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ON THE PVF PULSE


Manufacturing output surges to historic levels in December


(Continued from page 50.) While ethanol has proven less than


satisfactory as a biofuel converted from corn, it has been kept alive by the ongoing subsidy of 45 cents per gallon by the latest year-end Con- gress–administration political deal. Even Brazil, which has moved up


front in the world’s economic growth sweepstakes, has dedicated much of its sugar cane crop to keep its 1.5 mil- lion cars rolling. While emerging from a searing recession that has gen- erally maintained a disinflationary economic climate around the globe, food prices are approaching the pre- vious two-year peak (2007–08) at a time when the world at large is barely getting off its haunches. The major factor that didn’t exist in


the previous price spiral is the mas- sive monetary surplus available to two of the world’s economic super-


powers, China and India. They have seen literally hundreds of millions enter the consumption arena by virtue of rapidly expanding jobs paying multiple increased wages, allowing consumer participation levels not pre- viously ever dreamed of. This could prove even more infla-


tionary and shortage-ridden than the previous peak of 2007–8. If the de- veloped nations of the u.S., Japan and Europe regain their footing in 2011, the world could be faced with agricultural commodity shortages never before seen in modern history. Latest statistics indicate that 40%


of America’s world leading and bountiful corn crop is now dedicated to the controversial ethanol blend considered by experts to be damaging to automotive crankshafts. This was facilitated by the Obama administra- tion’s arbitrarily raising the percent-


age of ethanol used in gasoline blends from 10 to 15%.


U.S. manufacturing comeback trumpeted by nation’s media


After an historical manufacturing December surge, of which I became aware by dozens of contacts with pri- vately held u.S.-based businesses, the mainstream media is now trum- peting the manufacturing sector as the “shining light” in a lackluster eco- nomic recovery. Although acknowledging that this comeback is for real, reversing man- ufacturing’s decade-long shrinking percentage of America's annual gross domestic product, a major front page story in the Wall street Journal con- centrated on the comeback of factory hiring, whose 2010 136,000 new jobs were minuscule at best. Mark Zandi, chief Moody analysis


•THE WHOLESALER® — MARCH 2011


economist, went so far as to predict that manufacturing “would be a main source of job growth over the next decade.” Although accounting for less than half of the manufacturing jobs available in 1950 (22 million) and a 2010 GDP percentage of 9% compared with 17% in 1990, Zandi cites an expected annual two percent growth in job creation through 2015 as a major future contributor to un- employment reversal. Abetting the relatively jobless growth in the u.S. manufacturing


Mark Zandi, chief Moody analysis economist, went so far as to predict that manufacturing “would be a main source of job growth over the next decade.”


sector going forward are the follow- ing factors: • heightened productivity exacer-


bated by severe employee cutback and accelerated technological im- provements on the shop floor and back office. This was accompanied by a severe workforce reduction dur- ing the recent manufacturing reces- sion. • Increased overall business poten-


tial enabled by increased global recognition of America’s superior quality standards and inflation-in- duced import costs, both in labor, ma- terial and transportation. Fear induced by such major “product fail- ures” as a rash of accidents within BP facilities has occasioned a growing switch to “buy American.” • The need for “just in time” inven-


tory levels, readily available from American manufacturers, has occa- sioned an expanded dependency on American-based inventory levels. • New federal and state govern-


ment tax write-offs approaching 100% in 2011, for most new equip- ment, have given manufacturers a shot in the arm to take advantage of these tax breaks to speed up their quest for maximizing efficiencies now. • A spate of export orders and a


backup of new projects in power gen- eration, energy production and devel- opment and certain aspects of commercial and industrial construc- tion are further assurance that Amer- ica’s manufacturing sector could be on a potentially long term roll. n


Morris R. Beschloss, a 55-year vet- See contact information on page 194 • Be sure to visit www.thewholesaler.com for web exclusive articles and videos! •


eran of the pipe, valve and fitting in- dustry, is PVF and economic analyst emeritus for The WhOlesaleR.


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