46•


ON THE PVF PULSE


U.S. manufacturing remains on top of the world


A


n oft-repeated quote attributed to the legendary writer-author- traveler Mark Twain notes that


“the announcement of my obituary is greatly exaggerated.” It may come as a surprise to most


that the same can be said of the once global-dominating U.S. manufacturing capability. This fact came to my atten- tion increasingly in December when PVF distributors were substantially in- creasing their orders at a time when they usually “clear the decks” in antic- ipation of year-end floor taxes. My cu- riosity was heightened even more by an emerging record boom of exports. Further investigation emphasized


that this phenomenon reflected a “reawakenin” of new projects, as well as maintenance and repair, which had dominated most of the activity in the commercial and industrial construction, energy and export sectors on which I do much of my analytical focusing. My anecdotal commentaries on this evolving trend since that year-end sur- prising sea change have been emphati- cally confirmed by a recent study in the Wall Street Journal. It tells the story of a “thriving and growing U.S. manufac- turing arena” that remains, by far, the world’s largest. The misconception of a disappearing American manufactur- ing base can be attributed to four salient factors: • The seven million lost jobs, and the


continuously shrinking manufacturing employment base, reflective of un- skilled worker job opportunities in basic industry • The massive emergence of foreign-


based industrial manufacturing sites of some of America’s largest companies • The accelerating influx of low-


priced imports and America’s increas- ing dependence on them • Such loss of high profile sub-sec-


tors as automotive, electronics, textiles and footwear, etc. have projected the image of an American industrial entity forever lost The Wall Street Journal article puts


these conclusions into a realistic per- spective. Respected international data indicate that America’s manufacturing output has continued to increase con- sistently from 1970 to 2009, the last year these figures were available. In


• U.S. factory workers’ output tripled 1970s


• U.S. technological productivity surging


• Fracking battleground • Nuke power a good bet • Skilled employees in big demand


• North Dakota renewed


that year, U.S. manufacturing output was $2.155 trillion (including mining and utilities.) That’s more than 45% higher than


China’s equivalent total revenues. Be- cause the shrinking of industry employ- ment has cast a particularly gloomy cloud on the manufacturing sector’s image, it may come as a surprise that the average American factory worker today generates $180,000 of annual output, triple that of the $60,000 attributed to manufacturing employees in 1970. The American-led revolution in tech-


nological productivity, which embraces the agricultural sector as well, contin- ues to expand immeasurably, producing new products not normally associated with the traditional manufacturing em- blem of automotive, machinery and consumer products. With more than 20% of all the world’s manufactured goods output produced in the world as a whole, emblazoned with the highest quality reputation, the U.S. takes no back seat to any other nation, now or in the foreseeable future.


Oil and natural gas shale drilling in EPA jeopardy As oil prices continue to climb due


to geopolitical as well as to anticipated long-term global supply/demand prob- lems, hydraulic fracturing (fracking) has raised hopes that America’s huge amounts of shale reserves containing oil and natural gas would hold the key to resolving another expanding cost bubble, stemming from progressive im- port energy dependence. Fracking is a process that involves


injecting various types of drilling fluids into wells to free oil and natural gas trapped in shale formations deep under- ground. Due to its practically unlimited profusion in the U.S., it has been antic- ipated as a major breakthrough to lessen U.S. dependence on foreign oil, especially at stratospheric prices that make such recovery feasible cost-wise. This may all be for naught with the


Environmental Protection Agency moving into the shale drilling im- broglio, which had previously been regulated by the states. This was to have been supported by 2005 congres- sional action, which had exempted hy- draulic fracturing from the federal Safe Drinking Water Act. This has rapidly become a political


football. The minority House of Repre- sentative Democrats have recently is- sued a report showing that 29 known cancer inducing carcinogens were pres- ent in fracturing fluids used by oil and gas service companies. This report was based on data supposedly provided by 14 companies. Under the direction of activist EPA


chairman Lisa Jackson, that agency is destined to become a major stumbling


• Be sure to visit www.thewholesaler.com for web exclusive articles and videos! •


block in the ongoing “fracking” process expansion, much of which had already been launched outside of the huge areas reserved under federal ownership. The Petroleum Association of Amer-


ica, which often acts as an independent spokesman for U.S.-based oil and gas industries, sees the EPA’s direct inter- vention as a block for fracking in the fu- ture. The association has joined several oil and gas industries in a suit restraining the EPA’s direct intervention without re- ceiving authority from the federal Ad- ministrative Producers Law. Under the current administration, you can be as- sured this suit will be dead-ended.


