Posted on 08/19/2012 6:02:03 AM PDT by KeyLargo
Economic Preview
Aug. 19, 2012, 12:02 a.m. EDT
Atlas shrugged? Manufacturing seems worn out
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — There are signs that the manufacturing sector, which has led the economic recovery, is about to take a breather.
“It seems like the [factory] sector is stuck in neutral,” said Guy Berger, an economist at RBS in New York.
Several factors appear to be at work, economists said. Smurfit-Stone Container Corporation’s facility in Coshocton, Ohio.
Weakness in the global economy is cutting back exports. And factory owners are uncertain about how the outcome of the November election and what it means for taxes and government largesse.
“Japan is going nowhere, Europe is in recession, and we’ve got our own problems,” such as stalemate over tax policy and government spending, said Josh Shapiro, chief U.S. economist with MFR Inc.
Shapiro is concerned that there are no obvious heirs-apparent waiting in the wings to pick up the slack and propel the economy forward.
Housing seems to finally in recovery mode but it seems doubtful it can pick up the load.
Without an obvious source of strength, Shapiro sees a 50% chance of a recession in the next 12 months.
“I think things are more dangerous than a lot of other economists think,” Shapiro said.
Another economist forecasting a high probability of a recession in the next year is Chad Moutray, chief economist for the National Association of Manufacturers, the trade group for the factory sector.
(Excerpt) Read more at marketwatch.com ...
I guess I missed all that. I must have been busy watching "American Idol".
And...it’s about to take a “breather”
I guess that would be because its been on a treadmill for so long.
Manufacturing? What manufacturing? ...in USA? Every thing is made in China now.
Frankly we have more than enough stuff. We have stuff coming out of our ears. What is there a shortage of? What needs to be manufactured? People are sick of the throw away society and are keeping their stuff.
Now, at one point, there was a shortage of tanks for storing oil.........
Dear Mr President,
Please tell me more about the businesses the owners didn’t build, the greedy bankers, and the greedy doctors who would rather do surgical procedures that cure someone because it pays more.
Now tell me about Solyndra & the UAW bailout, MF Global and the DoJ decision not to seek prosecution, and the waivers granted to those thousand or so favorites of the regime that gets them out of Obamacare.
Oh, and let’s not forget fast & furious, the dead federal agents, and the pile of 300 or so dead innocent Mexican citizens your international weapons trafficking resulted in....
Mark
There is also what I’d call the eBay economy. Why buy new when you can buy gently used or rescued never used from the back of a closet for a fraction of the price? Those who don’t have to buy do not, and those who need to buy something (tools, clothes, electronics) can get it cheaply from those who must sell things for money - and no manufacturing is involved.
I agree. There is market saturation and many people are taking stock of their lives and realizing they don’t need so much STUFF, or any more stuff. Look at how much STUFF people are selling on E-Bay, garage sales etc. People are divesting themselve of STUFF.
This has repercussions for the global economy, not just the USA.
There are plenty of new markets where people are just now getting on the STUFF bandwagon (China, India, Indonesia). If we were smart we would sell STUFF to them.
Exactly.
And the thrift stores are full to the brim with stuff and plenty of buyers.
Garage sales, ditto.
We probably have enough stuff to sell to each other for 15 years or more. Quality stuff too a lot of ... made before the cheap Chinese stuff saturated our markets.
I buy quality hand tools and garden tools that beat the hell out of the new stuff in the stores as far as quality.
I took a train trip from Minot ND to Downingtown PA. The amount of obvious industrial decay and death was stunning, so many huge factories dying or dead, reminded me over and over of Atlas Shrugged.
Things are upside down. The finance industry was created and exists to support real industries that provide jobs.
The finance industry has hijacked the country and the treasury because it got into things over its head it should never have given a passing glance.
Now they threaten that the country goes down if they go down to justify their perfidy? Who do they think they are? They are supposed to service our communities, not the other way around?!!!
The train trip in post 12 was to buy a used car, not on eBay, on Craigslist.
I’ve never had a new car in my life and probably never will. This car doubled the life time total I’ve spent on cars - $14,500 for a 2006 Jaguar X-type with 18,410 miles.
“There is market saturation and many people are taking stock of their lives and realizing they don’t need so much STUFF, or any more stuff. “
There are also demographic reasons for this. My FIL told me, “you spend have your life acquiring stuff, and then you spend the other half getting rid of it”.
Another reason is that if you are going to be living in an apartment or have to move around a lot to get a job, you can’t have as much “stuff”.
No house = less stuff.
There seems to be an unusual number of older car collectors liquidating their collections. Younger people just aren’t interested and the long-term market can go nowhere but down.
I work in in manufacturing here in Minot :)
Freezers, coolers and other refrigeration equipment.
I’ve kept an eye out for a later model AMC CJ (76 or up) and see a lot of them out there with price tags way above what they are really worth.
What ones I see priced normally are on the other side of the country and transporting it here isn’t affordable. With summer going away maybe the demand will drop off some esp for those that don’t have tops included.
As long as the body is decent and it is driveable, the rest can be dealt with.
I had a 77 once in HS and it was a great one despite it being an oil drinker later on and a couple of lifters chattering.
I’ve gotten better about checking Ebay and Amazon about buying used.
For the past couple of years I’ve gone with if something has sat untouched for more than 6 months or so, it goes to Ebay, CL, Amazon or thrift store after some thinking and evaluation.
A lot of what left I don’t miss and not sure why some of it was bought in the first place.
ND is doing great, out of ND and MN the further east you go the more horrible the industrial areas look. Granted the train tracks go through the oldest areas but still there are major industrial complexes that are dead and rusting.
