A new analysis shows that chemical manufacturing is the largest, and one of the most successful, components of the U.S. manufacturing industry.
Research firm IBISWorld expects the subsector to generate about $893.3 billion in revenue and employ 777,000 people in 2015. It will account for about 16.0 percent of total manufacturing value added this year.
Chemical manufacturers produce a wide range of primary, intermediate and end products, ranging from plastics and resin to vitamins and explosives, said the report.
Several component industries have grown strongly over the past five years, including organic chemical manufacturing, which provides raw materials to various downstream manufacturers and has been fueled by strong export growth to emerging markets like China.
Chemical manufacturing has also benefited from rapid growth in the generic pharmaceuticals industry and the vitamins and supplements industry, IBISWorld reported.
However, the biggest boost to the U.S. chemical manufacturing subsector has come from the petrochemical manufacturing industry. This is largely thanks to the energy revolution in the United States over recent years following the advent of fracking and horizontal drilling technology, which has made fossil fuels more accessible than ever before.
The resulting drop in the price of natural gas, a primary input to petrochemicals, has made the industry “extremely profitable”, IBISWorld said. The research firm estimated that the average industry operator will achieve profit as high as 19.6 percent of revenue in 2015.
Overall, the U.S. chemical manufacturing sector is forecast to continue expanding over the next five years. Its revenue is projected to surpass the $1.0-trillion mark in 2020.