1

Economic Impact Analysis for the Polyvinyl Chloride and Copolymer NESHAP

February 2012

1.0 Background

This report is the economic impact analysis for the final Polyvinyl Chloride (PVC) and 

Copolymer NESHAP, which will be signed as per a court-ordered schedule by February 13, 

2012. Implementation of the rule is required by 3 years after promulgation. The standard is the 

MACT floor of control for each major HAP source type controlled, and GACT for the one area 

source that will be subject to this rule. Details on the rule can be found in the preamble 

contained in the public docket for this rulemaking. 

The chemical companies are found in NAICS 325211 (Polyvinyl chemical resins 

manufacturing). Below is a profile of the chemical manufacturing industry that PVC and 

copolymer facilities and firms are found in. 

 2.0 Chemical Manufacturing

Below is a profile of the chemical manufacturing industry. Economic data for this 

industry and portions thereof will be presented. 

2.1 Introduction

The chemical manufacturing industry produces over 70,000 chemical substances, many 

of which are ubiquitous in American life. Broadly speaking, chemical manufacturing operates by 

converting feedstocks into chemical products that can serve as intermediate goods or final 

products such as medicine, soap, and printer ink. From 1997 to 2007, shipments in the industry 

grew 42%, while employment declined by 8% (Table 2). While total payroll dropped 0.6% over 

this time, annual payroll per employee rose 7.8% from 1997 to 2007 because of the decline in the 

number of employees (Table 3). Shipments per employee grew 54% from 1997 to 2007, with 

much of that growth taking place between 2002 and 2006 (Table 4).

Chemical manufacturing (NAICS 325) covers a diverse set of industry groups, which we 

have aggregated into the following three groups:

 Bulk Chemicals—Includes the most energy-intensive industry groups as 

aggregated by the Department of Energy (DOE). Basic Chemical Manufacturing 

(NAICS 3251); Resin, Rubber, and Artificial Fibers Manufacturing (NAICS 

3252); and Agricultural Chemical Manufacturing (NAICS 3253).
2

 Pharmaceutical and Medicine Manufacturing (NAICS 3254)—Consists primarily 

of pharmaceutical preparation manufacturing. This industry group is the largest 

importer of goods within chemical manufacturing.

 Other Chemical Manufacturing: Consists of Paint, Coating, and Adhesive 

Manufacturing (NAICS 3255); Soap, Cleaning Compound, and Toiletry 

Manufacturing (NAICS 3256); and Other Chemical Product and Preparation 

Manufacturing (NAICS 3259).

In 2007, each of these groups generated approximately one-third of the total employment 

in chemical manufacturing (Figure 1). The bulk chemicals group accounted for the biggest share 

of chemical manufacturing’s total value of shipments (Figure 2).

Table 1. Key Statistics: Chemical Manufacturing (NAICS 325)

1997 2002 2006 2007

Shipments ($2007, millions) $521,251 $531,173 $675,223 $738,303

Payroll ($2007, millions) $49,961 $51,317 $46,981 $49,648

Employees 882,645 853,224 747,134 814,024

Establishments 13474 13,475 NA 12,937

NA = Not available.

Sources: U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: Annual 

Survey of Manufactures: General Statistics: Statistics for Industry Groups and Industries: 2006 and 2005.‖ 

<http://factfinder.census.gov>; (July 8, 2008).

U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 00: All Sectors: 

Core Business Statistics Series: Comparative Statistics for the United States and the States (1997 NAICS 

Basis): 2002 and 1997.‖ <http://factfinder.census.gov>; (July 8, 2008).

U.S. Census Bureau; generated by Kapur Energy and Environment; using American FactFinder; ―Sector 

00: EC0700A1: All Sectors: Geographic Area Series: Economy-Wide Key Statistics: 2007.‖ 

<http://factfinder.census.gov>. Accessed on December 27, 2009. [Source for 2007 numbers]
3

Table 2. Industry Data: Chemical Manufacturing (NAICS 325)

Industry Data 1997 2002 2006 2007

Total shipments ($2007, millions) $521,251 $531,173 $675,223 $738,303

Shipments per establishment ($thousands) $38,686 $39,419 NA $57,069

Shipments per employee ($2007) $590,556 $622,548 $903,750 $906,979

Shipments per $ of payroll ($2007) $10.43 $10.35 $14.37 $14.87

Annual payroll per employee ($2007) $56,603 $60,145 $62,882 $60,991

Employees per establishment 66 63 NA 63

NA = Not available.

