High Oil Prices = More U.S. Manufacturing Jobs

[BPSCG]

Thank you, OPEC.

Soaring energy costs, the falling dollar and inflation are cutting into what U.S. manufacturers call the "China price"-- the 40 to 50 percent cost advantage once offered by Chinese producers.

The export model that has powered China and other Asian countries for three decades will be compromised if fuel prices continue to rise, said Stephen Jen, a managing director for Morgan Stanley.

"Globalization has gone a little bit too far. It has overshot," Jen said. "We're not saying Asia is going to crumble, but we are saying Asia enjoyed extraordinary conditions in the past. Now the conditions are changing very quickly because of the energy shock, and Asia is coming under pressure."

The ripple effects have been far-reaching. The trade imbalance between the United States and China -- a source of political tension for years -- is beginning to right itself as Chinese exports fall and U.S. exports rise. Global trade routes are being transformed, suggesting a possible return to a less integrated world economy.

The model of outsourcing to China emerged at a time when oil was going for $20 a barrel. In the past few months, oil has been trading at about $110, and many experts say it will eventually hit $200.

This has led some companies to move production from China to northern Mexico, next door to the U.S. market. But others have chosen to relocate inside the United States.

Midwestern steelmakers are doing booming business as steel exports from China to the United States slowed down by 38 percent in the first seven months of the year while U.S. steel production rose 10 percent.

Manufacturers of furniture, electronic appliances and textiles are also among those shifting production back.

The most prominent company in the group might be Thomasville Furniture, which was criticized a few years ago for sending several thousand American jobs overseas. It announced in June that it was returning production of an entire line of upholstered and wood furniture to the United States. The company says it will add 100 jobs in North Carolina.

It's unrealistic to think that all or even the majority of factories lost to China will return to the United States if the price of oil continues to rise. A lot of equipment was disassembled and shipped abroad years ago, and it would require a massive reinvestment to move or replace it. And despite the high shipping costs, China still offers advantages: Many raw materials remain cheap, and millions of skilled laborers work for wages that are a fraction of what their American counterparts get.

Link.

 

[drkitten]

Thank you, OPEC.

Um, yeah? So what?

I mean, that's elementary economics; as transportation costs rise, local goods will have a comparative advantage over non-local ones. On the other hand, that also means that local goods will have a reduced market because they can't sell very far away, and it means that everyone is paying higher prices for goods.

It's hard for me to see this as a good thing overall. I'm reminded of when that guy from Doonesbury got his leg blown off -- but at least he's now down to his ideal weight.

 

[Blackadder]

It will certainly help to counter much ridiculous shipping back and forth of half finished products.

For example: In Europe you have Parma Ham.. Pork from Parma Italy. So what do we do with our Dutch pigs? Yes we breed them in Holland, then pack them in trucks.. ride them to Italy. Butcher them in Italy, then truck them back to Holland (or Germany or other markets)....


Or global... A manufacturer from the USA who makes a product, makes parts in county X, ships them to China for assembly, then ships the finished products back to country X

 

[drkitten]

It will certainly help to counter much ridiculous shipping back and forth of half finished products.

[snip]

Or global... A manufacturer from the USA who makes a product, makes parts in county X, ships them to China for assembly, then ships the finished products back to country X

What's ridiculous about that? The only reason that manufacturers do stuff like that is because it's cost-effective; it's cheaper to have Chinese labor do the assembly than country X natives, even after you factor in the shipping costs. This means that people in country X pay less for the product than they would otherwise, and the stockholders in the States (or globally) see a better return on their investment.

 

[BPSCG]

Um, yeah? So what?

I was thinking what a wonderful question this would be for a presidential debate.

"While Americans are paying more for gas at the pump, one of the unintended consequence of high oil prices has been to help the U.S. manufacturing sector. Senator, do you favor higher gas prices, if it means more Americans will have jobs?"

 

[Darth Rotor]

I was thinking what a wonderful question this would be for a presidential debate.

"While Americans are paying more for gas at the pump, one of the unintended consequence of high oil prices has been to help the U.S. manufacturing sector. Senator, do you favor higher gas prices, if it means more Americans will have jobs?"

Beeps, find a way to get a reporter to ask that and I'll buy you more than one beer next time I am in the DC area.

DR

 

[BPSCG]

Beeps, find a way to get a reporter to ask that and I'll buy you more than one beer next time I am in the DC area.