Chicago Union Station looked like crap, so did the Harrisburg PA station, I’m talking about the train track parts of the terminals, crumbling concrete, rusting metal, holes in the roofs, terrible. Quite a contrast to Bismarck ND where nearly everything looks so new.
I’ve been toying with the idea of a Jeep project; a CJ type 4x4 with a 4BT Cummins. From what I read they can get close to 30MPG. You’re right, those old jeeps sure hold their resale value!
LOL, you got me thinking about George Carlin.....Stuff
http://www.youtube.com/watch?v=MvgN5gCuLac&feature=youtube_gdata_player
I figure that bubble will burst sooner or later too. Some of the ones I see are nice ones no doubt and can command a good price. What some people want for glorified junkers and middle of the road OK models is absurd.
I still have my broken down jalopy Willys 68. My next paycheck I hope I can fork out for a replacement starter. A rebuild isn’t too far off from the price of a reman.
There aren’t many starter rebuilders left in my part of the world it seems.
Almost everything. I had a buy a new gas cap for an older car on Friday. It is made in Israel!
But they call that part of the country the "Rust Belt" for a reason. There are many reasons why it has lost its importance as a manufacturing hub over the years, and a lot of these reasons have nothing to do with the economic forces that are driving our overall national decline.
I'll give three examples that have their own separate roots and consequences, but have also combined to completely transform the face of U.S. manufacturing from a geographic perspective:
1. The growth of containerized shipping and changes in the shipping industry. The economies of scale in container shipping have effectively made it cheaper to transport some things by ship from thousands of miles away than by truck from 250 miles away. The growing size of cargo ships also means that the Great Lakes and St. Lawrence Seaway aren't accessible by vessels that have become the industry standard in maritime shipping.
2. Consolidation in the U.S. railroad industry. Since the privatization of Conrail in the early 1980s, the railroad industry U.S. has undergone a major transformation in the last thirty years. There are now only a handful of Class I rail carriers in North America, which means freight can be transported by rail over long distances faster, and at lower costs, than ever before.
3. The elimination of steel as a primary manufacturing material. Things that used to be built primarily of steel are now being built out of plastic, fiberglass, and other composite materials. The supply chains and logistics patterns for these materials are very different than what a steel-based manufacturer would use. Most of this nation's "Rust Belt" manufacturing centers grew where they are now because they had good access (mostly by barge, small ship, and railroad) to the two major commodities used in steel coking: iron ore and coal.
When you combine these three items, you find that having a manufacturing plant located in a place that has good direct (nearby) or indirect (via a Class I railroad) access to a port for delivery of components and some raw materials is preferable to having it located in a place where raw materials are shipped by barge or truck. Also, proximity to refineries (for plastics manufactured out of an oil base) and reliable, inexpensive electrity is a big plus. This country has seen tremendous growth in manufacturing for autos and large airplanes in recent years, but these plants are now being built primarily in a swath across the South from Texas to North Carolina.
The "Rust Belt" will continue to rust away even if the U.S. maintains and improves upon its position as the world's largest manufacturer.
The problem is progressive fascism between the Obama administration and the banks and industry. Obama’s got a pay to play scheme going that is backed up and perpetuated by union clout, that has the economy in a stranglehold.
There’s still a lot of metal used in the US. I have to wonder if EPA regulations figure into the near total demise of the US steel industry. Steel is cheaper from other countries becasue they don’t have to add in the cost of EPA regulations.
And their energy is cheaper for the same reason. There’s no better way to kill an economy than by raising the cost of energy, 90% of the recent cost increase of electricity is directly attributable to government mandates - mandates that don’t exist in China for example.
The US economy is staggering because of the government shooting it in the feet way too many times.
I have a 2006 S Type. Still love it. Was thinking about buying a new car so went and drove a new Lexus IS 350 the other day. Nice but didn’t drive any better than the Jag.
I will warn you though, everything that goes wrong with them is dam expensive, even the parts.
The difference today is that we use a lot fewer workers to produce it, and the uses of the steel are much different. I suspect structural steel for bridges and buildings now makes up a much larger portion of our production, and manufacturing components for consumer products (cars, for example) a much smaller portion.
You overlooked my other point about manufacturing in the South. If the EPA is killing U.S. industry, then why are foreign companies like Toyota, Airbus, Hyundai and Kia opening plants right here in the U.S. even now?
That may be true, but what percentage of the total is US steel? I work at a coal fired powerplant, I've seen what comes in here, the majority of metal (not just steel) we get is not US made, it's actually unusual if it ever is US metal. There was an interesting failure of steam piping failure at a new Chinese power plant. The had specified certified US steel but instead got chinese steel from a US firm. interesting discussion about it here; http://www.eng-tips.com/viewthread.cfm?qid=172967
“You overlooked my other point about manufacturing in the South. If the EPA is killing U.S. industry, then why are foreign companies like Toyota, Airbus, Hyundai and Kia opening plants right here in the U.S. even now?”
More and more those are assembly shops, with sub assemblies and parts manufactured outside the US. Boeing for instance used to manufacturer everything in house, not so, for quite a few years too. Even military equipment components have been manufactured in China - complete with malicious elements built in them. Read Aviation Week and Space Technology... now Gulfstream went bankrupt, and is will be owned by a Chinese company. pretty cheap way acquire some of the most cutting edge technology in aviation today.
I know some of the jobs exported to China are coming back but we're too close to the cliff now, in my opinion way past the point of no return with the nearly 16 trillion dollar debt.
Atlas is shrugging.
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