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The Almighty Buck United States

Higher Oil Prices Are Starting To Bring Jobs Home 777

Posted by kdawson
from the silver-lining-with-a-vengeance dept.
penguin_dance notes a report up at ABC News that high oil and gas prices in the US may be moving jobs back home in a trend that some economists are calling "reverse globalization." It's becoming more and more expensive to ship finished product from other countries, so some companies are moving the manufacturing back to the US. The article hints that this trend may spill over soon to raw materials such as steel. One economist is quoted: "It's not just about labor costs anymore. Distance costs money, and when you have to shift iron ore from Brazil to China and then ship it back to Pittsburgh, Pittsburgh is looking pretty good at 40 bucks an hour."
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Higher Oil Prices Are Starting To Bring Jobs Home

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  • by clonan (64380) on Tuesday June 24, 2008 @08:43PM (#23927555)

    from my home to my office....when will my company start teleworking as an option!

    But US jobs and stable prices despite the raising fuel costs is great news!

  • Telecommuting (Score:5, Insightful)

    by BWJones (18351) * on Tuesday June 24, 2008 @08:43PM (#23927559) Homepage Journal

    Now if companies would pull their heads out and either/or/both go to a 4 day work week and re-implement telecommuting...

    • Re:Telecommuting (Score:4, Insightful)

      by Shados (741919) on Tuesday June 24, 2008 @09:08PM (#23927801)

      Telecommuting is great, IF most of your employee base has a high level of experience and is responsible. In this day and age, thats the minority though... I've worked for a small-ish company who did it, but they lucked out big time on the quality of their employees. As for 4 day weekends...considering fridays don't even count as it is for a lot of people because its the "last day of the week", when you cut it to four, its even worse. Again, worked for a company who did that...nothing was getting done. It can work, but you need one hell of a nice corporate culture and good employees to do it. Not for everyone, definately.

      And for doing 4 days but more hours each days to compensate...again, very, very few people can be efficient at their job for more than like 6 hours, nevermind 9-10.

      These are things that work well in a small company of "special" people who can take it...but people who can take it are quite rare...even though many would pretend otherwise and lie to themselves about their own limits.

    • Re:Telecommuting (Score:5, Informative)

      by lena_10326 (1100441) on Tuesday June 24, 2008 @10:11PM (#23928477) Homepage
      I think telecommuting only works if your entire team telecommutes because if you stay home and your teammates go to the office you will gradually suffer the appearance of declining performance, at no fault from you.

      I've seen that happen because if you're not there when the execs ask the team for advice, you don't get asked and don't get a boost in perceived value. You won't get invited to adhoc meetings and you'll miss all those water-cooler conversations. You also don't get invited to lunch with the team or the management, which often spread news regarding the project, so when you actually do show up to a planned meeting, you'll appear extremely unprepared because you missed all those casual details. You also don't get the special projects handed out at a moment's notice, which generally saves someone's ass gaining you another supporter. Volunteering for those special projects makes you look like a go-getter, but you'll be completely bypassed because you weren't there to raise your hand. Also, if your teammates work late, it's assumed you're not. If they can't see you putting in extra time, you gain no benefit from doing such. You will watch helplessly as your teammates slowly rise in ranks. They will receive the flagship projects to work on, while you get handed the maintenance projects, which only buries you deeper because you have no chance to shine on those projects. Your teammates will be recognized every time they complete something, which will never happen on on your crappy maintenance project.

      I worked at a job in which every member of the team was remote, and it worked out very well, but once the team was consolidated in the office, the stragglers had a difficult time proving they were working as hard as the ones showing up in person. I watched previously great workers drift off into mediocrity because they suffered declining perceived value by management.

      But, like I said earlier. I think it works if everyone does it, but not if 1 or more teammates don't.

  • by Ungrounded Lightning (62228) on Tuesday June 24, 2008 @08:50PM (#23927617) Journal

    ... by The Invisible Hand.

    Adam Smith strikes.

