Up In Smoke Stacks

Larry Kudlow

June 3, 2004

The much-maligned factory sector is booming. Not rising. Not improving. Booming. According to just-released data from the Institute of Supply Management, which tracks the manufacturing sector, new orders, production, order backlogs, export orders and employment were very strong in May. The industrial sector is so strong that the speed of supplier deliveries has hit its highest level since April 1979. This means that firms cannot produce fast enough to meet rising demand, which is why commodity prices continue to climb. As a result, capacity use keeps growing and inventories are still too low in relation to skyrocketing sales.

Meanwhile, new factory hiring has jumped to a 31-year high, the best since 1973. Of more than 400 industrial firms surveyed, 36 percent added workers in May, while just 7 percent had fewer workers. This is another nail in the coffin of the jobless recovery. As the inventory-rebuilding process ratchets up over the next year, expect even more job creation to follow.

Election-year battleground states in the Midwest industrial heartland are reporting significantly lower unemployment rates compared to one year ago, according to the U.S. Bureau of Labor Statistics. In April, Michigan registered a 6 percent jobless rate compared to 7.2 percent in April 2003. Ohio's jobless rate fell to 5.8 percent from 6.2 percent. Pennsylvania's dropped to 4.9 percent from 5.4 percent. West Virginia reported 5.4 percent from 6.6 percent a year earlier. Missouri's jobless tally dropped to 4.5 percent from 5.5 percent. .....

....... The economic patient is recovering beautifully. Sen. John Kerry's European-style witches-brew policy elixir of trade protectionism and tax hikes would be exactly the wrong shot in the economy's arm. If it ain't broke, Sen. Kerry, don't try and fix it. "

GWB's steel tariffs and I had a good chuckle at that paragraph.

Are these the new McDonald's burger-manufacturing jobs?

Only if you like welded , cast or extruded burgers

Yo King,

Print out a copy of that article, hop the next filght to Pittsburg, Detroit, Cleveland or any other midwest manufacturing center, read it aloud at ANY union local, then see how long it takes you to fight your way out of the building...

Hopefully your healthcare premiums are paid in full.

4salt,

Unions are real unbiased so that would be a fair test.

Unions bankrupt companies and force Jobs overseas.

Unions are socialist by design why would I care what they think.

I would bust any Union I could and prefer not to do business with unionized companies if at all possible.

Dang! I thought this was gonna be about the meteor explosion last night. Shoulda known better....

But I agree with 4salt. US industries have to kow-tow to the unions - always pay more - always get less. Pay all the medical no matter how much.....

And, then, get beached at for outsourcing!

Dan S.,

You took those words about the steel tariffs right out of my mouth! However, out-of-context analyses are the norm for this board, making for entertaining one-liners.

Sincerely,

Salmo g.

Free trade is a hard one to make a stand on.

Trade restrictions cause artificial imbalances in a free market, leading to inefficiencies. They can also be used to protect domestic industries, but the overall effect is usually detrimental to consumers.

I'm still not sure I've taken a firm stand on either side yet. I'm sure my Econ prof. would be disappointed.

Trade restrictions are usually the result of political lobbies and whining by one or more groups. Whoops there may be some Lazy B and Weyerhaeuser workers here.

Basically, everything politicains do is in response to political lobbying or whining by one group or another.

The bad news bears will always find the black lining to any good news if it could in any way reflect favorably on the Republicans.....Unfortunate but predictable fact of life.

And by the way China is cornering the world market of scrap metal used for steel production. They can obviously manufacture steel far cheaper than the US steel industry burdened by unions and restrictions. Non partisan facts. Should we ship all our scrap metal over to China (like we are doing) and then allow them to sell the steel back to us for 10 cents on the US steel industry dollar? Maybe so...Send our logs to Japan so they don't have to buy our lumber. They simply pay more for our natural resources that they need. Even our sea urchin eggs....for pete's sake..
$500 per pound....

See what I mean about trade/tariffs. You can bet your ass that every US comapny that uses steel loves to see the price of steel driven down. US Steelworkers hate to see the price of steel driven down.

It's a hard issue to take sides on. Unions are a huge burden on any industry.......but we've seen what industry does on its own without the presence of unions and that isn't pretty either.

I guess it depends on your perspective.

I use alot of union labor and respect every hard working one of them...There are unions that are a joke though....Case in point: My daughter's boyfriend who is only 20 worked for QFC as a stock boy and bagger...low pay...bad hours and unpredictable hours...no rewards to very hard work...So he eventually quit but it was because QFC required him to join the union and he refused to pay the dues. Absolutely no benefits to him at all...no wage help..no medical..no retirement...just pay dues because you are told to ..because it is forced on you..I had my daughter call the union to ask what the benefits were to see what they would say...they said they would be there if he ever needed help....Well he asked about getting higher pay and was told the bargaining didn't apply to his pay grade....hours? can't prevent QFC from taking unfair advantage with 25 hour weeks and calling it full time. So there is an example of a mandatory union that lines the pockets of the few at the expense of the many.

There are also a ton of companies doing quite well by their employees without unions..in fact some pay much better wages and benefits to their employees than the union equivalent employees in the same business.

In my dad's day unions were essential....he lived his whole life paying dues...nothing to show for it when he died but he paid into something he may have believed in for his whole life.

To me the union employees are great but the unions are puffed up with themselves and try to strong arm to this day....ala Jimmy Hoffa. I work with some of them and they belong in the same hole as Jimmy is in.

Aunty, working for an employee-owned company makes a big difference.

Almost sounds like UPS?

I've never been a member of a Union but I do know that most worker rights in place today are a result of Unions.

[[/QUOTE]Basically, everything politicains do is in response to political lobbying or whining by one group or another. [/QB][/QUOTE]

Well said, Dan.

The more I learn about the federal political machine, the more I realize how true this statement is.

That is why my support for the RFA continues to grow. "Grass Roots" efforts are good, but pale in effectiveness compared to PAC's.

I think unions played an important role at their conception during the depression. But in today's world with modern communications and mobility, they are obsolete. They have become the biggest leeches on US society since Al Capone was in business.