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Energy, labor and the Big Squeeze

March 23, 2006

2 Min Read
Energy, labor and the Big Squeeze

Addressing the effects of energy and labor supply on manufacturing, specifically tackling the plastics industry impact, a new white paper, "The Big Squeeze," by engineering consulting firm Stress Engineering Services (SES) has been released.

While energy is a huge issue, labor could trump it as the bigger impediment to economic expansion, the report notes. The real challenge for U.S. manufacturers will be a labor shortage. "At the same time as we see energy markets starting a long-term and possibly severe tightening, domestic unskilled labor markets have effectively been moved into surplus on a macro basis. Some recent research demonstrates that the supply and demand balance of domestic unskilled labor is a critical variable in overall income equality," the report says.

The "Big Squeeze" that the plastics industry is feeling will likely have a long-term impact. "With a real limit on energy available, a growing world population, and increasing income inequality slowing and depressing growth, some forms of current domestic demand will have to be destroyed."

Two key points emerge from the paper: "Shipping radii are decreased both locally and globally;" and "Plastics will have to compete harder than today for remaining energy supply with uses having higher survival value than production of plastic products focused on convenience."

The paper notes some other industry shifts and trends, including:

More vertical integration and onsite molding Smaller, more numerous plants fracture economies of scale, increasing costs More corporations will manage resin arrangements to mitigate rising material costsFurther processor consolidation, resulting from material manufacturer, OEM squeezeThe report concludes material manufacturers bidding out feedstocks from petroleum and natural gas supplies will lose out in the upcoming competition between convenience products and hydrocarbons use for more basic survival needs, including food, energy, and transportation. "A tremendous amount of plastics volume is specifically associated with convenience and disposability." For information contact Steve DeHoff, and Stress Engineering (5380 Courseview Dr., Mason, OH, 45040). Clare Goldsberry, [email protected]

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