Sunday, June 16, 2013

Jobs über alles - shale edition

Worth a read and coming from right in the center of Cleveburgh.

The story starts out quite exuberant: "...largest capital investment by a manufacturer in northeast Ohio since the 1960s"..... and " first new steel mill since the 1920s."  The conclusion some want to believe is that th one plant is an...:

"...example of the money that has flowed into the state's industrial sector in recent years thanks to the surge in U.S. natural gas and oil drilling."

So how many jobs are we talking about at this new $billion+ plant?  350.  Just for a brief bit of context, on Black Monday in 1977, Youngstown learned it was losing 5,000 jobs when the Youngstown Sheet and Tubes work closed.  More job losses followed.  So even adding a zero to the new jobs being added does not get you close to what was lost.  The article quickly gets to the crux of it all:

"But state employment data, academic research and a week-long tour of half a dozen factories in Ohio suggests the shale gas revolution has been a disappointment when it comes to job creation. "

Locally there is a lot of similar confusion.  Many I talk to, some including the more informed folks I know, are pretty convinced local manufacturing job numbers are shooting up in recent years because of shale related investments and demand. Probably because of some advertisments I see perpeturally running on TV. Anyone want to back that up with something resembling data? 
So back in Ohio and the Reuters story today says this:

In March, a study by Cleveland State University concluded that while gas exploration had unleashed a surge in economic activity in Ohio, job growth - even in counties directly affected by the drilling - was stagnant. The employment growth that many assumed would follow the energy investment was "not yet evident," the study's authors said.

The full report that I missed out of Cleveland State a few months ago is online:

and I see some similar stories here today. Trib: Workers cope with slow side of drilling field

Where is the Wiz by the way?  Maybe his (or her) contract expired?


Anonymous The Wiz said...

Oh, contract is still on. Its just that you haven't made any egregious errors necessitating correction....until now. :-)

You are equating manufacturing growth with growth in jobs. Manufacturing has grown as the oil and gas industry demands pipe, tanks, compressors, complex treatment facilities, rail cars, trucks, heavy equipment, and more. But manufacturers, like all US employers, have found ways to do much more with less and less. From the very article that you linked to;
And some recent investments, like the $100 million Timken put into a new intermediate finishing line at its Faircrest Steel Plant in Canton, are resulting in fewer, not more, jobs.

Timken's old intermediate finishing line employed more than 200 workers and processed pipe and other products in 10 days, according to plant manager Larry Pollock. The new facility, built to meet surging demand from the energy industry, employs fewer than 30 and can process the same material in as little as two hours, plant manager Larry Pollock said.

Just another example of why the stock market is at record levels while true unemployment is at 11-12% and the labor participation rate is the lowest in 35 years.

PS I knew ya missed me.

Tuesday, June 18, 2013 8:53:00 AM  
Anonymous Anonymous said...

So would we prefer that new investments were less efficient, less competitive, less likely to be long term?

Tuesday, June 18, 2013 9:50:00 AM  
Anonymous The Wiz said...

Please point out where I said that increased efficiencies were negative. You can't....because I didn't. My post was neither negative or positive in that respect.

I merely pointed out, and used an example, of how using only manufacturing employment numbers as the sole gauge of the health of US manufacturing is not an accurate methodology.

Tuesday, June 18, 2013 12:40:00 PM  
Anonymous BrianTH said...

"You are equating manufacturing growth with growth in jobs."

I don't see anywhere in this post where Chris actually did this.

Of course all this is relevant to the question of how much long-term economic benefit the relevant localities and states are actually going to see from these investments and associated productive activities, which in turn is relevant to a variety of policy questions.

Tuesday, June 18, 2013 12:51:00 PM  
Anonymous The Wiz said...

BrianTH; You are correct that he did not do so in this post. I must have morphed previous posts into this one like the April 1 post. Which, BTW, you commented that the lack of employment was due in large part to productivity gains....great minds think alike.

Even in this post, why not post the clip that Timken greatly increased production while employing 170 less people? That would have been very enlightening as to why manufacturing employment is not showing dramatic gains.

Tuesday, June 18, 2013 9:59:00 PM  

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