Sources: U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: Annual 

Survey of Manufactures: General Statistics: Statistics for Industry Groups and Industries: 2006 and 2005.‖ 

<http://factfinder.census.gov>; (July 8, 2008).

U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 00: All Sectors: 

Core Business Statistics Series: Comparative Statistics for the United States and the States (1997 NAICS 

Basis): 2002 and 1997.‖ <http://factfinder.census.gov>; (July 8, 2008).

U.S. Census Bureau; generated by Kapur Energy and Environment; using American FactFinder; ―Sector 

00: EC0700A1: All Sectors: Geographic Area Series: Economy-Wide Key Statistics: 2007.‖ 

<http://factfinder.census.gov>. Accessed on December 27, 2009. [Source for 2007 numbers]

Figure 1. Distribution of Employment within Chemical Manufacturing (NAICS 325): 

2007

Source: U.S. Census Bureau; generated by Kapur Energy and Environment; using American FactFinder; ―Sector 

31: EC0731I1: Manufacturing: Industry Series: Detailed Statistics by Industry for the U.S.: 2007.‖ Release 

date: October 30, 2009. Accessed on December 27, 2009.

Bulk Chemicals, 

35%

Pharmaceuticals, 

31%

Other Chemicals, 

34%
4

Figure 2. Distribution of Total Value of Shipments within Chemical Manufacturing 

(NAICS 325): 2007

Source: U.S. Census Bureau; generated by Kapur Energy and Environment; using American FactFinder; ―Sector 

31:EC0731I1: Manufacturing Industry Series: Detailed Statistics by Industry for U.S.: 2007.‖ 

<http://factfinder.census.gov>. Accessed on December 27, 2009.

2.1.1 Supply and Demand Characteristics

Next, we provide a broad overview of the supply and demand side of the chemical 

manufacturing industry. We emphasize the economic interactions this industry has with other 

industries and people, including identifying the key goods and services used by the industry and 

the major uses and consumers of chemical manufacturing products.

The top 10 industry groups supplying inputs to the chemical manufacturing industry in 

2002 accounted for 71% of the total intermediate inputs (Table 4). Bulk chemicals’ production 

was the most energy intensive, using 79% of the chemical manufacturing inputs from petroleum 

and coal products, electric power generation, transmission and distribution, and natural gas

distribution.

Bulk Chemicals, 

50%

Pharmaceuticals, 

26%

Other Chemicals, 

24%
5

Table 4. Key Goods and Services Used in Chemical Manufacturing (NAICS 325) 

($2007, millions)

Good or Service BEA Code

Bulk 

Chemicals Pharmaceuticals

Other 

Chemicals Total

Basic chemicals 3251 $59,495 $4,772 $14,021 $78,288

Management of companies and enterprises 5500 $15,071 $19,380 $16,396 $50,846

Pharmaceuticals and medicines 3254 $0 $25,125 $0 $25,125

Wholesale trade 4200 $9,428 $8,367 $6,077 $23,872

Scientific research and development services 5417 $6,172 $6,139 $5,554 $17,865

Petroleum and coal products 3240 $10,066 $398 $3,432 $13,896

Plastics and rubber products 3260 $2,675 $1,132 $5,556 $9,363

Resins, rubber, and artificial fibers 3252 $4,048 $0 $4,949 $8,996

Electric power generation, transmission, and 

distribution

2211 $6,025 $716 $807 $7,548

Natural gas distribution 2212 $6,390 $154 $390 $6,934

Total intermediate use T005 $167,699 $82,403 $91,833 $341,935

Source: U.S. Bureau of Economic Analysis (BEA). 2008. ―2002 Benchmark Input-Output Accounts: 2002 Standard 

Make and Use Tables at the Summary Level.‖ Table 2. Washington, DC: BEA.

2.1.1.1 Goods and Services Used in Chemical Manufacturing

In 2007, the cost of materials made up 49% of chemical manufacturing’s total shipment 

value (Table 5). Total compensation to employees represented 9% of total shipment value, down 

from 10% in 2005.

2.1.1.1.1 Energy. The Department of Energy (DOE) classifies bulk chemical 

manufacturing as an energy-intensive industry. Pharmaceuticals and other chemical 

manufacturing are categorized as non-energy-intensive industries, grouped together with other 

industry groups under the ―Balance of Manufacturing‖ category (DOE, 2008).

