Shale Plays Fuel Manufacturing Growth

As many as 5 million manufacturing jobs could be added over the next eight years
Manufacturing Plant

Manufacturing Plant | Click to Enlarge

Shale plays are driving a surge in U.S. natural gas production. Production growth has pushed prices well below the peaks experienced in the 2000’s. Natural gas at less than $4/mmbtu, as of the end of 2012. Cheap fuel means cheaper energy, cheaper manufacturing, and cheaper products.

Natural gas or by products are used for heating, power generation, and as a feedstock in multiple chemical and manufacturing processes. A recent BCG study noted that rising factory productivity will boost U.S. exports and lead to the growth of as many as 5 million jobs. Five million jobs added to a workforce that measures approximately 150 million would be almost 3% growth from one sector of the economy. Add direct oil and gas jobs and you see why what we’re experiencing in the South Texas Job boom could translate to a widespread employment boom.

U.S. factory employment has grown by about 3.6 percent to roughly 12 million people from a 2010 post-recession low, a trend that could accelerate as the United States becomes a more competitive exporter, BCG said.

With lower manufacturing costs, the U.S. could potentially boost exports by almost $100 billion per year by capturing manufacturing that is currently done over seas. The wild card will be currencies. Europe’s manufacturing sector is actually benefiting from a weak currency. Energy will be cheap in the U.S., but predicting major currencies is a wildcard in my book.

Read more about the study at reuters.com

The following two tabs change content below.
R.T. Dukes

R.T. Dukes

Managing Editor at EagleFordShale.com
R.T. is the managing editor of EagleFordShale.com. In prior roles, he advised major oil companies on strategy, the macro business environment, and opportunity screening. 2503 Robinhood, Houston, TX, 77005, U.S.A. | Telephone: 832.429.4790

Add a Comment

MENU