NAM: Slowest recovery in 30 years—energy shortfall threatening

-- Control Engineering, 12/1/2005

Washington, D.C.—As the driving force behind October’s 0.9% increase in overall industrial production, “manufacturing production rose 1.4% and, excluding high-tech, finally pushed past its pre-recession, April 2000 peak for the first time,” said David Huether, chief economist for the National Association of Manufacturers.

“That was the biggest monthly jump for manufacturing production in six years,” continued Huether. “But the bad news is that the jump resulted largely from temporary factors and marks the slowest manufacturing recovery in the past 30 years. High energy prices continue to cloud the horizon.”

Explaining what he meant by “temporary factors,” Huether said, “The return of aerospace workers after a mechanics strike in September drove a 20.1% production rebound in that sector, and a post-hurricane increase of energy supplies helped the chemical sector stage a partial comeback, too.” Additional production gains came in wood products, fabricated metals and nonmetallic mineral products, he said.

On the threat posed by high energy prices, Huether insisted that, “the soaring price of natural gas is pulling the production rug right out from under us. Manufacturing is highly dependent on natural gas; many key industries, such as chemicals and plastics, use natural gas as both a fuel and feedstock. Over a third of the natural gas in the Gulf of Mexico remains shut-in and, as demand increases during the winter home-heating months ahead, U.S. natural gas prices will almost certainly remain higher than in any other industrialized competitor nation.

“This puts U.S. manufacturers at a tremendous international disadvantage,” Huether said. “Congress needs to pass legislation that will encourage expanded domestic natural gas exploration and increased import capacity,” he concluded.

— Richard Phelps, senior editor, Control Engineering