Fuel used in chemical production can either facilitate chemical processes or provide the 

feedstock to derive value-added chemicals. In 2007, 70% of chemical manufacturing’s energy 

bill was spent on fuel used as feedstocks (O’Reilly, 2008). These fuel costs represented 2% of 

chemical manufacturing’s total value of shipments (Table 6).
6

As a whole, chemical manufacturing use less energy over the last 10 years. According to 

DOE, natural gas use by the chemical manufacturing industry dropped 30% from 1998 to 2006, 

and electricity use fell 10% (Table 6). From 1997 to 2005, when data ceased to be available, 

chemical manufacturing used less electricity relative to the manufacturing sector as a whole 

(Figure 3).

2.1.1.2 Uses and Consumers

Products manufactured in the groups bulk chemicals, pharmaceuticals, and other 

chemicals have very different consumer profiles. Bulk chemicals is dominated by intermediate 

use, representing 93% of its total commodity output and 56% of the total intermediate use of 

chemical manufacturing products. Pharmaceuticals has both a high level of demand from 

personal consumption, accounting for 67% of the total personal consumption of chemical 

manufacturing products, and a large trade deficit (Table 7).
7

Table 5. Costs of Goods and Services Used in Chemical Manufacturing (NAICS 325) 

($2007)

Variable 2005 Share 2006 Share 2007 Share

Total shipments $646,895 100% $675,223 100% $722,494 100%

Total compensation (millions) $62,669 10% $61,683 9% $63,591 9%

Annual payroll $48,159 7% $46,981 7% $48,780 7%

Fringe benefits $14,510 2% $14,702 2% $14,811 2%

Total employees 756,078 747,134 801,567

Average compensation per 

employee 

$82,887 $82,559 $79,333

Total production workers’ wages 

(millions)

$22,643 4% $22,231 3% $23,157 3%

Total production workers 431,502 430,880 463,802

Total production hours 

(thousands)

899,499 885,993 948,244

Average production wages per 

hour

$25 $25 $24

Total cost of materials 

($thousands)

$299,859 46% $318,945 47% $357,055 49%

Materials, parts, packaging $247,851 38% $260,934 39% $291,656 40%

Purchase electricity $8,291 1% $8,490 1% $8,936 1%

Purchased fuel $14,568 2% $13,667 2% $14,227 2%

Other $29,148 5% $35,855 5% $42,236 6%

Sources: U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: Annual 

Survey of Manufactures: General Statistics: Statistics for Industry Groups and Industries: 2006 and 2005.‖ 

<http://factfinder.census.gov>; (July 8, 2008).

U.S. Census Bureau; generated by Kapur Energy and Environment; using American FactFinder; ―Sector 

31: EC0731I1: Manufacturing: Industry Series: Detailed Statistics by Industry for the United States: 

2007.‖ Accessed on December 27, 2009.
8

Table 6. Energy Used in Chemical Manufacturing (NAICS 325)

Fuel Type 1998 2002 2006

Total (trillion BTU) 3,704 3,769 3,159

Net electricitya(million kWh) 169,233 153,104 151,646

Residual fuel oil (million bbl) 8 7 4

Distillate fuel oilb(million bbl) 2 2 2

Natural gasc(billion cu ft) 1,931 1,634 1,349

LPG and NGLd(million bbl) 15 9 2

Coal (million short tons) 13 14 8

Coke and breeze (million short tons) * * *

Othere (trillion BTU) 748 1,158 1,045

Total (trillion BTU) 3,704 3,769 3,159

a Net electricity is obtained by summing purchases, transfers in, and generation from noncombustible renewable 

resources, minus quantities sold and transferred out. It does not include electricity inputs from on-site 

cogeneration or generation from combustible fuels because that energy has already been included as generating 

fuel (for example, coal).

b Distillate fuel oil includes Nos. 1, 2, and 4 fuel oils and Nos. 1, 2, and 4 diesel fuels.

c Natural gas includes natural gas obtained from utilities, local distribution companies, and any other supplier(s), 

such as independent gas producers, gas brokers, marketers, and any marketing subsidiaries of utilities.

d

Examples of liquefied petroleum gases (LPGs) are ethane, ethylene, propane, propylene, normal butane, butylene, 

ethane-propane mixtures, propane-butane mixtures, and isobutene produced at refineries or natural gas processing 

plants, including plants that fractionate raw natural gas liquids (NGLs).

e Other includes net steam (the sum of purchases, generation from renewables, and net transfers), and other energy 

that respondents indicated was used to produce heat and power.

* Estimate less than 0.5.

Sources: U.S. Department of Energy, Energy Information Administration. 2007b. ―2006 Energy Consumption by 

Manufacturers—Data Tables.‖ Table 3.1. Washington, DC: DOE. <http://www.eia.doe.gov/emeu/mecs/

mecs2006/2006tables.html>. [Source for 2006 numbers]

U.S. Department of Energy, Energy Information Administration. 2007a. ―2002 Energy Consumption by 

Manufacturers—Data Tables.‖ Tables 3.2 and N3.2. Washington, DC: DOE. 

