Jun 24 2008
So Is This How Our Recession Ends?
Found this via Slashdot - Oil Price Fallout: Jobs Coming Home?
The rise in transportation costs are fueling what some economists are calling “reverse globalization.” For instance, DESA, a company that makes heaters to keep football players warm, is moving all its production back to Kentucky after years of having them made in China.
“Cheap labor in China doesn’t help you when you gotta pay so much to bring the goods over,” says economist Jeff Rubin.
Some local manufacturers have suddenly found themselves in the thick of boom times.
“In December, we had three employees here. We were just getting set up. Now it’s 14,” says Casey Hearn, who owns a furniture manufacturing business in North Carolina.
We actually have pretty decent conditions for a manufacturing boom in this country. The dollar is weak, meaning our products will look increasingly attractive overseas. Our infrastructure, albeit not in the best condition, is still better than most countries our size. Transportation costs within the USA are cheap compared to most countries due to lower than average fuel prices. We have plenty of trained and educated laborers, few of which are unionized at least compared to Europe. Best of all, we’re the best customer on Earth. Nobody buys more stuff per capita than the United States, and it’s going to be a long, long time before that changes.
In order for a recession to change, there has to be another segment of the economy that can take off, experience growth, and propel the economy forward. The 1992 recession ended in part thanks to some strength from the technology sector. 2001 ended thanks to the housing and real estate bubble. The trouble right now is that there isn’t anything immediately obvious that would help us domestically. The energy industry is taking off, of course, but we’re not in an ideal regulatory position to take advantage of that. There’s not a whole lot of excitement in the tech industry at the moment, at least no more so than usual. Construction and real estate are collapsing, which means we need something to absorb some of that blue-collar labor. Manufacturing would certainly fit the bill, as would the increased jobs in intrastate transportation (trucks, trains, road maintenance, etc.) were such a boom to occur.
Either way… here’s hoping this isn’t a fluke.
You’re dead on it…. I couldn’t agree more. While I don’t think that crazy gas prices are exactly GOOD, it is necessary that they become more realistic than they have been, for multiple reasons.
As the new BMW commercial says, the Europeans have been designing more fuel efficient vehicles for years because gas is not dirt cheap. There’s nothing that makes us want to conserve a scarce resource than making it really expensive. After all, we’re not running out of diamonds anytime soon, right?