U.S. nuclear sites will keep operating America’s 104 operating reactors


now produce more nuclear energy than ever before, roughly 22% of US electricity, thanks to repowering in re- cent years to boost plant output but also to a quantum leap in efficiency in recent decades. In 1980, the average nuclear plant ran at just 56% of capac- ity. Today, that figure is in the low to mid 90% range. Meanwhile, outage time for refueling and repairs has been cut by two-thirds. The key is the massive consolidation


of ownership, most of which occurred during 1990s industry deregulation. Swallowing Wall Street’s badly mis- taken conventional wisdom that com- petition would make nuclear plants


BY MORRIS R. BESCHLOSS PVF and economic analyst emeritus


will stick to its current multi-year ap- proval process. As of now, 60 reactors at some 40 different sites have been cleared for license extensions. Nineteen others have submitted applications. The remaining plants are expected to file applications between now and 2017. There’s no indication that approval won’t be forthcoming. Let’s hope that, for once, the needs


of America’s business industry and the U.S. public at large will be considered in light of the nation’s increasing en- ergy dependence.


Specialized U.S. job openings proliferating during unemployment continuity


While the overall U.S. unemploy-


ment picture continues to vacillate at an uncomfortably high level, the openings at the top of the jobs pyramid are in- creasing significantly. Mid-April statistics indicated that


such specialized, highly-skilled and technical openings had increased to 3.1 million, up from 2.7 million in January. Although encouraging as a positive sign in an otherwise drab unemploy-


which embraces the agricultural sector as well, continues to expand immeasurably, producing new products not normally associated with the traditional manufacturing ...With more than 20% of all the world’s manufactured goods output produced in the world as a whole,


The American-led revolution in technological productivity,


emblazoned with the highest quality reputation, the U.S. takes no back seat to any other nation, now or in the foreseeable future.


worthless, dozens of owners sold their ownership to a handful of intrepid gi- ants for pennies on the dollar. Sellers were compensated with


“stranded cost recovery” by regula- tors. Buyers, however, achieved scale overnight. The result was a newfound ability to make repairs at plants during ordinary refueling outages and before they required unplanned shutdowns. The upshot is that today’s U.S. nu-


clear industry is more profitable and less burdened with debt than ever. Low nat- ural gas prices and still slumping elec- tricity demand have depressed wholesale power prices. But, in stark contrast to unregulated coal and gas- fired power producers, nuclear compa- nies are well in the black. In fact, they’re still by far the least-cost game in town. The Obama administration and the


National Regulatory Commission re- fused to close any U.S. nuclear plants as Fukushima struggled. As for plant re-licensing, the NRC has indicated it


ment scenario, much of this is due to the intense productivity drive of Amer- ica’s privately-owned companies, which are universally subscribing to the philosophy of “doing more with less.” As these companies represent two- thirds of the 150 million potential na- tionwide employment pool, it’s become readily apparent that the shift to person- nel capable of working with upgraded equipment on the shop floor and back office will be increasingly demanded as the global economy continues its halt- ing climb out of the current recession- ary morass. Such technological evolution also


signals that millions of hands-on jobs that were so prevalent in the decades after World War II — automotive, metal fabrication, construction, textiles — will never come back. This requires educational levels focused on the needs of the ever changing requirements of business and industry.


(Turn to PVF Pulse, page 48.)


•THE WHOLESALER® — JUNE 2011


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