U.S. manufacturing jobs begin their journey back from China

06.05.2012


U.S. manufacturing jobs begin their journey back from China
U.S. manufacturing jobs begin their journey back from China

In a down economy, serendipitous events can sometimes turn the tide and provide the necessary spark that could get things moving again. For this U.S., the discovery of vast reserves of natural gas may be one such occurrence that could have far-reaching effects on the nation's manufacturing industry.

According to the International Business Times, new technologies like horizontal drilling and hydraulic fracturing have led to extremely cheap production of natural gas, leading some of the world's largest chemical companies to bring their operations back to the U.S. from countries around the world as they look to take advantage of the inexpensive source of energy.

"The discovery of shale gas is an American manufacturing renaissance if handled well," said Andrew N. Liveris, chairman, CEO and president of the Dow Chemical Co. "It makes America a low-cost jurisdiction for any energy-intensive manufacturing of the value-add kind."

Dow stated that $8 in value is provided for the economy for every $1 of natural gas that is used as an energy source for manufacturing plants that produce petrochemicals, glass, steel and aluminum. The value is expected to significantly increase manufacturing staffing, with one proposed Dow ethylene plant expected to create some 2,000 new jobs. Exxon Mobil Corp. also announced a new facility will employ as many as 6,000 workers in Texas, while United States Steel Corp. has opened its doors at factory in Ohio that produces steel pipe drilling companies.

"We believe that, by 2025, the manufacturing sector could save $11.6 billion in cost, and could create up to 1 million manufacturing jobs attributed to shale gas," said Bob McCutcheon, U.S. industrial products and metals industry leader at PricewaterhouseCoopers LLP.

The Return of American Made

This forecast is certainly impressive, but is only one piece of an overall U.S. manufacturing renaissance. After losing out for years to China and other countries, where manufacturing was done at a fraction of the typical cost, those jobs appear to be returning to the states, the media outlet stated.

In 1953, the manufacturing industry made up approximately 30 percent of U.S. GDP. By 2009, that number had fallen to a mere 11 percent. However, to date, the industry has been growing again in what could be the beginning of a radical change, rising to 12.2 percent in only two years.

For example, large equipment manufacturer Caterpillar Inc. recently announced it plans to close its Japanese facility and moves its operations to Athens, Georgia, while Ford Motor Co. is bringing its jobs from China, Mexico and Japan back stateside. According to analysts' estimates, the return of manufacturing from China alone will create up to $55 billion annually for the U.S. economy in the next 10 years. Moreover, U.S. exports could grow to more than $65 billion a year in the next five years, statistics from Boston Consulting Group (BCG) show.

The effect all of this will have on manufacturing staffing and overall employment is truly immense. By bringing manufacturing jobs back home, up to 2.8 million additional jobs could be created in the construction, food services, housing, retail and transportation industries.

"The addition of this many jobs would be enough to lower the U.S. unemployment rate by 1.5 to 2 percentage points," said Harold L. Sirkin, BCG senior partner and managing director.

According to the latest data from the Bureau of Labor Statistics, the manufacturing industry continued to hire in May, adding 12,000 new jobs after a gain of 9,000 jobs the previous month. In the first quarter of 2012, manufacturing sector job gains averaged 41,000 per month.