Dive Brief:
- Germany-based polymer manufacturer Covestro announced it will spend 1.5 billion euros to build a new MDI (methylene diphenyl diisocyanate) plant at a company-owned site in Houston-area Baytown, Texas. MDI is a key ingredient in rigid polyurethane foams used in the production of products like energy-efficient insulation.
- The new "world-scale" plant will have a production capacity of 500 kilotons a year and will replace the existing 90-kiloton train. Covestro's existing Baytown site, according to the Houston Chronicle, is the largest of the manufacturer's U.S. production sites, employing 1,000 people.
- The new Baytown plant represents the company's biggest single investment ever. It said it chose Baytown because of cost considerations, existing infrastructure and logistical position.
Dive Insight:
The Gulf Coast region of the U.S. is home to many chemical plants, oil refineries and other industrial facilities because, as Covestro officials stated in the company's Baytown announcement, costs there are relatively low and the area has shipping and other logistical infrastructure in place.
Chinese manufacturer Wanhua announced last year that it was planning to build a $1 billion-plus chemical manufacturing facility in Louisiana, but increased costs due to U.S. tariffs could kill the deal or at least stall it.
However, the Gulf region is prone to hurricanes, and the chemical industry, which is a big employer and drives local economies from Alabama to Texas, is susceptible to potential catastrophic losses. For this reason, manufacturers with facilities in Texas have petitioned local authorities to pay for a $14 billion series of levees and barriers that would protect them against future storm surge.
The Army Corps of Engineers is studying the project, and local officials are looking to the Federal Emergency Management Agency to contribute $8 billion. The cost of annual maintenance could run at about $35 million.
