Leaner workforce not bad news for ethanol industry

Tuesday, February 12, 2008

The ethanol industry hasn't created the jobs supporters said it would, according to an Iowa State University study.

Communities that are counting on an influx of new jobs should use caution when using tax dollars to subsidize new ethanol plants, warns David Swenson, an ISU economist.

That's because ethanol plants, like nearly every other industry, will soon be able to get by with fewer employees.

The bottom line for Iowa is that the state's 42 ethanol plants will employ 1,865 people once 15 plants under construction are running next year.

For every one of the jobs in the ethanol plant, another three or four jobs are created in related sectors, or 8,129 jobs in Iowa, according to the report.

That's a serious number of jobs, for sure, but far below the 96,000 jobs the Iowa Renewable Fuels Association claims are supported by ethanol production.

With 20 plants in production and another seven under construction in Nebraska, it's easy to extrapolate the employment impact the industry has here.

Proponents naturally argue with the ISU study, pointing out -- correctly, we believe -- that ethanol has rejuvenated small towns and farm operations and the businesses that support them.

"If you think about it, we have record high farm income, we have record high land prices, we have record amounts of tax revenue going into the state treasury," Monte Shaw, executive director of the Iowa ethanol association.

It's natural that ethanol proponents overestimate the economic impact of production, but a decline in the number of jobs required shouldn't be seen as a problem with the industry.

Rather, it should be seen as a sign that ethanol production is becoming more efficient and profitable, as any maturing industry should.

Producing more fuel with fewer employees puts ethanol production in a position to better deal with potential economic challenges.

Better efficiency, through increased automation and, unfortunately, a leaner workforce, puts the ethanol industry in a stronger position for the long haul.

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