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The cost of globalization; manufacture at home

I hope you are doing well in your physical separation. My wife, Lynnda has always enjoyed doing jigsaw puzzles. Now I am helping her. It is more enjoyable and thought provoking than I thought. It is a project we can do together. I hope you are housebound with people you like and enjoy being with.

I remember the title of the first book I was required to read in college at WVU. (other than a text book). It was “TANSTAAFL”. The letters stand for, THERE AIN’T NO SUCH THING AS A FREE LUNCH. Nothing is free! Garth Brooks says in his song How Bad Do You Want It, “There’s always a price to pay no matter what you do.” Over the years I’ve seen we get what we pay for or work for, ultimately. There are no short cuts. I lost a lot of muscle mass all those weeks I was in the hospital and the wheelchair. It is coming back along with my strength. I’m finally starting to run. It took months of hard work. The manager who thinks they can get ahead with dishonesty and treating people badly will find there is always a day of reckoning when they are escorted out of the building by security with a cardboard box. A Hollywood mogul named Harvey learned this the hard way. He is now in prison in New York.

For decades, we lost manufacturing to foreign countries mostly in Asia. Many American companies have moved large segments of their manufacturing and related jobs to countries like China. Look around your office or home and see where most of the products come from. Two of the reasons this happened was the USAs lack of abundant domestic energy and cheap labor over-seas. The USA became a service economy rather than a manufacturing economy. We all benefited from cheaper overseas products like TVs and computers. We became accustomed to cheap products from overseas and our Region became “The Rustbelt”.

The true cost of American companies moving manufacturing overseas is becoming apparent. We lost high wage manufacturing jobs. Now we are learning that 80% of our antibiotics and other pharmaceuticals come from China. Things like N-95 masks, hospital gloves, surgical gowns and medical equipment are manufactured outside the USA because it was perceived as “cheaper” to make them overseas. We really need them now and we are at the mercy of others to supply them. Companies are beginning to learn the problem of long global supply chains when they have to shut down an assembly line because they can’t get a critical part from overseas due to the virus. What other critical items will we find in short supply because they are no longer manufactured here?

We learned from the Arab oil embargo in 1970s and the energy crisis of the early 2000s what happens when we depend on OPEC for our energy. We are even more dependent on China for our rare earth elements required in most electronic items. Almost all of the rare earth metals we use come from China. Windmills and solar panels require rare earth metals. If we move to more renewables we could become more dependent on China than we were on OPEC. Most of the products we use every day are plastic or petrochemical based. Cars today are more glued together then welded because of the amount of plastic they contain. The feed stock for plastic is oil and natural gas. It is essential for us to have a strong US oil and gas industry to avoid going back to the days of OPEC being in control of our energy and product cost.

The Shale Revolution gave the us abundant affordable energy needed to begin to bring manufacturing back to the region.

Automation and advanced manufacturing help us compete with cheap labor costs overseas and are beginning to create the high tech, high wage jobs we desperately need.

This is the marketing message Shale Crescent USA is carrying to the world. US companies moved manufacturing to places like China because of cheap labor. China has been the low-cost producer for decades. China and the rest of Asia get their energy from OPEC, Russia or the USA. Much of their energy and feedstock now comes from the USA.

Then they ship products back to the USA. Companies in the Shale Crescent USA are literally on top of their energy and feedstock and in the middle of their customers. They have a logistical advantage. With advanced manufacturing and automation, the world has changed. The cheapest place to manufacture in order to supply the US market has changed.

Everyone’s focus is getting through this Covid-19 crisis. Companies are managing the crisis, securing their company and people. On a recent National Speakers Association Town Hall call the focus was helping speakers, who are mostly small business owners survive the next six months because of the cancellation of meetings and conferences.

Expect to hear more about “on shoring,” bringing manufacturing back to the USA. Companies in our Region are now making hand sanitizer, masks, face shields, ventilators and other products.

They are stepping up to help in a time of crisis. This Region can also be the key player in the long-term solution of bringing manufacturing of critical national security and public health items back to the USA. Companies everywhere need to learn the most cost-effective way to serve the US market is to manufacture here.

Stay safe. Stay physically separated. Stay positive. Call a friend. Help someone. Many churches are finding was to come together virtually. Now more than ever we need God and we need each other.

Kozera, gkozera@shalecrescentusa.com, is the director of marketing and sales for Shale Crescent USA. He is a professional engineer with a master’s in environmental engineering who has over 40 years’ experience in the energy industry. He is the author of four books and numerous published articles.

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