At PPG Industries, a Pittsburgh-based glassmaker, production is up 10 percent since the recession — but employment remains flat because of automation.
Jessica Kourkounis • New York Times ,
Cheap energy hasn't led to job boom
- Article by: NELSON D. SCHWARTZ
- New York Times
- April 1, 2013 - 9:30 PM
These are good times for Libbey, a 125-year-old American glassmaker that nearly went bankrupt four years ago. The company’s shares have risen to almost $20 from below $1, sales of its tableware are at a record high, and its energy-intensive factories saved more than $5 million in 2012 as natural gas prices fell.
Despite all the upbeat news, however, Libbey recently announced it would lay off 200 workers at its plant in Shreveport, La., and move some production to Mexico as it cuts costs and discontinues several products.
Libbey’s decision is just one example of why manufacturing, for all its renewed promise, is likely to fall far short of the claims by industry groups that millions of new factory jobs are about to be created in the United States because of the unlocking of abundant supplies of domestic energy.
“Even though the U.S. is more competitive globally, manufacturing doesn’t give you the kind of direct job creation it did in years past,” said Joseph G. Carson, director of global economic research at AllianceBernstein, a Wall Street investment firm. “At the end of the day you still want a strong manufacturing base, but there aren’t as many people on the factory floor.”
Indeed, while the sector has added 500,000 jobs since the recession ended and the value of what the nation’s factories churn out is close to a high, there are nonetheless 2 million fewer manufacturing workers today than in 2007.
The dream that a reinvigorated manufacturing sector will restore prosperity to the middle class and bring back millions of well-paying blue-collar jobs has made for some unlikely political bedfellows recently.
Even as heavy industry has garnered strong support from the White House — in his State of the Union address in February, President Obama proposed financing 15 new centers for manufacturing innovation — a number of lobbying groups have been promising that more drilling for natural gas will lead to a jobs boom in dozens of industries that would benefit from cheaper energy. They argue that if additional land is opened for exploration, especially shale formations where hydraulic fracturing, or fracking, can increase production, millions of manufacturing jobs that migrated overseas will return to the United States.
Industries that benefit from cheaper gas have not been shy about talking up the coming manufacturing jobs bonanza they foresee. A December 2011 report by PricewaterhouseCoopers and the National Association of Manufacturers predicts fracking could help add 1 million U.S. manufacturing jobs by 2025.
A May 2012 study by the American Chemistry Council, which represents the chemicals industry, estimated that increased gas production could create 200,000 jobs in the broader manufacturing sector, including several thousand in the glass industry.
But glass industry veterans say cheaper natural gas, which is used to melt sand into glass and is critical to the manufacturing process, isn’t a game changer in terms of jobs, however beneficial the cost savings are.
It’s not that manufacturing itself is disappearing. But nearly all of the American manufacturers that survived the lean years of the past decade are globally competitive companies that depend on high productivity and advanced technology for their success more than masses of assembly line workers.
“There is this incredibly powerful long-run trend of declining employment in manufacturing,” said Robert Z. Lawrence, a professor of economics at Harvard’s John F. Kennedy School of Government. “It’s the same story as in food and farming. We’re producing more food with many fewer workers. The only way we compete with our higher wages is by being more innovative.”
© 2014 Star Tribune