Manufacturing
The president has touted the resurgence of manufacturing in America in two SOTU speeches. He has stated among other things that our manufacturing sector is adding jobs, 620,000 new manufacturing jobs over the last four years, for the first time since the 1990s. This resurgence is fueled by abundant natural gas production, which the President stated in a trip to the Marcellus Shale region outside Pittsburgh on January 30th. At this event, President Obama and US Steel CEO Mario Langhi provided some much-needed context into how the steel manufactured there is used in our daily lives. More specifically, the steel made at this facility is being used to manufacture pipelines needed to bring natural gas to our homes. And while the steel industry manufactures and provides pipelines, the natural gas industry has supplied steel plants with cheap natural gas, which keeps production costs down. Interesting that the President takes credit for increased manufacturing that largely comes from natural gas derived from fracking which he and his supporters abhor via pipelines that he does not approve. He says his administration has launched two hubs for high-tech manufacturing. One is in Youngstown, Ohio and is focused on 3-D printing and one focused on energy-efficient electronics in Raleigh, North Carolina. He has announced the next two advanced manufacturing hubs. One is in the Detroit area, and the other is in Chicago, Illinois. All these hubs are partnerships that bring together companies and universities to develop cutting-edge technology, train workers to use that technology, and then make sure that the research is translated into real-world products made by American workers. Sound good? Well it is supposed to sound good. But doe sit make a difference or just spend money? We will have to wait and see.

Domestic Manufacturing Costs to Fall Below China

7/7/15
from NCPA,
7/7/15:

A recent report projected that the cost of manufacturing in the U.S. will fall below costs in China within the next three years, in large part due to the rise of fracking.

Fortune, citing an analysis by Boston Consulting Group, reported that the average cost to produce goods is currently only 5 percent higher in the United States than in China, and that the cost is expected to be 2 to 3 percent lower by 2018. - Rising wages in China and increased industrial productivity in the United States contributed to that trend, but the report cited hydraulic fracturing as the primary reason for the shift in costs. - Despite plummeting crude oil prices worldwide, the United States leads the global rankings in petroleum and natural gas production due to fracking. - As a result, the prices U.S. industrial customers pay for electricity are now 30 to 50 percent lower than the rates in other top exporting nations. - Falling energy prices particularly helped the metals, paper and petrochemicals sectors, which rely heavily on those fuels. A chemical trade group expects the plastics industry alone to create 127,500 jobs over the next decade due to decreasing natural gas prices. The Fortune report noted that increased domestic production can also curb transportations costs, particularly with trucks fueled by natural gas. Maintaining the country's fracking advantage over other nations could also help bring manufacturing jobs to the U.S. from overseas. A BCG analyst noted that even the current 5 percent cost gap between the U.S. and China could persuade companies to produce domestically, thereby avoiding potential shipping delays and political complications.

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