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St. James Parish Residents Rise Up Against Formosa Plastics Plant

Bitter about the recent closure of a Shell refinery, which caused about 700 people in the community to lose their jobs, residents are voicing their opposition to the construction of a new Formosa Plastics plant, part of what they call a "dead-end industry."

Clare Goldsberry

May 19, 2021

7 Min Read
representation of angry mob
Image: Андрей-Яланский/Adobe Stock

As Mark Twain once remarked after his obituary was mistakenly published, “The reports of my death are greatly exaggerated.” That same thing could be said about the plastics industry if you listen to reports from the anti-plastics crowd, including the good citizens of St. James Parish in Louisiana. Residents told the St. James Parish Council that they are “fed up” with its support of Formosa Plastics, despite mounting evidence of massive financial risk to taxpayers and looming job losses. Formosa Plastics, they said, is part of a “dying industry.”

Formosa Plastics Corp. was founded in 1978 and, according to the company website, is a “growing, vertically integrated supplier of plastic resins and petrochemicals with annual revenues of more than $5 billion.” Formosa Plastics employs nearly 2,900 people who operate over 20 production units in five businesses: Olefins, polyolefins, vinyl, specialty polyvinyl chloride, and chlor-alkali. The company produces resins and petrochemicals at its wholly owned manufacturing subsidiaries located in Baton Rouge, LA, and Point Comfort, TX.

Formosa Plastics produces oil and gas, and transports these raw materials through its subsidiary Lavaca Pipe Line Co., after which Formosa Hydrocarbons Co. processes natural gas into its components for use by Formosa Plastics’ production plants. The company even has its own fleet of large, modern railcars to transport its products.

That doesn’t exactly sound like a company that is part of a “dying industry.” Yet, at a recent St. James Parish Council meeting, a life-long resident of the parish, Sharon Lavigne, asked: “Why is the St. James Parish Council putting our hard-earned tax dollars at risk? Why do they keep making the same bad bets on risky companies with no future?”

Formosa Plastics project said to pose excessive financial risks

The press release from ProtectOurParish.org said that Lavigne was “referring to the recent Shell refinery closure at Convent, which saw about 700 area residents lose their jobs overnight.” A new analysis done shortly after the Shell closure from the Institute for Energy Economics and Financial Analysis (IEEFA) detailed the excessive financial risks posed by the controversial Formosa Plastics project, and warned it was likely to suffer a similar fate.”

Other findings in the IEEFA report point to “markets trending away from petrochemical products and single-use plastics.” While it’s true that many cities, counties, and even some states are moving away from single-use plastics (SUPs) via bans, the science isn’t settled as yet. Plastic for single-use items is still far and away in greater demand than paper, metal, or glass, and has been proven in study after study to be more eco-friendly than those alternatives.

Now, if we could just get consumers to be more eco-friendly and stop throwing single-use carry-out containers, utensils, cups, straws, and bags into the environment. Availability of those useful items does not translate automatically into unwanted waste. We would see the same amount of trash in the environment if the products were made of paper, metal, or glass. It appears to be human nature to just throw waste products into the environment. Changing the materials won’t change human nature.

Another finding in the IEEFA report cites rising construction costs that will diminish Formosa Plastics’ profitability, noting that the Taiwan Rating Service “recently estimated the cost of the project to be $12 billion, a 24% increase from Formosa’s original 2018 estimate of $9.4 billion.” (Formosa Plastics' headquarters is in Taiwan.) Of course, we must take into consideration the number of delays in the permitting processes caused by regulatory oversight, which always adds costs to any type of construction project. Formosa Plastics was fraught with these issues from the start.

Chasity White, another St. James Parish resident, asked, “Why is the Parish Council continuing to support dead-end industries with no future? The Shell refinery closure should be a wake-up call. The last thing we need is more dying industry.”

Shell refinery falls victim to net zero carbon goals

The Shell refinery, which closed in November, 2020, had been in Convent since the 1960s. It was a victim of the new net zero carbon future that companies are being forced to embrace in order to get financing from Wall Street. “With net zero carbon goals, energy companies are talking about switching to fuels that would reduce the kind of emissions that scientists believe induce climate change — or the companies are planning to find ways to offset the impact of those kinds of emissions,” said an article in the Advocate, a Baton Rouge newspaper, at the time of Shell’s announcement.

A new plant like Formosa Plastics could provide much needed jobs to those laid off from the Shell closure, and the jobs would be different given that Formosa Plastics produces products for a range of end markets. It wouldn’t be another “Shell.” While the citizens of St. James Parish were sorry to see Shell close its 60-year-old plant to focus on its newer plants with greener, lower-carbon energy sources like hydrogen and biofuels, the residents slam Formosa Plastics’ new, modern manufacturing facility as one that will “expose” them to a “dangerous” plastics facility, and urged the Parish Council to stop it.

Formosa Plastics has received substantial tax incentives to develop in St. James Parish. The company was offered $1.4 billion in local property tax exemptions and a $12 million grant to offset infrastructure costs in a competitive packaging to secure the project. The plant has also been grandfathered under an old tax break program and is expected to receive 100% property tax abatement for 10 years.

Despite Formosa Plastics’ success over the past 40 years, parish residents “felt they had no choice but to take their case to families and taxpayers, who have so much to lose when the Formosa project goes belly up,” said the press release.

Demand for polymers continues to grow

Yet, it’s obvious that these residents know very little about the plastics industry, including the fact that, in spite of SUP bans in some areas, the demand for polymer materials for a range of products in a variety of end markets has hardly slowed down. Grandview Research in its analysis of the global plastics market noted that the “packaging end-use segment held the largest revenue share of more than 36% in 2020. Packaging is a high-potential end-use segment with moderate penetration.” Plastics such as polyethylene terephthalate (PET) and polycarbonate (PC) are increasingly used in the packaging of beverages, consumer goods, appliances, toys, and apparel. The packaging of appliances is expected to offer lucrative growth opportunities for the segment.

“Moreover, the demand for plastic in consumer packaging is expected to shift severely toward food packaging owing to the recent shutdown of restaurants and food service outlets during the pandemic. The stockpile and panic purchases of food, groceries, and other homecare necessities are further expected to boost” this trend, said Grandview’s report.

Other end markets, especially those in the durable goods industries such as electrical and electronic, automotive, agriculture, construction, and medical devices will also increase demand for polymer materials. Building and construction represents about a 20% share of the global plastics market, and automotive represents approximately another 20% share, so it’s easy to see that the products that Formosa Plastics makes are in no danger of going away any time soon. Nor is Formosa Plastics in danger of failing.

Far from being a “dead-end industry,” the plastics industry and companies like Formosa Plastics continue to manufacture the many products we use every day from cars to appliances to building materials to medical equipment. Plastics continue to be in high demand for all the benefits they have come to provide, including light weight, durability, and environmentally responsible solutions to make life better. 

Shell gave three generations of Parish citizens good jobs. The residents of St. James Parish should be grateful that Formosa Plastics chose their parish to build a thriving, growing industry. The myths that are being spread about Formosa Plastics inability to survive because it is part of a “dead-end” industry are just that — myths!

About the Author(s)

Clare Goldsberry

Until she retired in September 2021, Clare Goldsberry reported on the plastics industry for more than 30 years. In addition to the 10,000+ articles she has written, by her own estimation, she is the author of several books, including The Business of Injection Molding: How to succeed as a custom molder and Purchasing Injection Molds: A buyers guide. Goldsberry is a member of the Plastics Pioneers Association. She reflected on her long career in "Time to Say Good-Bye."

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