Year: 2011

Heavy Metal Is Back: The Best Cities For Manufacturing

For a generation American manufacturing has been widely seen as a “declining sport.” Yet its demise has been largely overplayed. Despite the many jobs this sector has lost in the past generation, manufacturing remains remarkably resilient, with a global market share similar to that of the 1970s.

More recently, the U.S. industrial base has been on a powerful upswing, with employment climbing steadily since 2009. Boosted by productivity gains and higher costs in competitors, including China, U.S. manufacturing exports have grown at their fastest rate since the late 1980s. In 2011 American manufacturing continued to expand, while Germany, Japan and Brazil all weakened in this vital sector.

To determine the best cities for manufacturing my colleague Mark Schill at Praxis Strategy Group measured the 51 largest regions in the country in terms of how they expanded their “heavy metal” sector — think automobiles, farm and energy equipment, aircraft, metal work and machine shops. We averaged absolute growth rate and momentum in 148 heavy metal manufacturing industries over ten-, five-, two-, and one-year time frames.

Our top ranked area, Houston, is one of only four regions that enjoyed net job growth in manufacturing in the past 10 years. This year its heavy manufacturing sector expanded by almost 5%. Houston’s industrial growth is no fluke; over the past year its overall job growth has been about the best among  all the nation’s major metros.

Houston’s industrial success owes much to the city’s massive port and booming energy sector, says Bill Gilmer, senior economist at the Federal Reserve office of Dallas. “Houston is about energy — it’s about fabricated metals and machinery,” he says. “It’s oil service supply and petrochemicals. It’s all paced by a high price of oil and new technology that makes it more accessible.”

This shift towards domestic energy augurs well for a huge and economically beneficial  shift in America’s  longer term economic prospects, he points out. Cheap natural gas, for example, makes petrochemical production in America more competitive than anyone could have imagined a decade ago. Linkages with Mexico in terms of energy as well as autos has made Texas — which is also home to No. 4 ranked San Antonio and No. 15 ranked Dallas — the nation’s primary export super-power, with current shipment 15% to 20% above pre-crisis levels.

The energy and industry connection also can be seen in No. 10 Oklahoma City, where heavy industry has been booming through much of the recession due to its strong fossil fuel industry. This synergy between energy and manufacturing could also spread to other regions, including many not associated with large fossil fuel deposits  New finds in the Utica shale in Ohio, for example, could be worth as much as  $500 billion; one energy executive called it “the biggest thing to hit Ohio since the plow.”

These gas finds may help ignite the heavy metal revival. As coal-fired plants become more expensive to operate due to concerns over greenhouse gas emissions, the region will have a new, cleaner and potentially less expensive power source.

Already the  boom in natural gas has sparked a considerable industrial rebound in parts of eastern Ohio including the building of a new $650 million steel plant for gas pipes in the Youngstown area.  Karen Wright, whose Ariel Corporation sells compressors used in gas plants, has added more than 300 positions in the past two years. “There’s a huge amount of drilling throughout the Midwest,” Wright says. “This is a game changer.”

But the industrial rebound is not only about energy. Another critical factor is rising  wages in East Asia, including China. Increasingly, American-based manufacturing is in a favored position as a lower-cost producer. Concerns over “knock offs” and lack of patent protection in China may also spark a growing “Made in the USA” trend.

The shift back to U.S. production may be a great sign for many regions. Our No. 3 ranked area, Seattle-Tacoma-Bellevue, is picking up heavy metal jobs associated with the aerospace industry. A growing focus on domestic production for Boeing’s new aircraft could bring even more prosperity to the high-flying region, which also ranked No. 1 on our recent information industry ranking.

If new industrial growth is just another piece of good news in the Pacific Northwest, it’s manna from heaven to the long suffering industrial heartland heavily concentrated in the Great Lakes region, which includes much of Ohio, Michigan, Indiana, Illinois , Wisconsin and Minnesota.  Long reviled as the “rust belt” this area now leads in the industrial rebound with over 100,000 new manufacturing jobs in just the past year.

Particularly well positioned is No. 2 ranked Milwaukee, which is home to a wide array of specialized manufacturing firms ranging from machine tools to energy. Over the past year alone the region added almost 3900 heavy metal jobs and has consistently led other Great Lakes communities in job creation.

But Milwaukee is not the only rust belt rebound town. The greater Detroit area, No. 6 on our list, actually added the most heavy metal jobs — more than 12,000 — than any region of the country. The area’s ranking, however, was dragged down by its legacy; greater Detroit still has lost almost 130,000 positions in the past decade.