  • by Citizen of Earth (569446) on Tuesday June 24, 2008 @08:50PM (#23927623)
    It's almost like there was some kind of invisible hand at work.
  • Yep. (Score:4, Funny)

    by UPZ (947916) on Tuesday June 24, 2008 @08:58PM (#23927701)
    Things sure have turned around 360 degrees in the good ol' USA.
  • by Anonymous Coward on Tuesday June 24, 2008 @09:04PM (#23927755)

    Recently I saw a show that visited Asbury Park in NJ, and it was stated that the slow decline of the park started with cheap airfares. It immediately struck me that this trend should now start to reverse itself, as travel costs are rising while consumer confidence is dropping.

    High gas prices are going to have some bad side effects, but also quite a few good ones. Hopefully, reduced travel will be effected on almost every scale: suburbs will wilt and cities will grow stronger, local foods will become more popular, inefficient business travel will be replaced by online meetings, etcetera. I think most people who have wanderlust aren't going to let higher airline prices stop them, but perhaps they'll take fewer and longer trips in order to reduce expenses - e.g., instead of going to France and Spain on one trip, and the U.K. on another, they'll wait and take a longer trip to visit all three.

  • by Joe The Dragon (967727) on Tuesday June 24, 2008 @09:05PM (#23927773)

    It less oil to use rail over ships to move iron ore and other big stuff.

  • by dbIII (701233) on Tuesday June 24, 2008 @09:18PM (#23927893)
    There are already trade restrictions on the importation of steel which over rule "free trade" agreements. Expensive domestic steel may actually be one of the forces driving outsourcing of manufacturing to places where the raw materials are cheaper.

    You won't get any more local steel production unless there are local manufacturers that want it or if it can be produced at internationally competative prices. Steelmaking is one of those things that is not labour intensive so nobody can honestly blame unions or cheap labour countries on the price of the stuff - it comes down to effective or ineffective management.

  • Too bad (Score:3, Interesting)

    by SaintOfAllChucks (1200371) on Tuesday June 24, 2008 @09:38PM (#23928121)
    they don't make steel in Pittsburgh any more. US Steel may be based here but most of the steel plants are no longer in the region. They make steel in Pittsburgh the same way they make cars in Detroit. Pittsburgh is mostly medical science and hospitals now. When industry comes back to the U.S. it will be in places that are less union friendly. (for the record, I do live in Pittsburgh)
  • by RobinH (124750) on Tuesday June 24, 2008 @09:38PM (#23928123) Homepage

    The fact is, for all the environmentalists out there screaming to put regulations on carbon emissions, etc., the price of energy is the only thing that's going to have a substantial impact on the amount of fuel we use. People are actually considering more fuel efficient vehicles, and at my place of work people are taking advantage of opportunities to work from home once in a while. Especially when their commute is over one hour. If we keep it up, people might move closer to work.

    • by catchblue22 (1004569) on Tuesday June 24, 2008 @10:17PM (#23928537) Homepage

      The main problem with high oil prices is that the money is going largely to rich oil producing countries like Saudi Arabia, so that they can build monstrosities like ski resorts in the desert. I would have preferred to pay a carbon tax instead; at least the money would stay in our own economy and be used to build infrastructure. Carbon taxes could be offset by decreases in income taxes, so that we don't pay any more overall. As an environmentalist, I am strongly opposed to these high oil prices, because they are siphoning off our wealth and giving it to rich oil foreign oil companies.

  • China is the last (Score:3, Interesting)

    by thorpie (656838) on Tuesday June 24, 2008 @09:38PM (#23928125)

    In the 50's it was Japan,
    In the 60's it was Hong Kong
    In the 70's it was Taiwan
    In the 80's and early 90's it was South East Asia
    In the late 90's to now it has been China
    To be worthwhile producing elsewhere you have to be able to produce for less than 30% of your home costs.
    There is nowhere left to go
    We have to manufacture our own again
    So maybe we will get decent working conditions at last!

    • Re: (Score:3, Insightful)

      by Garabito (720521)

      There is nowhere left to go
      What about Africa? There is also Burma/Myanmar, Mongolia, Haiti, Nicaragua, Honduras...

  • by street struttin' (1249972) on Tuesday June 24, 2008 @09:39PM (#23928135)
    My dad has worked in steel for the past 38 years and he says they are busy as hell because the fuel cost and weak dollar has been making US steel cheaper for a while now.
  • by gillbates (106458) on Tuesday June 24, 2008 @09:55PM (#23928319) Homepage Journal

    The problem with telecommuting is that your job is basically dependent on the quality of the IT staff to a much higher degree. My employer tries to do telecommuting, but somewhere between cost cutting in IT, draconian security restrictions, and a dodgy network connection, it fails to be useful for getting real work done.

