American manufacturers are a significant factor in the rebounding U.S. economy, thanks in part to a ready supply of natural gas. Technologies that leverage lower natural gas prices are leading to increased production at better price points for North American manufacturers. Even the recently depressed steel industry is making noise on the global front by converting to natural gas technologies that make products manufactured in the U.S. more competitive in the export market.

The ripple effect of more affordable steel here in the United States is increased manufacturing vitality across a number of fronts. U.S. manufacturers who use steel in production and fabrication are gaining access to a cheaper, domestically produced product. That improves planning and production as well as shipping schedules.

This upward swell of productivity is having effects at the national level. The November 2013 Institute for Supply Management (ISM) Report notes that the United States manufacturing sector expanded for the sixth consecutive month while the overall economy grew for the 54th consecutive month.

In The Spotlight

According to the ISM report, this growth in manufacturing is broad-based. It includes industries such as plastics and rubber products, textile mills, furniture and related products, primary metals, food, beverage and tobacco products, paper products, printing and related support activities, petroleum and coal products, miscellaneous manufacturing, electrical equipment, appliances and transportation.

Also showing growth are chemical, computer and electronic, nonmetallic mineral and fabricated metal products.

Industries that reported contraction in November included apparel, leather and allied products, wood products and machinery.

The complex picture of why so many industries are now showing growth includes several historical factors. The cost of labor is cited as the principal reason why so many manufacturing jobs migrated overseas. The cost of energy may have been a factor as well, with the U.S. struggling to maintain its global foothold in energy production.

Now that domestic energy is surging on a wave of natural gas and shale oil production, energy costs are dropping and American manufacturing is benefiting.

Now that domestic energy is surging on a wave of natural gas and shale oil production, energy costs are dropping and American manufacturing is better able to manage costs of production. A Boston Consulting Group release from August 20, 2013 notes that the U.S. is particularly well positioned for export business in seven industrial categories, including chemicals, machinery, transportation, petroleum and coal, computer and electronics, electrical equipment and appliances, and primary metals. These categories account for three-quarters of total global exports.

The overall growth in manufacturing could lead to job gains, and less expensive natural gas deserves considerable credit. According to the Boston Consulting Group report, natural gas prices are projected to be 60 to 70 percent lower than in Europe and Japan, and the ensuing competitive advantage could lead to as many as 2.5 million to 5 million U.S. jobs by the end of the decade. Growth of that order bodes well for the consumer segment, with up to 5 million more workers and purchasing power in the billions adding to the American economy.

The conversion to natural gas in manufacturing is changing the structure and approach of manufacturing on every front. Futures Magazine reports that existing plants in the steel and chemical industries are turning to natural gas as a principal source of energy due to its availability and affordability. Construction of new facilities, such as petrochemical plants, is also being planned around natural gas.

Amid a manufacturing resurgence, attention turns to the processes driving natural gas supply and balancing growth opportunities against costs of exploration, extraction and delivery. With such a great opportunity at its feet, the United States can ill afford to ignore the sources of these trends.

Neither can the nation afford to go the route of countries such as China, which has created expensive and dangerous environmental problems through nearly ungoverned industrial expansion.

The ultimate ingenuity when it comes to natural gas production, jobs and economic growth may come from America’s ability to successfully sustain the ready supply of natural gas currently driving domestic manufacturing growth, while responsibly managing the resources and processes that drive that growth.


Tom Bonine
About The Author Tom Bonine
Tom Bonine is president of National Metal Fabricators. The Chicago area firm, established in 1944, offers custom fabrication, angle rings, welding, and bar milling services.

You don't have permission to view or post comments.

Quick Search

FREE Impact Analysis

Get an inside perspective and stay on top of the most important issues in today's Global Economic Arena. Subscribe to The Manzella Report's FREE Impact Analysis Newsletter today!