<http://www.eia.doe.gov/emeu/mecs/mecs2002/data02/shelltables.html>.
9

Figure 3. Electric Power Use Trends in Chemical Manufacturing (NAICS 325): 

1997–2005

Source: Federal Reserve Board. 2009. ―Industrial Production and Capacity Utilization: Electric Power Use: 

Manufacturing and Mining.‖ <http://www.federalreserve.gov/datadownload/>.

2.1.2 Firm and Market Characteristics

This remaining subsection describes geographic, production, and market data. These data 

provide the basis for further analysis, including regulatory flexibility analyses, and give a 

complete picture of the recent historical trends of production and pricing.

2.1.2.1 Location

In 2002, California had the most chemical manufacturing establishments in the United 

States, followed by Texas and New Jersey (Figure 4). The composition of establishments in these 

states differs among the different industry groups. Despite the fact that each group employed an 

approximately equal share of people in 2002, 54% of the total establishments were other 

chemicals establishments, and only 13% were pharmaceutical establishments.

8 0

8 5

9 0

9 5

100

105

110

Jan-97

Jul-97

Jan-98

Jul-98

Jan-99

Jul-99

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Index Value (Jan-97=100)

Manufacturing Chemical Manufacturing
10

Table 7. Demand by Sector: Chemical Manufacturing (NAICS 325) ($2007 millions)

Sector

BEA 

Code

Bulk 

Chemicals Pharmaceuticals

Other 

Chemicals Total

Plastics and rubber products manufacturing 3260 $39,353 $0 $3,057 $42,410

Basic chemical manufacturing 3251 $33,972 $0 $1,675 $35,647

Pharmaceutical and medicine 

manufacturing

3254 $4,778 $25,125 $462 $30,365

Resin, rubber, and artificial fibers 

manufacturing

3252 $28,249 $0 $1,076 $29,325

Ambulatory health care services 6210 $2,716 $22,900 $934 $26,550

General state and local government 

services

S007 $7,150 $10,586 $8,807 $26,543

Hospitals 6220 $2,936 $15,390 $394 $18,720

Other chemical product and preparation 

manufacturing

3259 $8,021 $0 $2,680 $10,701

Textile mills 3130 $9,568 $0 $930 $10,498

Soap, cleaning compound, and toiletry 

manufacturing

3256 $3,886 $0 $6,289 $10,176

Total intermediate use T001 $212,996 $83,279 $82,107 $378,382

Personal consumption expenditures F010 $4,449 $123,746 $55,882 $184,077

Exports of goods and services F040 $47,121 $15,683 $13,136 $75,940

Imports of goods and services F050 −$38,732 −$67,950 −$10,906 −$117,588

Total final uses (GDP) T004 $15,733 $73,485 $58,023 $147,241

Total commodity output T007 $228,729 $156,765 $140,129 $525,623

Source: U.S. Bureau of Economic Analysis (BEA). 2008. ―2002 Benchmark Input-Output Accounts: 2002 Standard 

Make and Use Tables at the Summary Level.‖ Table 2. Washington, DC: BEA.
11

Figure 4. Establishment Concentration in Chemical Manufacturing (NAICS 325): 

2002

Source: U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: 

Manufacturing: Geographic Area Series: Industry Statistics for the States, Metropolitan and Micropolitan

Statistical Areas, Counties, and Places: 2002.‖ <http://factfinder.census.gov>; (July 23, 2008).

2.1.2.2 Production Capacity and Utilization

Capacity utilization of the chemical manufacturing industry has been broadly in line with 

the manufacturing sector (Figure 5). In the second half of 2005, the chemical manufacturing 

industry’s capacity utilization fell dramatically because of the multiple hurricanes affecting the 

Gulf Coast states. The impact of the economic downturn in 2001 can be seen in the capacity 

utilization of both manufacturing and chemical manufacturing.

2.1.2.3 Employment

The geographic distribution of employment in chemical manufacturing differs largely 

among the different groups. In California, 52% of the chemical manufacturing employment 

comes from the pharmaceutical industry, while 60% of the chemical manufacturing employment 

in the Gulf Coast states comes from bulk chemicals manufacturing (Figure 6).

2.1.2.4 Plants and Capacity

Production capacity in chemical manufacturing has grown 33% since 1997. This growth, 

however, is 9% less than the growth rate for the manufacturing industry as a whole (Figure 7).