    We've been looking to move out of our high cost of living area for quite some time, but the rising cost of gas has put that on hold. I would like to buy a house - and can afford one on the edge of the suburbs, but alas, any saving in mortgage payments would be consumed by the cost of fuel. Even though I'm just a fifteen minute commute from work, I spend nearly fifty dollars a week getting there and back.

    So yeah, it might bring some manufacturing jobs back home. But those of us who have become used to working in the city and commuting out from the cheaper communities are finding themselves in quite a bind. I can't afford a house in my current area, and I can't afford the gas to drive from the places where I can afford a house.

    I'm slowly coming to the conclusion that I'm going to have to wait another 5 to 10 years for the next housing market crash before I'll be able to move into a house. When my Dad was my age, the loan on his (our) house was up - and he was a factory worker. Today, I make almost four times what he did, and can't even afford a three bedroom house. So much for the American Dream.

    • Re: (Score:3, Insightful)

      by Spy Handler (822350)
      When my Dad was my age, the loan on his (our) house was up - and he was a factory worker. Today, I make almost four times what he did, and can't even afford a three bedroom house. So much for the American Dream.

      The society that your dad lived in, was built by the Greatest Generation... the one that endured the Great Depression and won WWII.

      The society that you live in, was built by worst generation (IMO), children of the 60's (Clintons, GWBush etc.)
    • by tknd (979052) on Wednesday June 25, 2008 @02:26AM (#23930479)

      The American Dream is overrated because the "advertised" American dream is not necessary. If the standard to "achieving" the American dream is to own a house with an ample lot size, a nice car or three, and enough cash to throw parties every weekend or whatever other activity you find fun, well I say that's just the TV and popular culture brainwashing you.

      You can be perfectly happy and successful living in a town house without a yard and an econobox car. Almost every form of entertainment or activity is still accessible without the McMansion or the SUV. The only lacking thing is the increased expenses and the ability to flex your debt-inflated-penis with your shiny SUV and spinners.

      I'm probably in the same boat as you. I make more than my parents yet I can't afford a house near work. I can afford a 2 bedroom condo though. And after thinking, I would be plenty happy with condo as long as I was single. I'd still be happy with it if I was married. The only time it would start to feel cramped is if I wanted to have a family. But by then, I would probably be married and I figure a 3 bedroom town house would suffice. The only thing I really get with a bigger house is bragging rights and a whole lot more maintenance. For example if there was a yard I'd have to pay for a gardener or do it myself. If there were extra rooms I'd have to clean yet another room. I don't need that. A 2 bedroom condo with a decent kitchen, living room, and a few complex facilities (pool/patio) is plenty to keep me happy.

      Houses (with full yards, extra rooms, and large garages) only make sense in rural areas. In places like suburbs they're just a luxury and bragging rights.

  • by the_other_chewey (1119125) on Tuesday June 24, 2008 @10:30PM (#23928643)
    From the summary: Distance costs money, and when you have to shift iron ore from Brazil to China and then ship it back to Pittsburgh, Pittsburgh is looking pretty good at 40 bucks an hour.

    No it isn't if the alternative is (probably less than) 40 bucks per month.

    True, handling and treatment of raw materials may be one of the first things to become cheaper when
    handled in what I'll call "the west" as opposed to "the east", because huge quantities are handled
    by relatively few people.
    But what are we going to do with all those raw materials at home? They still need to be transformed
    into consumable goods, which involves much more labour - cheapest done "somwhere else".

    True, sea transport costs more than twice es much today than just a few years ago, but if you look at the
    absolute numbers, it still is more or less for free compared to the worth of the shipped goods. There needs
    to be at least another tenfold increase in shipping costs before businesses really start to feel it in
    their manufacturing costs.


    I know for a fact that it is (in quite a lot of cases much) cheaper to import presorted recovered paper
    (for paper production) from China and India to Europe than to collect it and have it sorted in Europe directly.
    Transport costs simply don't matter in that case.