The heavy metal revival has a long way to go. And we cannot expect it to produce the same kinds of jobs produced in the last century. For example, the new jobs will be more highly skilled; even as the share of the workforce employed in manufacturing has dropped from 20% to roughly half that, high skilled jobs in industry have soared 37%, according to a New York fed study.

Regions seeking strong industrial growth will have to focus more and more on training more skilled workers. Even after years of declining employment and surplus numbers of graduates in the arts and law, manufacturers in heavy industry are running short on skilled workers. Industry expert David Cole predicts there could be demand for 100,000 new workers by 2013. According to Deloitte Touche, 83% of all manufacturers suffer a moderate or severe shortage of skilled production workers.

The resurgence of heavy metal should lead regions, and the federal government, to consider shifting their emphasis toward productive, skilled based training and away from a single-minded focus on the BA or graduate degree. Few regions suffer a shortage of art history or English graduates.   This more practical emphasis is particularly critical for the Midwest, which is home to four of the ten highest-ranked industrial engineering schools in the nation.

Even more important: training workers for the assembly lines of tomorrow. These jobs, notes Ariel’s Karen Wright, will require not BA degrees but high degrees of math and mechanical skills that can be apply to expanding companies like hers.

As we enter a new economic era, regions should look beyond the current obsession with “creative” and “information” industries. Instead, they should focus on a resurgent industrial economy — which then can provide a customer base for advertising, graphics and software companies — as a primary driver of economic growth.  Turn down those soulful   Adele tracks: Heavy metal is back.

By Joel Kotkin

Leading the News

Unemployment Claims Continue To Fall.

The CBS Evening News (12/22, story 2, 2:05, Pelley) reported that “there are some other encouraging things about the economy” now, including a drop in the number of people filing for unemployment last week, which fell to 364,000, the lowest “since April of 2008.”

According to Bloomberg News (12/22, Homan, Willis), the 45 economists surveyed by Bloomberg had predicted an average “increase in jobless claims to 380,000,” however “the number of applications” has fallen 40,000 in the last three weeks. Chief US economist for High Frequency Economics, Ian Shepherson, said “this is great news,” and while “one unexpectedly low number can easily be a fluke” and “two are interesting,” three may say “something real is happening in the labor market.” Further, there was a decline of 79,000 in the number of “people continuing to receive jobless benefits,” now down to 3.55 million, the lowest level since September 2008.

According to the AP (12/22, Wagner, Crutsinger), “the steady improvement in the job market is unquestionable,” and BMO Capital Markets senior economist Jennifer Lee says “I think everyone is starting to come around to the view that, yes, there is a recovery going on.” Further, minus “a spike this spring” following damage to “US manufacturing” after the earthquake and tsunami in Japan, “unemployment claims” have been declining “steadily for a year and a half” after peaking “at 659,000 in March 2009.” In the four years prior to “the Great Recession,” the numbers were usually between 300,000 and 350,000.

The Wall Street Journal (12/23, A4, Dougherty, Subscription Publication, 2.08M) notes that these weekly unemployment claims may vary due to seasonal differences, but the monthly averages for the past three months have shown declines in unemployment applications, and economists are now predicting a more positive outlook for job hiring.

US Economy Projected To Grow About Two Percent In 2012. The Wall Street Journal (12/23, A4, Dougherty, Subscription Publication, 2.08M) reports that economists are now predicting that in 2012 the US economy will grow at a rate of about two percent based on continued issues in the housing market, tepid job growth, government spending cuts and the economic crisis in Europe. However, this forecast means that 2012 should see a bit more growth than this year’s estimated 1.7 percent yearly growth, and it’s possible that growth will be higher than anticipated in 2012, especially given Q4 2011’s predicted 3.5 percent growth.


Consumer Confidence Edges Higher, Beating Expectations.
Bloomberg News (12/22, Willis) reports, “The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 69.9 from 64.1 at the end of November.” A Bloomberg News survey projected that consumer sentiment, or confidence, would increase to “for 68 after a preliminary reading of 67.7.” According to Bloomberg, “a drop in unemployment and lower gasoline prices may be boosting confidence, raising the odds that the pickup in household spending will continue into 2012.”

Canadian Manufacturing On The Rebound.

The Globe and Mail (Toronto, CA) (12/23) reports a slideshow titled, “Manufacturing set for year-end rebound,” noting that “Canadian manufacturing had its second-best month for 2011 in October and analysts expect another increase this month.” The slideshow focuses on the metals sector.

