Reindustrializing America

Meanwhile, back in the real world...

I would not support reindustrializing for it's own sake, let the market have that one, but it doesn't hurt to see 2.5% manufacturing job growth this year. Thank you, lower (relative) value USD.

http://blogdg.ctl.ca/2011/04/would_reindustrializing_americ.html

"Would Reindustrializing America be the Spark Needed to Produce Stronger Freight Flows?

For many years America has been the envy of the world. Its powerful, diverse economy helped generate consistent freight growth and produce a very vibrant freight industry. But America’s success ignited an escalation in the value of the greenback and a shift of production to lower cost sources of supply. The current issue of Logistics Management contains some amazing statistics that capture the impact of these changes.

• The U.S. has lost approximately 42,000 factories since 2001.
• The U.S. has lost about 5.5 million manufacturing jobs since October 2000.
• Today 12 million American work in manufacturing jobs, the lowest level since 1941.
• The percentage of people working in manufacturing jobs has dropped from 28 percent in 1959 to 9 percent currently.
• The U.S. has lost 32 percent of its manufacturing jobs since 2000.

In a separate study reported on Canadian television this week, over the decade 2000 - 2009, U.S. based multinational companies have cut 2.9 million manufacturing jobs in America while they created 2.3 million jobs overseas.

During this same time frame a set other powerful forces were unleashed. Certain countries became very proficient in manufacturing particular products (e.g. cars, television sets, smart phones, clothing etc.). There was also the miniaturization movement that resulted in shrinking the size of so many technology based products. Then the great recession hit in late 2008 and 2009 driving out more manufacturing jobs and causing a significant decline in freight volumes across all sectors.

An economic recovery is underway but is hitting a number of headwinds brought on by rising fuel costs, the CSA driver safety program and new (reduced) driver hours of service. However, the good news is that as the U.S. dollar has fallen to its lowest level since August 2008, manufacturing jobs have risen for the first time since 1997.

According to IHS Global Insight and Moody’s Analytics, U.S. manufacturing jobs are expected to grow by 330,000 or 2.5 percent this year. Thomas Runiewicz, an economist with IHS Global Insight recently told the Wall Street Journal that the economic rebound is being driven by three factors:

• Quality - - U.S. workers produce superior products
• Onshoring - - U.S. manufacturers are rediscovering the value of producing goods in America
• Excess U.S. Capacity and Infrastructure - - Unused plants and real estate exist throughout the United States that can be retrofitted for specific purposes.

The Logistics Management article highlights three companies (e.g. Whirlpool, Dow Chemical and Caterpillar) that are expanding production in America. The plunging U.S. currency is also providing a boost in revenue for many U.S. based exporting companies. The 15 percent decline in value of the U.S. dollar over the past nine months is reigniting export sales.

Vincent Delisle, Scotia Capital Strategist said a combination of healthy economic growth and a weak greenback represent “a sweet spot” for U.S. profit growth. An article in the April 22 issue of the Toronto Globe and Mail highlights the fact that IBM receives 64 percent of its revenues from non-U.S. sources. Their 2010 non-U.S. revenues were up 4.4 percent as compared to 2009. Similarly Johnson & Johnson’s 2010 non-U.S. revenues represent 52 percent of their business and were up 3.6 percent over 2009.

Nearly one-third of S&P 500 revenues come from non-U.S. sources. Peter Gibson of CIBC World Markets points out that roughly one-fifth of the companies on the S&P 500 are what he calls “value-added exporters” – U.S. multinationals that get more than half of their revenues from outside the U.S. Analysts said that the U.S. sectors that stand to benefit the most from the weaker currency because of their large exposure to foreign markets are consumer goods, information technology, industrials, energy and materials.

Of course, what goes down may and likely will go up. America cannot live forever on a low value dollar. What will it take to sustain America’s growth? The Harvard Historian Niall Ferguson, who has just written a book, Civilization: The West and the Rest, offered this historical context: “For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps. ---- competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.”

Recent studies now indicate that America has slipped back on where it ranks on these variables. As an example, in a 2009 study, American 15-year-olds ranked 17th in science and 25th in math out of 34 OECD countries. America must refocus on these six killer apps as part of a process of reindustrialization to create expanded domestic and international freight flows.

Posted by Dan Goodwill on April 22, 2011 11:27 AM"

 

Ricter im curious about something. You have mentioned you have a business building something that has something to do with the oil rigs in Canada. You are also cheering for a weaker dollar.

Do you export something from the States that gets used on the rigs in Canada? If so i can understand why you are cheering for a weaker dollar, and loving what is going on in the economy right now with the Canadian dollar sky rocketing at the same time the USD is collapsing. As for myself, this sucks, Im trying to move money into Canadian dollars, because i no longer trust the USD, but i have had to take a 35% haircut from where i was at with the peak in the USD/CAD conversion during the collapse.

 

...and complaining about man mad global warming.

 

Our US manufacturing strictly exports its rigs abroad. All rigs purchased for the Canada fields are made in Alberta. But like I admitted, the imports to the US facilities are painful, because of the USD; thankfully the US does still manufacture most of these inputs so there is not a lot of importing. What there is, though, is expensive. On the Canadian side, our imports are relatively cheap, thanks to the CAD$, and that's great.

I can be concerned about AGW and still work in this sector. My business and my life are not the most important things under the sun.

 

So your business doesnt primarily rely on exporting from the U.S. then?

There goes my thought... I was just guessing that you were happy about the USD going down because you build it in the U.S. and sell to Canada.

 

Classic Ricter, I can worry about the spread of STD's but screw every whore in sight, I can worry about pollution but drive an 8 mpg Hummer, I can yell for environmental issues but not bother to recycle, I can promote gun control but carry one myself, I can preach against racism but attend Reverend Wrights church, I can claim to detest violence but attack protesters I disagree with, I can claim integrity but support ACORN and voter fraud...

It's not hard to see why you've swallowed the whole liberal dogma hook, line and sinker.

 

I know what you saying, but I am one of the minority who aren't like that. I don't drive a guzzler, all our lights and PCs are turned off nightly, our paper is recycled, our shop water is scrubbed, our welding fumes filtered, etc. We don't advertise these things, even as strengths, but a day is coming when we will be able to.

I'm in a better position where I am to effect positive change in this industry than most folks.

 

The US division does export a great deal (more right now, by value, because of a huge recent sale) but almost nothing to Canada. I'm still happy (maybe "not displeased" is a better phrase) about the weaker USD though, since the Russians and the Australians find us competitive.

 

My daughter got a stuffed animal from her boyfriend. I kid you not, the tag said "Made in Mexico, brought in US".

I said "I'm glad to see you buying American."

He said "Whatever."

He is up to two sylabyls sentences, makes me proud.