    This situation is changing at the moment - not because of higher bulk shipping rates, but because of developing
    paper industries in China and India, consuming more of the recovered paper on the spot, thereby increasing prices for
    the exported good "recovered paper". Interesting side effect: The shipping costs' percentage in the total price/weight is
    therefore even decreasing.
  • by Fantastic Lad (198284) on Tuesday June 24, 2008 @10:38PM (#23928717)

    Exports will also go down.

    Ask anybody in the mail order business if the ballooning shipping charges have hurt or improved sales. Same goes for food prices, or anything which needs to be moved from point A to point B.

    Greed destroys itself. --And let's not make any mistakes here; the higher fuel prices are being artificially inflated. It's a short-term money grab which will of course threaten the continued health of the oil industry and many of our daily economic realities.

    I'd certainly enjoy seeing that happen, (especially if it involves the hanging of Bush and his oil cronies), although the collapse will be painful. We're probably going to see lots of unnecessary deaths from cold this winter, lots of frost-bitten children in emergency wards, and that will be difficult to live through. It will take a while before new systems are found to replace the rotten old ones, but New is good when it comes to the cycle of life and decay.

    Where I do find this positive is in the alternative power markets; electric vehicles actually have a shot at market viability. That could be a really cool thing to see. --If new schemes are implemented smartly, that is.

    But seriously. Let's hang Bush.


    -FL

  • by SEWilco (27983) on Tuesday June 24, 2008 @10:51PM (#23928839) Journal
    Environmentalists have been hoping for high fuel prices, to encourage use of less fuel.
    They weren't expecting the return of blast furnaces to Pittsburgh, however. So we burn a little less gasoline, and dump tons of coal and limestone in the steel furnaces.
    • Re: (Score:3, Interesting)

      by DigiShaman (671371)

      I've got a better one for you.

      Environmentalists are restricting the US from drilling in and around our own country. But, the demand will never change. Ironically, all they are doing is shifting the burden of oil extraction and refinement to other countries. I seriously doubt these other countries will do a better job than the US at looking after the environment too.

      Can we all say togeather now "one step forward, two steps back"?

    • by khallow (566160) on Wednesday June 25, 2008 @01:40AM (#23930135)
      Actually, it appears to me that we're using less fuel. More of the coal and limestone is being used in the US, near the demand. But overall the key difference is things are getting moved around a bit less.
  • by moosesocks (264553) on Tuesday June 24, 2008 @10:58PM (#23928891) Homepage

    Although high oil prices will force us to live more frugally and locally (probably a good thing in terms of the environment), the US has the small problem that its transportation infrastructure is designed based around the roads. Cars specifically.

    A coherent bus network simply doesn't exist, Amtrak is a pathetic mess, and Americans (white people, specifically*) hate the concept of public transport.

    *I hate to bring race into this, but for whatever reason, it's more or less a heavily recurring trend that, outside of big cities, white Americans don't use public transportation. I'm white, in my 20s, and take the bus to work every day. It's an extremely rare situation to spot somebody from my own demographic on the bus that isn't also homeless.

  • by MtViewGuy (197597) on Wednesday June 25, 2008 @06:51AM (#23932345)

    I think people forget that this is not the first time people have been looking for a new fuel for industrial purposes.

    Up until the 1850's, lighting lamps were fueled by whale oil, and with the rapid decline in the whale population even by then there was considerable concern about what to substitute for whale oil. The discovery of using kerosene derived from crude oil about this period changed all that, and that was the foundation of the oil industry as we know it today.

    Today, rapid changes in technology could make gasoilne obselete as a motor fuel within the next 20 years. The most important announcement was MIT's announcement of research into high-energy supercapacitors using carbon nanotubes back in 2006; that may just open the way for a drastic reduction in the size of the battery pack needed for a battery-electric vehicle (BEV), making it possible for a practical electric car that could carry four passengers in comfort yet go up to 400 km (248 miles) or more on a single charge, and the charge time for the battery pack would be a tiny fraction of even Li-On battery packs.

    That same technology could make it possible to have electrical storage units from home size to city size that could provide power after being charged up by a solar cell array or wind turbine array. I can imagine a single house with a sun-facing solar cell array (now much cheaper thanks to nanotechnology) that provides power during daytime and charges a supercapacitor electrical storage unit for use at night.

    In short, I see within 20-25 years most homes and apartment complexes with cheap solar arrays on their roofs and supercapacitor electrical storage units somewhere in the building.

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