MECHANICAL CONTRACTING | PVF | CONTINUED FROM PAGE 58
profitable at today’s prices, also extends into Montana and the provinces of Alberta and Manitoba in Canada. As a result of such intense energy development activity,
unemployment is down to an incredible 3.8%, affording North Dakota the best job market potential in this country. As if the blessing of such new oil wealth were not enough, the state encompasses heavy coal supplies and ranks ninth in the country in wind-generated electricity. With coal benefitting from worldwide demand, this former farm- dominated state is also experiencing record agricultural export sales but now employs only 7.2% of its workforce in that once dominant sector. Most surprising is North Dakota’s attraction of high tech
graduates, due to the success of Great Plains Software, founded in the 1980s and sold to Microsoft in 2001 for $1.1 billion. The firm now employs 1,000 persons. Also located in the state are such biotech firms as Aldevron, which manufactures protein for bio-medical research. Others are also starting to proliferate. In addition to all the supplemental benefits of such
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largesse, North Dakota enjoys one of the nation’s highest median incomes and business activity at the wholesale and retail level that would be the envy of just about any of the other states in the Union. The entrepreneurial drive that is springing up in all
corners of North Dakota in a multitude of sectors could be a promising forerunner of such states as Ohio, Wisconsin
and Pennsylvania, whose government leadership is now concentrating on the development of new entrepreneurial businesses to displace the vacuum left by the shrinking of the once huge automotive and construction sectors. By the way, North Dakota is a right-to-work state, with
low taxes and a minimum of government interference, either from federal or state agencies.
Will stagflation rear its ugly head anew? With nagging unemployment, lackluster consumer
demand and potential supply chaos resulting from Japan’s catastrophe paramount at the end of the first quarter 2011, creeping inflation may be combining with a potentially flat economy to slide the recovery into — stagflation. From an economic health point of view, this is a virus
that combines flat consumer activity with an upward inflationary bias. Currently, this is the result of surging food and energy prices caused by global disruptions, but increasingly impacting the U.S. consumer’s pocketbook. What is troubling this year’s fragile economic recovery
even more than usual are some of the worst geo-political disruptions seen since the end of World War II. The disintegration of the rigid autocratic control by Arab and Iranian potentates over almost 50% of the world’s oil suppliers is showing no signs of resolution. The impact of the gigantic Japan-based nine point
earthquake and subsequent tsunami is only beginning to make itself felt. At stake are not only Japan’s future as the world’s leading exporter and third-largest global economy but also the retention and growth of nuclear power as a major factor in regeneration of electricity worldwide. The shortage of a
multiplicity of components ranging from semi-conductors to autos, television sets and a variety of electronic equipment has already begun to push up the prices paid component of the Institute of Supply Management manufacturing index to 84 earlier this month. This compares to 62.5 prior to the recent commodity shortages and the Japan earthquake calamity. A continuation of this set
of circumstances could lead to severe profit shrinkage by most corporations, while slack consumer demand, global unemployment and a continued residential construction depression continue to dog the economy in general. With the last ounce of
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productivity already squeezed out of most businesses, there is practically no room left to cut costs further. Such a somber sum of developments will turn the possibility of stagflation into stark reality. l
phc may 2011
www.phcnews.com
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