The Impact of Accessible Natural Gas on Domestic Manufacturing

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The rise in inexpensive, readily available natural gas may have a powerful impact on the manufacturing sector as the economic recovery gets fully underway. The future is still uncertain, but for the moment, two forces are converging on the manufacturing marketplace, and both may play an influential role in the direction of manufacturing staffing and hiring during the coming decade.

First, manufacturing enterprises are returning to domestic shores after years of steady offshoring and outsourcing. Wage savings are slowing down as developing economies catch up with the US, and other overseas advantages are also beginning to equalize as China and Southeast Asia alter the lax environmental and labor regulations that once made overseas markets appealing. Skills gaps are also becoming a determining factor, and so are the balanced educational and job opportunities that are becoming a global reality in our digital age.

This is good news for domestic manufacturing, but there’s additional advantage to bringing operations back to US shores: Plentiful natural gas.

As drilling operations tap into a previously inaccessible fossil fuel resources here in the US, energy usage shifts away from more expensive petroleum products imported from overseas. For the moment, natural gas drawn from deep shale deposits across the northeast suggests a cheap, plentiful energy source that can support production, distribution, machine operation and overhead costs for countless sectors of the manufacturing marketplace.

Since 2010—in the last four years alone—natural gas has had a powerful impact on the domestic manufacture of steel, iron, fabricated metals, plastic, resin, rubber, and chemical compounds. In turn, the rise in production and the return of offshore operations has led to a modest increase in hiring and labor demand associated with these industries.

Of course, hiring managers and decision makers are wise to move slowly and consider the multiple factors that play a role in the sudden flow of cheap natural gas. Primarily, the environmental impact of low cost drilling methods is uncertain, and research and experience may reveal serious problems with current extraction methods. In addition, states have yet to determine how these drilling efforts will be taxed and how the use of this resource will impact municipalities and local economies. The future looks promising, but all parties will need to move forward with cautious optimism and close attention to research and developing social and economic patterns.

For more information on the issues surrounding the impact of natural gas on the manufacturing sector, reach out to the staffing and business management experts at CSS.

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