Establishments

Fewer than 100

100 - 249

250 - 474

475 - 750

More than 750
12

Figure 5. Capacity Utilization Trends in Chemical Manufacturing (NAICS 325)

Source: Federal Reserve Board. 2009. ―Industrial Production and Capacity Utilization: Capacity Utilization.‖ 

<http://www.federalreserve.gov/datadownload/>.

Figure 6. Employment Concentration in Chemical Manufacturing (NAICS 325): 2002

Source: U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: 

Manufacturing: Geographic Area Series: Industry Statistics for the States, Metropolitan and Micropolitan 

Statistical Areas, Counties, and Places: 2002.‖ <http://factfinder.census.gov>; (July 23, 2008).

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

5 0

5 5

6 0

6 5

7 0

7 5

8 0

8 5

9 0

9 5

100 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Percentage Capacity Utilization

Manufacturing Chemical Manufacturing

Employment

Fewer than 5,000

5,000 - 13,999

14,000 - 29,999

30,000 - 40,000

More than 40,000
13

Figure 7. Capacity Trends in Chemical Manufacturing (NAICS 325)

Source: Federal Reserve Board. 2009. ―Industrial Production and Capacity Utilization: Industrial Capacity.‖ 

<http://www.federalreserve.gov/datadownload/>.

2.1.2.5 Firm Characteristics

In 2007, the top six companies by chemical sales had greater than $10 billion in sales. 

Together, their sales are greater than the next 44 highest chemical companies combined. These, 

however, are global companies, with a large portion of both sales and production coming from 

operations outside of the United States (Table 8). The largest chemical manufacturing company, 

Dow Chemicals, has 108 out of 150 manufacturing sites located outside of the United States 

(Dow Chemical Company, 2008).

In 2007, 58% of U.S. chemical manufacturing corporations generated net income. 

Including those with and without net income, chemical manufacturers had an average before-tax 

profit margin of 10.24%. Profitability is highest for pharmaceutical and medicine corporations 

(Table 9).

100

110

120

130

140

150 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Index Value (Jan-97=100)

Manufacturing Chemical Manufacturing
14

Table 8. Top Chemical Producers: 2007

Chemical Sales 

($millions) % of Total Sales % of Sales in United States

Dow Chemical 53,513 100% 35%

ExxonMobil 36,826 9% 38%

DuPont 29,218 100% 38%

Lyondella16,165 57% 80%

Chevron Phillips 12,534 100% 86%

PPG Industriesa10,025 90% 56%

Huntsman Chemical 9,651 100% 50%

Praxair 9,402 100% 43.5%

Air Productsa8,820 88% 51%

Rohm & Haasb7,837 88% 49%

a

Percentage of sales in the United States calculated from total sales, not chemical sales.

b

Percentage of sales in the United States is actually percentage of sales in North America.

Source: O’Reilly, R. 2008. ―Chemicals.‖ Standard and Poor’s Industry Surveys. 176(28). 

Table 9. 2007 Corporate Income and Profitability (NAICS 325)

Industry

Number of 

Corporations

Number of 

Corporations 

with Net 

Income

Total 

Receipts 

($thousands)

Business 

Receipts 

($thousands)

BeforeTax Profit 

Margin

After-Tax 

Profit 

Margin

Basic chemical 1,244 757 $195,022,700 $178,019,490 5.07% 4.10%

Resin, synthetic rubber, 

and artificial synthetic 

fibers and filaments

1,067 648 $44,692,366 $40,078,009 8.06% 6.33%

Pharmaceutical and 

medicine 

1,034 611 $381,339,258 $317,414,432 15.63% 11.66%

Paint, coating, and 

adhesive 

1,411 1,260 $51,778,868 $49,486,744 5.39% 4.02%

Soap, cleaning compound, 

and toilet preparation 

1,862 463 $150,506,485 $139,836,602 9.07% 7.51%

Other chemical product 

and preparation 

2,946 1,773 $89,014,032 $84,062,534 6.71% 5.27%

Chemical manufacturing 9,564 5,512 $912,353,710 $808,897,810 10.24% 7.89%
15

Source: Internal Revenue Service, U.S. Department of Treasury. 2008b. ―Corporation Source Book: Data File 

2007.‖ <http://www.irs.gov/taxstats/article/0,,id=167415,00.html>; (January, 15, 2010).

2.1.2.6 Size Distribution

The primary criterion for categorizing a business as small is number of employees, using 

definitions by the SBA for regulatory flexibility analyses. The data describing small business 

size standards are provided in Table 10. For the PVC industry, the size standard is 750 

employees or less (NAICS 325211). In 2002, enterprises with fewer than 500 employees 

accounted for 27% of employment and 15% of receipts within the chemical manufacturing 

industry) as noted in Table 11.

