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Tuesday, August 11, 2015

Professor: Shale Boom a Key Reason Manufacturing Companies Have Added Over 1 Million Workers Since 2010

From Cleveland.com comes a guest piece written by Bernard L. Weinstein, associate director of the Maguire Energy Institute and an adjunct professor of business economics in the Cox School of Business at Southern Methodist University in Dallas.  Weinstein writes:
Until a few years ago, the prevailing conventional wisdom viewed America's manufacturing sector in secular decline, unable to compete with lower-cost production platforms in Mexico and China. The data seemed to bear this out. Between 2000 and 2010, the number of manufacturing jobs in the United States dropped by a third, a decline of more than 5.8 million. 
But since 2010, manufacturing companies have added more than one million workers. Similarly, the value of production from America's factories has jumped from $1.7 trillion in 2010 to $2.1 trillion last year and now accounts for 12 percent of our gross domestic product (GDP). 
There are several explanations for this rebound in U.S. manufacturing activity. Labor costs have been rising rapidly in Mexico and China, as well as other export-oriented Asian economies, while American companies have boosted productivity faster than their competitors abroad.

But the most important factor in America's industrial renaissance has been cheap and abundant energy, a result of the "fracking boom" that started about six years ago and has boosted America's oil and natural gas output by 70 percent.
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