Auto, Energy Industries To Drive Steel Industry Growth.

Following earlier reports on the mixed but generally upbeat predictions for the US steel industry, IndustryWeek (12/23, Katz) reports, “The industry is not expected to reach a full recovery until 2013, according to Fitch Ratings.” Monica Bonar, a senior director at Fitch, said “steel producers are being cautious about how much inventory they’re stocking, including raw materials, on fears of a downturn.” Larry Kavanagh, president of the Steel Market Development Institute, said demand from the auto industry is expected to rise in the coming year, and that “the energy sector presents significant growth potential for the steel industry, led by the boom in shale gas exploration and distribution.”

Missouri Gains 11,000 Manufacturing Jobs.

The Kansas City Business Journal (12/23, Subscription Publication) reports “Missouri gained 10,900 manufacturing jobs between December 2010 and last month, an accomplishment Gov. Jay Nixon lauded Thursday.” Nixon said, “For generations, manufacturing has been a vital driver of Missouri’s economy, and modern manufacturing companies have offered opportunities for outstanding careers to folks across our state.” Nixon “also praised growth yet to come in the state’s automotive sector, particularly Ford Motor Co. and General Motors Co. making historic announcements in October.”

Mass Layoffs Decline In Missouri. Another Kansas City Business Journal (12/23, Subscription Publication) article reports, “Missouri mass layoffs were less common in November, dropping to 22 events compared with 29 a year earlier, the US Department of Labor reported Thursday.” In November, “1,440 Missourians made initial claims for unemployment insurance, down from 2,159 a year prior,” the Labor Department reported. And while “the manufacturing sector claimed a quarter of the mass layoff events,” the article notes that “15 of the 21 manufacturing subcategories saw over-the-year decreases in claims.”

From SME Daily Executive Briefing 12.23.2011

Economic News

Data Show US Unemployment Down In November.

ABC World News (12/20, story 2, 2:40, Stephanopoulos) reported that there was “good news today on the economy,” as employment is increasing. Cecilia Vega reported that “it hasn’t looked this good in a really long time,” but in November almost “every state in the country saw unemployment drop,” and the US continues to see about 100,000 new jobs each month since July, which “hasn’t happened since before” the recession began. North Dakota is leading the US with an unemployment rate of 3.5 percent, well “below the national average of 8.6 percent,” due to “an oil boom.” According to Brookings Institute economist Howard Wial, “I think we’re going to see continued job growth and reductions in unemployment in the country as a whole.”

Home Construction Data Signals Housing Turnaround.

The AP (12/21, Kravitz) reports that “builders in November broke ground on homes – houses and apartments alike – at an annual rate of 685,000” according to the US Department of Commerce. This represents “a 9.3 percent jump from October” and is “the fastest pace since April 2010.” The AP characterizes this as a “gradual comeback” for home constructions that “should add to the nation’s economic growth in 2011.”

The Washington Post (12/21, Irwin) reports that it seems as if “the deeply depressed housing sector finally seems to have found its bottom – and may even be starting to bounce back.” The Post also notes that “the number of building permits issued for new houses and apartments also rose, to 5.7 percent in November.” Brian Bethune of Alpha Macroeconomic Foresights is quoted saying, “The good news is that housing has switched from being a drag on overall growth, to modest positive contributions.”

ME Daily Executive Briefing 12.21.2011

MG December 2011 Newsletter

On December 16, 2011 MG was awarded the Quality Certificate ISO9001-2008.

ISO 9001:2008 specifies requirements for a quality management system where an organization

  • needs to demonstrate its ability to consistently provide product that meets customer and applicable statutory and regulatory requirements, and
  • aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements.

For more detailed information on ISO standards click HERE.

Economic News

Business Inventories Increase 0.8 Percent In October.

Bloomberg News (12/14, Willis) reports, “Inventories in the US rose in October by the most in five months as companies moved to bring stockpiles in line with demand. The 0.8 percent gain followed little change in stockpiles a month earlier,” according to the Commerce Department. “Sales climbed 0.7 percent during the month.”

The AP (12/14) reports, “When companies build up their inventories, it usually signals that they expect more sales. And the extra factory production needed to increase stockpiles boosts economic output.”

The Wall Street Journal (12/14, Bater, Morath) also covers the story.

NFIB Report: Small, Medium-Sized Businesses Plan To Increase Hiring.

