Friday, May 18, 2012

Friday Afternoon Links

1.  "Washington state's manufacturing sector added 14,600 jobs — most of that growth in the Seattle area — over the 12 months ending in March, leading all other sectors, according to data released Wednesday by the Employment Security Department. "It's been the highlight of the past 12 months," said Dave Wallace, the department's senior labor economist."

2. Baker-Hughes reported today that the share of rigs drilling for natural gas fell to 30.2% for the week ending May 18, the lowest share ever for natural gas since Baker-Hughes started tracking the oil/gas drilling split back in 1987. Market forces at work.

3. "In the Bakken, the latest slogan is, “Build, baby, build.” A Bakken Housing Summit hosted in Williston this week calls for 5,000 new homes to be built in 24 months. Organizer Jeff Zarling said that 5,000 may not be the magic number, but the theme was designed to convey the magnitude of the oil boom on western North Dakota’s housing needs to stakeholders around the country."

I see some shovel-ready (shale-ready?) construction jobs here from the economic stimulus program known as "Bakken shale oil."

4. "North Dakota airline boardings are setting records, due in large part to the influx of people into the booming western oil patch. Six of the state's eight commercial airports had record boardings in April, and statewide there was an increase over the year of nearly 24 percent.  In the western oil patch, the Williston airport saw a 36 percent increase in boardings over the year, the Minot airport a 69 percent rise and the Dickinson airport a 74 percent jump."

Another example of the "Bakken shale oil economic stimulus."

5. On the international front, a) Mexican economic growth accelerated to 4.6% in Q1, the fastest pace since Q3 2010, prompting several analysts to upgrade 2012 growth forecasts and b) Japan's economic growth accelerated to 4.1% in Q1.

6. Should insider trading be legal? Of course, here's the case.  Here's an alternative case for prosecuting traders using inside information with civil charges that generate pocket-book penalties instead of criminal ones that lead to prison sentences. Civil charges are more proportional to the wrongdoing, less expensive to prosecute, and still get the job done, according to criminal defense lawyer Harlan Protass.

 More double-digit home sales gains for April:

7.  "Huntsville AL home sales increased 31.8% from March. It's also a 19% rise over April's five-year sales average. It's the fifth-consecutive month that Huntsville area home sales have improved over the same month a year ago. The range of increases throughout Alabama is about 10 to 13 percent."

8. "The Northern Ohio Regional Multiple Listing Service is reporting a 12% climb in the number of sold listings in April, reaching 3,050 from 2,716 in April 2011. The number of listings sold also rose 7% in April from March. On a year-to-date basis through the end of April, sales are up 16% to 10,624 this year from 9,143 in the first four months of 2011."

5 Comments:

At 5/18/2012 3:15 PM, Blogger AIG said...

Makers of transportation equipment, a category that includes aerospace, had the biggest impact among all manufacturers, paying $16.5 billion in wages in 2010, the latest year available. The average annual wage: $87,668.

That's crazy. 87k average wage for the world's most useless fat-as*ses I have ever encountered.

Boeing has been hiring massively, and most of the new-hires are very poor hires; as in the company has no idea how to hire people, or who to hire. It hasn't done so in decades, and is now scrambling to replace the retirees that are coming up. So it's solution is to throw as many people at the problem as will stick. That 87k average is driven mainly from the demographics the Union drives at aerospace companies...it has no relation to productivity anymore.

There's several problems with US manufacturing, that doesn't make me very confident:
1) wages for manufacturing remain very high, much higher than I would feel comfortable paying as a producer.
2) Transportation, energy and quality costs are the main drivers for companies moving manufacturing back to the US, in my opinion. These costs, however, can change relatively quickly, especially quality.
3) The labor culture in US manufacturing is very rigid. The politics of manufacturing are also very rigid. If you're a manufacturer and you open a plant in the US, you are hiring people who expect to have a job for life, and you're going to get a lot of PR coverage. If sometime down the line you decide to downsize, or shift production elsewhere, you're going to have to deal with this sort of mentality.

Manufacturing in the US will continue to grow, undoubtedly, in terms of production. But it still needs to squeeze the labor out of it, I think. Big Labor remains a problem.

 
At 5/18/2012 3:44 PM, Blogger Buddy R Pacifico said...

AIG,

Here are the wage ranges for Puget Sound Boeing International Machinists Union: Start $11.00 up to $41.22 for the highest grade and seniority level.

As you state, old guys are leaving, but Boeing has will have relatively low blue collar labor costs as replacements.

Engineering is another matter, and whatever is saved on the plant floor will probably go into white collar salaries, IMO.

 
At 5/18/2012 3:55 PM, Blogger Larry G said...

re: 5000 houses usually means taxpayer-funded infrastructure.

5000 houses = 50,000 additional car trips per day on local roads.

5000 houses = 150,000 gallons per day in drinking water

5000 houses = 100,000 gallon a day sewage effluent

5000 houses = 1000-2000 kids at 10K a pop per year.

unless of course they are talking about building a 5000 home gated community with all infrastructure and services provided in the price of the house. (and maybe they are).

 
At 5/18/2012 3:55 PM, Blogger AIG said...

That's my point, the 87k average isn't reflective of productivity, but of Union demographics. There's a lot more cutting of fat to be done to Big Labor.

 
At 5/19/2012 10:57 AM, Blogger VangelV said...

2. Baker-Hughes reported today that the share of rigs drilling for natural gas fell to 30.2% for the week ending May 18, the lowest share ever for natural gas since Baker-Hughes started tracking the oil/gas drilling split back in 1987. Market forces at work.

Given the huge depletion rates we expect natural gas production to fall rather rapidly. How can this happen AND we still see investment in chemical plants and new power generation facilities that are counting on plentiful and cheap natural gas? Or those plans to export LNG to other countries?

 

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