Growing pains: The rebirth of U.S. manufacturing | www.pabusinesscentral.com … – Pennsylvania Business Central

Last year on October 3, which has been designated as National Manufacturing Day, President Obama held a town hall meeting at Millennium Steel in Princeton, Indiana and introduced a new word into the American lexicon – “insourcing.”

In his opening remarks, the president said, “Manufacturing as a whole has added about 700,000 new jobs. It’s growing twice as fast as the rest of the economy. New factories are opening their doors. More than half of manufacturing executives have said they’re actively looking to bring jobs back from China… and this is important [because] manufacturing jobs have good pay and good benefits.

“…if we keep up these investments, then we can define this decade as a period, instead of outsourcing, insourcing — bringing jobs back to America. When you ask business executives around the world, what’s the number-one place to invest their money right now… they say, here in the United States of America.”

Taylor Politicians on both sides of the aisle have been touting the rebirth of U.S. manufacturing for the past few years, but some critics outside the beltway have been skeptical. Forbes magazine scoffed at the idea of a U.S. manufacturing renaissance as “a cruel political hoax.” The New York Times ran an editorial titled “The Myth of Industrial Rebound.”

To separate fact from fiction, Pennsylvania Business Central asked Harry Moser, founder and president of the Reshoring Initiative, for statistics his organization gathers on re-shored manufacturing to gauge the growth of manufacturing jobs. We also spoke to David Taylor, president of the Pennsylvania Manufactures’ Association in Harrisburg, to find the potential for a resurgence of manufacturing in the commonwealth and what factors might drive it.

“Our data show that the bleeding of manufacturing jobs to offshore has stopped,” said Moser.

“In the last decade the U.S. has gone from losing about 140,000 manufacturing jobs per year to gaining 10,000 or more per year.

“It’s clear that the wave of reshoring is dramatically higher than before, however, it’s small relative to total U.S. manufacturing.

“There are still 3 to 4 million manufacturing jobs offshore, a huge potential for U.S. economic growth.”

According to the Reshoring Initiative’s “infographics”, in 2014, “transportation equipment” led in the number of jobs reshored with 13,823 jobs at 33 U.S. companies. Next is “electrical equipment, appliances, and components,” with 9,240 jobs throughout 58 U.S. companies, followed by “computer/electronic products” with 3,483 jobs spread over 25 U.S. companies.

Moser mentioned that Walmart, the world’s largest retailer, recently hosted a two-day U.S. Manufacturing Summit in Orlando to discuss the company’s “Made in the USA” campaign to encourage more U.S. manufacturing so Walmart could buy U.S.-made goods, which was founder Sam Walton’s original intent for the company.

The irony is that Walmart played a pivotal role in the offshoring of manufacturing jobs. When Walmart realized it could not beat the prices of its competitors with U.S.-made goods, its top executives met with suppliers at the company’s St. Louis headquarters and told them in order to stay competitive, they needed to make their goods in China, if not, they were out.

What’s behind Walmart’s reversal and companies that are bringing manufacturing jobs back to the U.S.? According to Dave Taylor, president of the Pennsylvania Manufacturers’ Association in Harrisburg, the low price of energy is the key factor luring manufacturers back to U.S. shores.

“The talk of a U.S. manufacturing renaissance is premature, however, the enormity of the potential of what is before us cannot be overstated,” said Taylor.

“The American energy revolution where hydraulic fracturing and horizontal drilling have released tight oil and natural gas on a scale that was here therefore unimaginable has supercharged the economy by dropping the price of energy.

“The U.S. is never going to be a low tax, low wage, light regulation county like China, which is why maximizing U.S. energy production has been the number one priority of manufacturers as long as I can remember.

“No matter what they’re making, they’re consuming a lot of energy to manufacture the finished product.”

America’s energy revolution is set to create a second wave of manufacturing jobs due to the abundant supply of ethane, one of the natural gas liquids exacted along with methane in the “wet gas” regions of southwestern Pennsylvania, eastern Ohio, and northern West Virginia.

“Not one but three ethane cracker plants could potentially be built in the Appalachian Basin, and those plants will produce ethylene, which is the precursor of every kind of plastic, Styrofoam, paint, glaze, solvent and adhesive, and it can also be used to make pharmaceuticals and fertilizer,” said Taylor.

“The cracker plants will attract manufacturers of these products to the region to be close to the feedstock sources, and at that point we will really start rebuilding our manufacturing base.”

PMA’s other goal is to promote the deployment of the infrastructure necessary to get natural gas to residential, commercial and industrial customers.

“These are private sector dollars, we’re not asking the taxpayer for anything, we’re not asking the government for anything except permission to build,” said Taylor.

“If we can get the three major infrastructure projects completed — the Sunoco Logistics Mariner East I & II, which would run from the southwest along the southern Tier down to Delaware County, Williams’ Atlantic Sunrise, which will take gas from the Northern Tier down to Lancaster and UGI’s Penn East Pipeline that will go from the Poconos to New Jersey – it will be major game changer by making it more competitive for manufacturers to operate in the Northeast versus overseas.

“The combination of pipeline infrastructure and cracker plants offers the potential for creating wealth the way the steel industry created wealth in this county, because the crackers will be making the raw material that other companies use to make products.

“The amount of value added that could be captured is mind blowing, and this is why the politicians in Harrisburg need to temper their ‘smash and grab’ looter mentality about levying new taxes on the drillers because they are a potential source of revenue to make up for shortfalls in the budget.

“New taxes will stunt the growth of a new industry that is waiting to be born, which will be even bigger than what we’ve seen from the drillers, which has already had a substantial impact on the state’s economy.” .