2.1.2.7 Domestic Production

In the late 1990s, overall manufacturing production was growing much faster than the 

chemical manufacturing component (Figure 8). Following the recession of 2001, however, the 

components have moved broadly in line with one another, except for the drop in chemical 

manufacturing production caused by the hurricane season of 2005.

2.1.2.8 International Trade

In the year 2000, the United States moved from having a trade surplus to a trade deficit in 

chemical manufacturing products (Figure 9). This change occurred because the trade deficit in 

pharmaceutical manufacturing, currently at $35 billion, overwhelmed the trade surplus of bulk 

chemicals and other chemical manufacturing combined, currently at $22 billion.

2.1.2.9 Market Prices

Prices of goods in chemical manufacturing have accelerated rapidly in the last 2 years, 

having outpaced overall manufacturing since 2002 (Figure 10). Much of this recent acceleration 

seen in the industry PPI is due to the bulk chemicals segment, largely reflecting the rapid 

increase in fertilizer prices.
16

Table 10. Small Business Size Standards: Chemical Manufacturing (NAICS 325)

NAICS Description Employees

325110 Petrochemical Manufacturing 1,000

325120 Industrial Gas Manufacturing 1,000

325131 Inorganic Dye and Pigment Manufacturing 1,000

325132 Synthetic Organic Dye and Pigment Manufacturing 750

325181 Alkalies and Chlorine Manufacturing 1,000

325182 Carbon Black Manufacturing 500

325188 All Other Basic Inorganic Chemical Manufacturing 1,000

325191 Gum and Wood Chemical Manufacturing 500

325192 Cyclic Crude and Intermediate Manufacturing 750

325193 Ethyl Alcohol Manufacturing 1,000

325199 All Other Basic Organic Chemical Manufacturing 1,000

3252111Plastics Material and Resin Manufacturing 750

325212 Synthetic Rubber Manufacturing 1,000

325221 Cellulosic Organic Fiber Manufacturing 1,000

325222 Noncellulosic Organic Fiber Manufacturing 1,000

325311 Nitrogenous Fertilizer Manufacturing 1,000

325312 Phosphatic Fertilizer Manufacturing 500

325314 Fertilizer (Mixing Only) Manufacturing 500

325320 Pesticide and Other Agricultural Chemical Manufacturing 500

325411 Medicinal and Botanical Manufacturing 750

325412 Pharmaceutical Preparation Manufacturing 750

325413 In-Vitro Diagnostic Substance Manufacturing 500

325414 Biological Product (except Diagnostic) Manufacturing 500

325510 Paint and Coating Manufacturing 500

325520 Adhesive Manufacturing 500

325611 Soap and Other Detergent Manufacturing 750

325612 Polish and Other Sanitation Good Manufacturing 500

325613 Surface Active Agent Manufacturing 500

325620 Toilet Preparation Manufacturing 500

325910 Printing Ink Manufacturing 500

325920 Explosives Manufacturing 750

325991 Custom Compounding of Purchased Resins 500

325992 Photographic Film, Paper, Plate and Chemical Manufacturing 500

325998 All Other Miscellaneous Chemical Product and Preparation 

Manufacturing

500
17

Source: U. S. Small Business Administration (SBA). 2010. ―Table of Small Business Size Standards Matched to 

North American Industry Classification System Codes.‖ Effective November 5, 2010. Found on the 

Internet at http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf. 

1 The PVC industry is classified as part of NAICS 325211. 

Table 11. Distribution of Economic Data by Enterprise Size: Chemical Manufacturing 

(NAICS 325) 

Enterprises with

Variable Total

1 to 20 

Employeesa

20 to 99 

Employees

100 to 499 

Employees

500 to 749 

Employees

750 to 999 

Employees

1,000 to 1,499 

Employees

Firms 9,341 5,413 1,974 790 95 56 71

Establishments 13,096 5,433 2,208 1,352 250 185 276

Employment 827,430 34,838 78,090 113,326 28,025 18,119 28,338

Receipts ($millions) $468,211 $9,631 $21,394 $39,111 $12,217 $7,324 $14,762

Receipts/firm ($thousands) $50,124 $1,779 $10,838 $49,507 $128,603 $130,779 $207,913

Receipts/establishment 

($thousands)

$35,752 $1,773 $9,689 $28,928 $48,869 $39,587 $53,485

Receipts/employment ($) $565,862 $276,464 $273,971 $345,117 $435,942 $404,195 $520,920

a Excludes SUSB employment category for zero employees. These entities only operated for a fraction of the year.

