In an article Tuesday, the Post looked to the future with a report, “European industry flocks to U.S. to take advantage of cheaper gas,” while the Times complained Monday that the “Jobs Boom Built on Cheap Energy Has Yet to Appear.”
Industries that require large amounts of energy, including the steel and chemical industries, are expanding their operations in the U.S. because hydraulic fracturing (fracking) has unlocked vast amounts of cheap natural gas, the Post said, profiling German chemicals giant BASF SE, which is building a formic acid plant in Geismar, LA.
When asked about the shift in manufacturing jobs from Europe to the United States, Harald Schwager, head of BASF’s European operations, told the Post, “it’s a very slow process, but it’s a continuous one. Once a customer of ours decides to build a new factory in the U.S., then this customer will request from us to be close by with our production. And so, over time, you see a self-accelerating process, which will move production into the U.S.”
Robert Oswald, head of BASF’s union, concurred, telling the Post that “the prognosis [for manufacturing jobs in Europe] is not so positive. If the energy prices remain so much lower in the United States than here, of course that will endanger jobs.”
In 2012, natural gas prices in the United States were about one-quarter of the price in Europe, thanks in large part to gas from shales.
Other European firms mentioned by the Post included Voestalpine AG, an Austrian steelmaker that plans to open a $700 million sponge iron plant on Texas’ Corpus Christi Bay; and Royal Dutch Shell plc’s proposal to build a “world-scale” ethane cracker in Pennsylvania (see Shale Daily, March 16, 2012).
But the Times reported on the current scene, saying that cheaper labor costs in countries such as China and Mexico are trumping low natural gas prices in the United States, and manufacturing jobs are not being created as fast as industry groups have predicted.
In an article published Monday, the Times said that despite the addition of more than 500,000 U.S. manufacturing jobs since the end of the last recession, the nation still had two million fewer manufacturing jobs compared to 2007. As proof, the newspaper cited glass manufacturer Libbey Inc.’s plans to lay off workers from a plant in Shreveport, LA, and move some production to Mexico.
In part the U.S. is the victim of its own productivity success. “Even though the U.S. is more competitive globally, manufacturing doesn’t give you the kind of direct job creation it did in years past,” Joseph Carson, director of global economic research at AllianceBernstein, a Wall Street investment firm, told the Times. “At the end of the day, you still want a strong manufacturing base, but there aren’t as many people on the factory floor.”
The Times also cited a 2011 report by IHS Global Insight that predicted 1.6 million jobs in the coming decades; a December 2011 report by PwC and the National Association of Manufacturers that said nearly one million manufacturing jobs could be created by 2025 (see Shale Daily, Dec. 16, 2011); and a May 2012 study by the American Chemistry Council that said 200,000 new manufacturing jobs were possible, all thanks to the abundant supply of natural gas made possible through fracking.
“There are industries you may never see come back to pre-recession levels,” IHS consultant John Larson told the Times. “Jobs are not the only measure. It’s also about how productive American workers are.”
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