Fracking heats up the job market

Fracking, also know as hydraulic fracturing, is pretty controversial among environmentalists. The process threatens groundwater, but then natural gas burns much cleaner than coal.

Another issue affecting the fracking debate involves jobs. With the natural gas boom fueled by fracking, we’re now seeing a ton of drilling for gas, and also oil, and that’s creating many jobs.

On the East Coast, abundant natural gas flowing from the Marcellus Shale formation, which runs through New York, Pennsylvania, and Ohio, is enriching farmers who lease their lands to production companies and is estimated to have created 60,000 jobs in the region, with another 200,000 possible by 2015.

Cheap domestic energy is also good news for the manufacturing sector. “The discovery and development of North America’s shale resources has the potential to be the most remarkable source of economic growth and prosperity that any of us are likely to encounter in our lifetimes,” U.S. Steel CEO John Surma told the Congressional Steel Caucus in a late March hearing. It’s a virtuous cycle: More drilling requires more steel, and lower energy costs give U.S. steel producers a cost edge. This at a time when the Department of Energy reports that the energy intensity of U.S. steel companies is now among the lowest in the world.

In St. James Parish near Baton Rouge, ground was broken last year for a $3.4 billion steel plant being built by Nucor Steel (NUE), the first major facility built in the U.S. in decades. U.S. Steel is investing in a new facility in Lorain, Ohio, and V&M Star Steel (the North American subsidiary of the French pipemaker Vallourec) plans to spend $650 million on a small-diameter rolling mill in Youngstown, Ohio.

It’s not just Big Steel that will benefit. Feedstock made from cheap natural gas is a boon for the petrochemical industry. Citing “the improved outlook for U.S. natural-gas supply from shale,” Dow Chemical (DOW) says it will build an ethylene plant for startup in 2017. (Ethylene is used to make things like plastic bottles and toys.) Dow will also restart its ethylene plant near Hahnville, La. Shell, which is building a new petrochemical refinery in Pennsylvania, is also considering a $10 billion Louisiana plant to convert natural gas to diesel. “Low-cost natural gas is the elixir, the sweetness, the juice, the Viagra,” says Don Logan, president of the Louisiana Oil and Gas Association. “What it’s doing is changing the U.S. back into the industrial power of the day.”

Studies show that fracking will support millions of jobs. Of course some will argue that green jobs are even better for the economy, and the environment, in today’s economy we can’t be too picky.

The need for skilled factory workers

There are plenty of factory jobs opening up as the economy recovers, but employers are having trouble filling them.

What’s missing are the skilled workers needed to fill them.

A metal-parts factory here has been searching since the fall for a machinist, an assembly team leader and a die-setter. Another plant is offering referral bonuses for a welder. And a company that makes molds for automakers has been trying for seven months to fill four spots on the second shift.

“Our guys have been working 60 to 70 hours a week, and they’re dead. They’re gone,” said Corey Carolla, vice president of operations at Mach Mold, a 40-man shop in Benton Harbor, Mich. “We need more people. The trouble is finding them.”

Through a combination of overseas competition and productivity gains, the United States has lost nearly 4 million manufacturing jobs in the past 10 years. But many manufacturers say the losses have not yielded a surplus of skilled factory workers.

Instead, as automation has transformed factories and altered the skills needed to operate and maintain factory equipment, the laid-off workers, who may be familiar with the old-fashioned presses and lathes, are often unqualified to run the new.

Compounding the problem is a demographic wave. At some factories, much of the workforce consists of baby boomers who are nearing retirement. Many of the younger workers who might have taken their place have avoided the manufacturing sector because of the volatility and stigma of factory work, as well as perceptions that U.S. manufacturing is a “dying industry.”

“Politicians make it sound like there’s a line out front of workers with a big sign saying ‘No more jobs,’ ” said Matt Tyler, chief executive of a precision metal company in New Troy, Mich. “Nothing could be further from the truth.”

This is one of many reasons why job training has to be a priority for government spending. We need more skilled factory workers, along with more engineers.

If you’re looking for a job, keep this in mind. With some training you could land a well-paying job in manufacturing.

Jobless claims plunge

The news on jobs keeps improving.

Weekly jobless claims moved sharply lower, while inflation remained tame and housing starts unexpectedly weakened in December, according to a set of data painting a mixed picture of the economic recovery.

Weekly unemployment benefit applications dropped to 352,000, the fewest in nearly four years.

The buzz out there is that manufacturing is a big part of the rebound.

It will be interesting to see how the improving job situation will affect the 2012 presidential election.

Are American Jobs Really Heading Home From Overseas?

shutterstock_Chinese Factory Small

This just might mean something for millions of unemployed manufacturing workers across America.

Dana Morey, executive vice-president of Morey Corp., remember well Chinese New Year two years ago, when they were calling all over Shenzhen, China, trying unsuccessfully to find someone who could pick up a load of finished parts from a factory during the two-week holiday and ship them to Chicago. Then it was holes not drilled deeply enough in a shipment of circuit boards from a Chinese supplier. Similar problems have occurred in metal and plastic castings.

Morey is part of the wave of “near-shoring” or “re-shoring” of production that gained momentum during the recession. Manufacturers are bringing work back to the U.S. because of the rising cost of shipping, labor and raw materials—coupled with quality problems and shortened lead times from customers unable to predict their own orders in a still-choppy economy.

“People are starting to see they went too far in outsourcing,” says Harry Moser, former chairman of Lincolnshire-based machine-tool maker AgieCharmilles LLC and a proponent of bringing manufacturing work back to the U.S.

The near-shoring trend is hard to quantify, however. A January study by Chicago-based accounting firm Grant Thornton LLP found that 20% of the 312 companies it surveyed had shifted from Asian suppliers last year to partners closer to home, mostly in the U.S. And 12% planned to do so this year.

While it’s not enough to reverse the 40-year shift in manufacturing from the U.S. to Asia, Mexico and Latin America, winning back some work that had gone overseas is helping manufacturers recover from the deep downturn that started three years ago.

Let’s see how many manufacturing companies follow suit in the coming year. So far, Caterpillar, Ford Motor, General Electric, and NCR have already moved operations and thousands of jobs back to the U.S.

Job market showing signs of life

We’ve been hearing anecdotal evidence that hiring has been picking up, and today’s job numbers confirm the trend with some good news on the jobs front.

Employment in the U.S. increased in March by the most in three years and the unemployment rate held at 9.7 percent as companies gained confidence the economic recovery will be sustained.

Payrolls rose by 162,000 last month, less than anticipated, figures from the Labor Department in Washington showed today. The March increase included 48,000 temporary workers hired by the government to conduct the 2010 census, as well as job gains in manufacturing and health services.

The government revised January and February payroll figures up by a combined 62,000, putting the March gain at 224,000 after including the updated data. Caterpillar Inc. is among companies adding staff, indicating the recovery that began in the second half of 2009 is starting to foster the jobs needed to lift consumer spending and sustain the expansion.

Let’s see if this can be sustained. Much of the stimulus money is still in the pipeline, so we can expect more hiring resulting from those federal dollars and they work their way through the economy. Also, manufacturing seems to be picking up, so that could also have a very positive effect.

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