Source: U.S. Census Bureau. 2008. ―Firm Size Data from the Statistics of U.S. Businesses: U.S. Detail Employment Sizes: 

2002.‖ <http://www.census.gov/csd/susb/download_susb02.htm>.
18

Figure 8. Industrial Production Trends in Chemical Manufacturing (NAICS 325)

Source: Federal Reserve Board. 2009. ―Industrial Production and Capacity Utilization: Industrial Production.‖ 

<http://www.federalreserve.gov/datadownload/>.

Figure 9. International Trade Trends in Chemical Manufacturing (NAICS 325)

Source: U.S. International Trade Commission. 2008. ―U.S. Domestic Exports‖ & ―U.S. Imports for Consumption.‖ 

<http://dataweb.usitc.gov/scripts/user_set.asp>.

100

110

120

130

140 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Index Value (Jan-97=100)

Manufacturing Chemical Manufacturing

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

$1,000,000 (2007)

Imports Exports
19

Figure 10. Producer Price Trends in Chemical Manufacturing (NAICS 325)

Source: U.S. Bureau of Labor Statistics (BLS). 2009c. Producer Price Index. Series ID: PCU325—325—

&PCUOMFG—OMFG—. <http://www.bls.gov/ppi/home.htm>.

3.0 Summary of Analysis Results

There are eight major chemical companies affected by the rule. Most of these firms are 

multinational, and all of these firms have annual revenues above $2 billion for the last full year 

reported (2010). All of these firms have more than 1,500 employees, so none of these firms are 

a small business as defined by the Small Business Administration (SBA) for this industry – 750 

employees or less for a parent owner in the polyvinyl chlorine resins manufacturing.

1

 Thus, 

since there are no impacts on small business as a result of this rule, it follows that there is no 

significant economic impact on a substantial number of small entities (SISNOSE) for this rule. 

The total annualized costs (TAC) of the rule for each parent owner company, as taken 

from the cost and emission reductions memo prepared for US EPA2, are in Table 12. The 

nationwide total annualized costs of this rule are $4.1 million. All costs are in 2010 dollars.

 

1 U.S. Small Business Administration, Table of Size Standards. November 5, 2010. Found on the Internet at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 

2 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. ―Cost and Emission 

Reductions of the MACT Floor Level of Control for the Polyvinyl Chloride and Copolymers (PVC) Production 

Source Category.‖ Prepared by ERG, Inc. for Jodi Howard, U.S. Environmental Protection Agency, Office of Air 

Quality Planning and Standards. December, 2011.

9 0

100

110

120

130

140

150

160

170 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 PPI (Jan-98=100)

Manufacturing Chemical Manufacturing
20

Table 12. TAC for Each Parent Owner (in 2010 dollars)

Parent Owner and Subsidiary Total Annualized Costs per Parent Owner

Saint-Gobain (owner of Certain Teed) $68,706

Dow $85,632

Formosa Plastics Group (owner of Formosa 

Chemicals)

$824,205

Georgia Gulf $303,689

Occidental Petroleum (owner of OxyVinyls) $635,293

PolyOne $396,739

Shin-Etsu Group (owner of Shintech) $236,632

Westlake Chemical $1,377,907

Total: $3,928,803

This analysis identified the businesses that will be affected by this rule and provides an 

analysis at a screening level to assist in determining whether this rule is likely to impose a 

significant economic impact on affected businesses. The analysis employed here is a ―sales test‖ 

that computes the annualized compliance costs as a share of sales for each company. The 

annualized cost per sales for a company represents the maximum price increase in affected 

product needed for the company to completely recover the annualized costs imposed by the 

proposed regulation. 

The ―sales test‖ is the impact methodology EPA employs in economic impact analysis 

such as this one as opposed to a ―profits test‖, in which annualized compliance costs are 

calculated as a share of profits.3 This is because revenues or sales data is commonly available 

data for entities normally impacted by EPA regulations and profits data normally made available 

is often not the true profits earned by firms due to accounting and tax considerations. Firms and 

entities often have ways legally available in the tax code to minimize their reported profits; thus, 

using reported profits may lead to a less than accurate estimate of the economic impact of a 

regulation to an affected firm or entity and their consumers. 

Economic impact estimates are shown in Table 13 below. The table lists the 8 ultimate 

parent companies impacted by the rule, the costs of the rule for each company basis, the annual 

revenues for these companies, and then the impact to the company on a cost to sales basis. 