DR

Meh, I figured out the answer is, "No, I don't. Lower gas and fuel oil prices will give the American consumer more disposable incometo spend right here in America. It also means we'll be sending less money overseas to people who do not wish us well."

You could argue the economic of it, but there are more Americans who pay high gas and fuel oil prices than there are unemployed Americans. Follow the votes.

 

[GreyICE]

And people look at me like I'm crazy when I say I like these prices.

As far as I can tell they're good for the environment and good for domestic manufacturing.

If we have less disposable income, so what? We were overconsuming anyway.

 

[geni]

High oil prices are inevitable long term ajusting now has it's advantages rather than running into a bigger shock down the line.

 

[Francesca R]

I was thinking what a wonderful question this would be for a presidential debate.

"While Americans are paying more for gas at the pump, one of the unintended consequence of high oil prices has been to help the U.S. manufacturing sector. Senator, do you favor higher gas prices, if it means more Americans will have jobs?"

"Show me the jobs" . . .

 

[Francesca R]

It will certainly help to counter much ridiculous shipping back and forth of half finished products.

For example: In Europe you have Parma Ham.. Pork from Parma Italy. So what do we do with our Dutch pigs? Yes we breed them in Holland, then pack them in trucks.. ride them to Italy. Butcher them in Italy, then truck them back to Holland (or Germany or other markets)....


Or global... A manufacturer from the USA who makes a product, makes parts in county X, ships them to China for assembly, then ships the finished products back to country X

This is the (economic) law of comparative advantage, coupled with the ease of transportation. It has been occuring and developing for several thousand years.

 

[The Central Scrutinizer]

I was thinking what a wonderful question this would be for a presidential debate.

"While Americans are paying more for gas at the pump, one of the unintended consequence of high oil prices has been to help the U.S. manufacturing sector. Senator, do you favor higher gas prices, if it means more Americans will have jobs?"

I think their heads would explode.

 

[jmercer]

Moved to business sub-forum for what I hope are obvious reasons...

Replying to this modbox in thread will be off topic  Posted By: jmercer

 

[balrog666]

And people look at me like I'm crazy when I say I like these prices.

As far as I can tell they're good for the environment and good for domestic manufacturing.

If we have less disposable income, so what? We were overconsuming anyway.

You mean that people weren't spending their money in accordance with your desires so they should just have their money taken away.

Gosh, why didn't I think of that? Oh, right, because it's incredibly stupid.

 

[GreyICE]

You mean that people weren't spending their money in accordance with your desires so they should just have their money taken away.

Gosh, why didn't I think of that? Oh, right, because it's incredibly stupid.

Nope! When did I take anyone's money away? Never. I never touched your money.

People weren't spending money in accordance with the concept of sustainable production. Like any unsustainable activity, it can't be sustained after a certain point.

I just happen to think it's good that we reached that point before we did more damage than we otherwise could have.

Sorry, you've been smacked with Adam Smith's invisible hand. Go rail at him.

 

[balrog666]

Nope! When did I take anyone's money away? Never. I never touched your money.

People weren't spending money in accordance with the concept of sustainable production. Like any unsustainable activity, it can't be sustained after a certain point.

I just happen to think it's good that we reached that point before we did more damage than we otherwise could have.

Sorry, you've been smacked with Adam Smith's invisible hand. Go rail at him.

"Unsustainable production", huh? Got any specifics there, bud?

 

[GreyICE]

"Unsustainable production", huh? Got any specifics there, bud?

http://bcn.boulder.co.us/basin/local/sustain6.htm

Don't know why people still don't know the basics.

 

[balrog666]

http://bcn.boulder.co.us/basin/local/sustain6.htm

Don't know why people still don't know the basics.

Oh, gee, somehow you neglected to provide a rationale for how the local price of oil somehow intersects with your ideological vision of utopia.

Perhaps you can try that again after you have given it some thought.

 

[GreyICE]

Oh, gee, somehow you neglected to provide a rationale for how the local price of oil somehow intersects with your ideological vision of utopia.

Oh hey, look, a strawman! Try addressing what I'm saying.

Perhaps you can try that again after you have given it some thought.

Yeah, thought.

I think strawmen are stupid.

 

[Francesca R]

And people look at me like I'm crazy when I say I like these prices.

As far as I can tell they're good for the environment and good for domestic manufacturing.

If we have less disposable income, so what? We were overconsuming anyway.

Then why not agitate for higher taxes and retain the abilty to do something in the public interest with the money?

Are you particularly liking the bit about this "excess" income that people have earned going into the pockets of oil-rich governments and oil companies?