Yes, Virginia, There Is a U.S. Manufacturing Boom

Courtesy of BusinessWeek. By Harold L. Sirkin

A recent opinion piece in the New York Times brings to mind one of the most frequently quoted lines ever to appear in a newspaper editorial: “Yes, Virginia, there is a Santa Claus.”

The editorial, which appeared in the New York Sun in 1897, was written in response to a letter to the editor from eight-year-old Virginia O’Hanlon, daughter of New York City coroner’s assistant Philip O’Hanlon.

The letter was brief: “Dear Editor, I am eight years old. Some of my little friends say there is no Santa Claus. Papa says, ‘If you see it in The Sun it’s so.’ Please tell me the truth; is there a Santa Claus?”

One of the Sun’s editors, Francis Pharcellus Church, a war correspondent during the Civil War, responded, telling Virginia that her friends were “affected by the skepticism of a skeptical age”—and were wrong.

“Yes, Virginia, there is a Santa Claus,” Church wrote, “… he exists as certainly as love and generosity and devotion.”

Today, Virginia’s great-great-grandchildren, and those of her little friends, probably read the Times, which many consider today’s newspaper of record. Some of these readers may be graduates of Hunter College, Columbia University, or Fordham University, where Virginia—who would become a New York school teacher—later received her bachelor’s degree, master’s, and Ph.D.

Like many other college graduates, they may be wondering where the jobs are. And they may be wondering if what they read recently in the Times regarding America’s reported manufacturing renaissance is correct: that it’s largely a myth, like old Saint Nick.

While I’m no Francis Church, let me assure Times readers and everybody else that such accounts extolling “the return of manufacturing jobs to the U.S.” are not a myth.

The rebound is very real, and and it will likely gain even more momentum as companies worldwide come to realize the cost advantage U.S. manufacturing has gained from cheap domestic energy, most notably natural gas.

This is not to say that there will be tens of millions of new high-paying manufacturing jobs. But my colleagues and I predict that by 2020, we could see up to 1.5 million manufacturing jobs and as many as 3.5 million additional jobs created because of the new factories that are being built. Five million new jobs are not just a trickle as the Times article suggests.

For evidence, consider the recent Honda Motor (HMCannouncement that it manufactured a record 1.3 million vehicles in the U.S. last year—with nearly 10 percent of the total (some 109,000 vehicles) exported to other countries.

Twenty-five years ago, Honda didn’t make any cars in the U.S. Now it has four U.S. plants. The company created some 2,040 new U.S. manufacturing jobs in the past two years alone. And the company’s total U.S. payroll exceeds $1.2 billion. That is no myth.

Yes, Virginia, there is a U.S. manufacturing boom under way. And Honda isn’t the only company—foreign or domestic—fueling the resurgence.

The natural gas boom alone has prompted numerous international companies, including Taiwan’s Formosa Plastics (1301:TT), Canada’s Methanex (MEOH), France’s Vallourec, and Germany’s Siemens (SI) (which makes gas turbines that generate electricity from natural gas), to invest billions in new U.S. plant capacity.

U.S.-based chemical companies, such as Westlake (WLK) and Dow (DOW), and steel companies, including Nucor (NUE) and JMC, are also building up their stateside presence to take advantage of our natural gas industry.

This also is not a myth. Nor are the jobs that are being created.

For Virginia’s descendants, I offer the following encouragement: Hang in there; the rebound is about to take a big bounce.

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