Revenues are for the ultimate parent owner, and a number of the companies are multinational in 

 

3 More information on sales and profit tests as used in analyses done by U.S. EPA can be found at 

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf, pp. 32-33. 
21

corporate scope and are headquartered outside the U.S. Revenues are for 2010 to be consistent 

with the year for the cost estimates. Applying such a calculation yields the following results as 

shown below:

Table 13: Economic Impact Results by Parent Owner for the Polyvinyl Chloride NESHAP

Parent Owner and 

Subsidiary

Total Annualized 

Costs per Parent 

Owner (2010 

dollars)

Total Revenues in 

2010 per Parent 

Owner (billions of 

US dollars)

Annualized Costs 

per Revenues for 

Each Parent Owner

(in %)

Saint-Gobain (owner of 

Certain Teed)

$68,706 $54.49a 

0.00012

Dow $85,632 $53.67b0.00016

Formosa Plastics Group 

(owner of Formosa 

Chemicals)

$824,205 $55.09c

0.0015

Georgia Gulf $303,689 $2.82d0.011

Occidental Petroleum 

(owner of OxyVinyls)

$635,293 $19.05e

0.0033

PolyOne $396,739 $2.61f0.015

Shin-Etsu Group (owner of 

Shintech)

$236,632 $9.86g

0.0024

Westlake Chemical $1,377,907 $3.21h0.043

a

Revenue estimate found at Industry Week, 

http://www.industryweek.com/research/iw1000/2010/iw1000Company.asp?Input=59. Estimate is for Compaigne 

de Saint-Gobain. 

b Revenue estimate found in Dow Chemical Company’s 2010 Annual Report, p. B3. Found at 

http://www.dow.com/financial/pdfs/annual-report-2010.pdf. 

c Revenue estimate found in financial highlights of Formosa Plastics Group’s 2009 Annual Report, which is 

available at http://www.fpg.com/tw/html/eng/annu.asp. 

dRevenue estimate found on Georgia Gulf’s home web page: http://www.ggc.com.

eRevenue estimate found on Occidental Petroleum’s web page at 

http://www.oxy.com/InvestorRelations/CompanyProfile/Pages/AtaGlance.aspx. 

fRevenue estimate found at Plastics Today web site on April 7, 2011 from article, ―Record results for plastics, 

PolyOne, ExxonMobil, Dow, and Eastman.‖ Found on the Internet at http://www.plasticstoday.com/articles/recordresults-plastics-polyone-exxonmobil-dow-and-eastman. 

g Revenue estimate found at Shin-Etsu Group web site (http://www.shin-etsu.jp.com ). Converted from revenue 

estimate in yen using 93 yen = $1, the rate of exchange on March 31, 2010. The conversion is found in the ShinEtsu annual report (p.2). 

h Revenue estimate found on Westlake Chemical’s web site at http://www.westlakechemical.com. It should be 

noted that Westlake has made a bid to purchase Georgia Gulf as of mid-January, 2012. Georgia Gulf turned down 

this bid. It is uncertain if Westlake will be successful in purchasing or merging with Georgia Gulf by the 
22

promulgation date of this rule. Therefore, we consider these firms as separate for this analysis. Westlake does own 

4.8% of Georgia Gulf’s shares as of mid-January, 2012.

On a firm by firm basis, the results show that no parent owner affected by this proposed 

rule will experience an annualized compliance cost of more than 1 percent of its sales; in fact, 

none of these parent owners will experience annualized compliance costs of more than 0.05

percent of its sales. 

It should be noted that available estimates show that the U.S. price elasticity of demand 

for PVC output is -1.04, and the U.S. price elasticity of supply for PVC output is 0.8.5 Based on 

this information, one can conclude that domestic PVC demand will respond 1:1 with a change in 

output price, and that domestic PVC supply is inelastic (i.e., will respond less than 1:1) with a 

change in output price. Thus, the direct impact of this rule appears quite minor, and thus it is 

reasonable to infer that the impact on consumers of chemical manufacturing output from this rule 

should also be minor. The TAC is taken from the cost memorandum mentioned earlier that was 

prepared by U.S. EPA for the rule and in that memorandum more information can be found on 

the cost analysis. 

 

4 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. ―Impact of Carbon Price Policies on US Industry.‖ RFF 

Discussion Paper 08-37). Http://Www.Rff.Org/Publications/Pages/Publicationdetails.Aspx?. 

Publicationid=20680. Accessed August 2009. Table 8.A.6.

5 Broda, C., N. Limao, and D. Weinstein. 2008a. ―Export Supply Elasticities.‖ 

http://faculty.chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/TradeElastic

ities.html. Accessed September 2009.