February 26, / Charleston, W.Va. / Managers and employees alike watched as the chemical industry entered its third year of decline after record-setting profits in 2000.

Plant workers from Dow, FMC, Great Lakes, OSi Specialties and UCAR Carbon have faced layoffs in the past year. All hope to see business pick up in the next 12 months.

But indications are the downsizing trend won't change.

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Kanawha Valley chemical companies employed about 12,500 workers in 1980. Today, 3,600 remain on the job.

Increased competition abroad, the uncertain economy, fluctuating oil prices, the threat of war in Iraq and other geopolitical risk factors have been tough on the industry, said Robert Baptista, executive director of the Chemical Alliance Zone, an economic development association.

West Virginians aren't alone. Layoffs have hit plants all across the country. Manufacturing jobs inside and outside the industry have been dropping off.

The only growth in the world's chemical industry is in China, Baptista said. China, India and other countries continue to play a larger role in chemical and pharmaceutical production. Their strides have forced American companies to become meaner and leaner over the past several years.

In 1996, the American chemical industry enjoyed a positive trade balance of $15.7 billion. Last year, the industry faced a negative balance of $2.4 billion.

To stay competitive, West Virginia company executives are turning to technologies that allow them to do more with fewer employees. Production lines and customer services have become highly automated. And more and more plants are outsourcing their chemical storage rather than maintaining their own warehouses.

"These are necessary changes in the region and nationwide," Baptista said. "How else can we compete against plants in Mexico or China that pay $1 or less an hour? Without these changes, more plant closures would have occurred years ago."

Lost chemical jobs have a noticeable effect on the state's economy. The average chemical worker earns $60,000 a year, about twice the overall industrial job average. Estimates are that for every job in the chemical industry, four to five other jobs are created, Baptista said.

Despite the trends, the Chemical Alliance Zone's 10 member companies, including Dow, DuPont, Bayer and Flexsys, see a bright spot in biotechnology. They are working to attract investment in research and development.

Managers at Dow have opened the company's South Charleston Technology Park to outside groups interested in developing biotechnology. Dow has donated 10,000 square feet of a 100,000 square foot building to be used as a biotech incubator that will provide lab space, equipment, access to Dow's pilot plant, site security and waste disposal services.

Members of the Chemical Alliance Zone want to develop closer ties with Marshall University and West Virginia University to improve their reputations in the medical and biotech research fields. They hope cooperative efforts will attract investment from other regions.

Multimillion-dollar investments are already being made at Marshall University for biotech research, Baptista said.

"We're being aggressive in attracting potential investors," Baptista said. "We have an opportunity to develop biotechnology research and development as an economic driver for the area."

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