries.
We have about 20,000 employees and 14,000 retirees in the United States and 33,000 employees worldwide.
Affordable energy has played an important role in PPG becoming the leading global manufacturer that it is today.
PPG began operations more than 120 years ago in Pennsylvania. And has been in Senator Voinovich’s home state of Ohio for 105 years.
In all, about 10 percent of PPG’s corporate sales is generated from products made in Ohio.
The high cost of natural gas is clearly affecting PPG’s operations in Ohio and across the nation. For example:
· At our Circleville, Ohio, plant -- which makes resins needed in paint manufacturing -- natural gas costs have increased 70 percent over the past several years.
· From 2002 to 2003, natural gas costs at our Cleveland automotive paint plant doubled, and at our Barberton, Ohio, chemicals plant increased by 50-percent.
· High natural gas costs at our Crestline, Ohio, automotive glass plant may result in elimination of more than 10-percent of that site’s work force.
PPG has a well-earned reputation for controlling costs. But in spite of this, if natural prices increase, our businesses may have to make reductions elsewhere.
The average market price during the past 15 months has been about $5.50 -- 25 percent higher than any year since 1976 and double that of the 1990s.
On a global scale, if the price of natural gas increases to $7 – and remains there – PPG’s chlor-alkali chemicals business would have additional problems competing in global markets.
The work force at our Lake Charles, Louisiana, Chemicals facility is shrinking by 8 to 10 jobs per month through attrition. And we don’t expect to be rehiring.
And we believe other Gulf Coast producers are similarly affected.
The U.S. chemicals industry is no longer competitive globally because of the disparity of natural gas prices -- as shown in the exhibit I’ve entered into the record.
The U.S. industry has evolved into a net importer of product and exporter of jobs.
My company strongly believes solutions to the natural gas crisis are within our country’s grasp.
In the short term, energy conservation must be a major part of the solution. Education is necessary, as well as increased economic incentives.
For example, if all new residential windows sold in the United States were energy-efficient, it would eliminate the need for 20 additional power plants over the next decade and up to 60 power plants over the next 20 years.
Consumers need an incentive to use energy-efficient glass, positioning high-performance glass as the construction material of choice for saving energy in homes and commercial buildings.
As a start, the Senate needs to pass the Energy Conference Report which provides consumers an incentive to use energy-efficient glass.
But consumer conservation alone will not fix the problem.
There is an urgent need for increased access to domestic supplies, including resources in the outer continental shelf, the Rocky Mountain region and Alaska.
We feel that all of these opportunities can and should be accomplished in an environmentally responsible way.
Construction of an adequate delivery infrastructure, including for the import of liquefied natural gas, must be part of the solution.
In addition, government should encourage increased energy production from all sources, including coal, oil, nuclear, wind energy and other alternatives.
As makers of fiber glass used in wind-powered electricity generators, we believe tax credits to develop wind energy is a step in the right direction. Unfortunately, the bill is stalled in Congress.
On a final note, PPG does not support government intervention for price controls. Competition and free market forces should continue to drive prices.
Thank you for your leadership in developing solutions to resolve this growing natural gas crisis that threatens businesses, jobs and our nation’s economy.