NCPA - National Center for Policy Analysis

Manufacturing's Greatest Days Lie Ahead

December 20, 2016

Mark Perry and NCPA Senior Fellow Thomas Hemphill write in U.S. News:

In Donald J. Trump's "Contract with the American Voter," the president-elect outlines what he intends to do to in his first 100 days in office to "Make America Great Again." A key component of the contract is the seven actions that he will initiate during his first days as president "to protect the American worker." Two of these actions will importantly have long-term consequences for the economic success of American manufacturers: First up, President Trump plans on lifting restrictions on the production of domestic energy resources, including shale oil, natural gas and clean coal. Second, he has pledged to lift regulatory roadblocks established by the Obama administration to allow important energy infrastructure projects, such as the Keystone Pipeline, to progress to completion.

Team Trump's promotion of domestic energy will yield significant economicdividends in several ways. First, it will stimulate economic activity in the U.S. and will help revive job creation in the energy sector, both for workers employed directly in oil and gas drilling and extraction activities as well as increased employment in all of the support activities for oil and gas operations. Further, removing restrictions on domestic energy development and the pipeline infrastructure that supports the efficient transportation of oil and gas will contribute to a continuation of the low energy prices that have made the U.S. one of the lowest-cost manufacturing locations in the world for energy-intensive production. American manufacturers that use natural gas to produce chemicals, petrochemicals, fertilizer, plastics, pharmaceuticals and fabrics have benefited in recent years from the lowest natural gas prices in the world.  At prices that are currently 50 percent below prices in Asia, Europe and South America, the low cost of natural gas here goes a long way towards offsetting higher U.S. labor costs and helps make our energy-intensive manufactured goods competitive globally with countries like China, which have lower labor costs.

Continue reading

 

Browse more articles on Economic Issues