The New York Times (12/13, Rampell) “Economix” blog reported, “Some good news in the job market: Small businesses plan to increase hiring, according to the latest report from the National Federation of Independent Business.” NFIB – “an industry group for small and medium-size businesses – conducts a survey each month on subjects like optimism, credit conditions and jobs. November’s survey showed that the net share of companies that were planning to hire workers was at its highest in 38 months.”

Bloomberg News (12/13, Willis) reported, “The share of owners projecting higher sales, adjusted for inflation, rose eight points to 4 percent, the highest since April. A gauge of expectations for better business conditions six months from now climbed four points to a net minus 12, marking a third monthly gain from a record-low of minus 26 in August.”

The Washington Post (12/13, Harrison) “On Small Business” blog reported, “Eight of the 10 index components improved or remained unchanged from the October report, with the most substantial gains posted in sales expectations gains and outlooks for business conditions – again, not necessarily because more owners expect improvement in those areas, but because fewer owners expect sales and business conditions to worsen.”

On its website, CNBC (12/14, Orsini), Dow Jones Newswires (12/14, Derby) and other media sources also cover the story.

From SME Daily Executive Briefing 12/14/2011

Alien Gold-Diggers?

If you are in the metal fabrication industry, Michael Tellinger might argue that you need to learn about him. He is none other than the organizer of South Africa’s first UFO Science and Consciousness Conference, which was held only a week or so ago in Johannesburg. Michael Tellinger might be described as the “Consciousness” part of the conference, since he seems to have an ability to just “know” random and completely unfounded “facts” without needing or even thinking about supplying the slightest iota of evidence to back up his own bizarre statements. In other words, he isn’t letting science get in the way of his conclusions at all.

Without offering any proof whatsoever, Michael has stated that he knows not only why aliens have been interested in Planet Earth for the last 300,000 years or so, but also what types of interactions they have had with Earth’s governments. And here’s how it connects to the metal fabrication industry: in the World According To Michael, he is the world’s foremost authority on Gold. He says that gold is not only the lure for aliens to this planet, but it is actually the reason we humans were created in the first place. Furthermore, aliens are to blame for the scarcity of this precious metal on our planet, and they have also been directly involved in lots of government-run transactions for the stuff. Here’s what he told the South African news station News 24: “There’s a battle for Earth by some interesting dark forces. All the governments in the world are puppets and instruments to implement the will of a small group of individals. The royal political bloodline [of aliens or humans?] goes back thousands of years”.

But that’s not all. Mikey claims that our own obsession with gold is a reminder encoded our DNA of our own genetic roots as Alien Spawn. In fact, when the aliens first same here in search of gold 300,000 years ago, they cloned themselves and – ta-daa – humankind was invented. Ever since then, they have controlled us and been in continuous contact with world leaders.

Another speaker at the conference was Laura Eisenhower, who claims she is the great-granddaughter of president Dwight Eisenhower. According to her, treaties between aliens and world leaders have been signed every decade. She told News 24 that “aliens have been working with governments for a while”.

Again, thanks to the “Consciousness” aspect of the conference, no proof was offered for any of these statements. So I suppose we are supposed to conclude from this that not only are aliens the most tenured government workers of all, but they are to blame for having stolen all of our gold, mismanaging politics and banks to create a global recession, and yet they are so smart that they have managed to do all of this (including signing treaties) without leaving behind a single shred of physical evidence.

Honestly, I hope the people who organized this conference get abducted when the aliens make official contact with us in 2012. I think we’d all benefit from that.

Countdown to the Fabtech 2011 Newsletter

Over 35,000 visitors made FABTECH 2011 the largest event in show history!

THANK YOU to all the industry professionals who joined us in Chicago and made FABTECH 2011 the best attended event in show history.  FABTECH 2011 shattered all records of previous shows, with the number of buyers walking the floor, educational conference attendance and the overall square footage of exhibit space.  The recently concluded, four-day exposition and conference at Chicago’s McCormick Place welcomed a historic 35,457 attendees from more than 80 countries and had over 1,300 exhibitors.  Buyers were exposed to more than 500 new products and hundreds of equipment demonstrations.

If you missed it, you can still view the Official On-Site Guide and Directory.

Next Destination: Las Vegas in 2012!

Mark your calendar now: November 12-14, 2012 at the Las Vegas Convention Center – FABTECH returns to Las Vegas for the first time in four years.   Plans are already underway to make it another great event!  Click here to be notified once registration for FABTECH 2012 is open.  You won’t want to miss it.