May 2013 Spray 31 recession and has never caught up. Manufacturing now has an underperforming gross domestic product (GDP). The January 1994 devaluation of the Chinese yuan was the initial trigger. China was not on the U.S. Treasury radar screen in 1994, and the yuan devaluation left other Asian countries uncompetitive. The Asian currency crisis began July 1997, as devaluations were a necessary response to yuan devaluation and a tradeweighted dollar surged. The widening of the U.S. trade deficit accelerated in 1997, and the macroeconomic impact was initially masked by the tech bubble. The housing bubble diverted scarce U.S capital away from manufacturing, just as the tech bubble had already diverted capital away from traditional manufacturing. Indicators of a U.S. manufacturing renaissance are that the dollar has declined since early 2002; the real dollar hit an all-time low in 2011 and the yuan has been appreciating since 2005. The U.S. labor cost disadvantage has been lessened or reversed, as unit labor costs have fallen relative to Europe and most of Asia and Chinese labor costs are rising rapidly. Low natural gas prices give U.S. manufacturers an advantage, as do cheaper feedstocks for industrial chemicals, cheaper fuel for many industries (notably steel) and lower electricity costs. The U.S. also has a demographic advantage over other developed countries and its population is still growing at a healthy rate. Barriers to a U.S. manufacturing renaissance include general macroeconomic weakness holding back needed investment; a tax system biased against savings and investment; the highest corporate tax rate in world; high and uncertain healthcare costs, paid by employers; inertia; and a shortage of scientists and engineers. The latter is because foreign university students ultimately return home (we need more H1-B visas); scholarships and student loans are given without regard to major or ability to repay; and the U.S. needs stronger math and science programs in K-12 education. The U.S. recovery continues to disappoint, said Fry. GDP growth has been below 2.5% for 11 of 14 quarters in this recovery. Employment growth has picked up, but is still too slow. The income growth surged in late 2012, but will drop sharply in early 2013. However, housing is finally picking up and auto sales are also trending up. Most indicators point to slow growth, not recession. Financial conditions have improved in Europe, but recessions continue. Leading indicators suggest an end of decline, but no strong rebound; China slowed more than official data indicated, but has picked up again. The recession might be ending in Japan and the rest of Asia might be starting to pick up, with indexes rising in Korea and Taiwan. Darren Ellsmore, CEO & President of RGS Labs, presented Manufacturing in the Domestic Market. Ellsmore stated that, initially, he had no idea about aerosols, but wanted to build a business. He employed four steps: Identify what you want, find people you want to work with, beware of pitfalls and get busy now. The Shale Gas Liquids Revolution was presented by Brandon Bello, VP of Commercial Development, Texon LP. Shale gas—a natural gas that is found trapped within shale formations— is experiencing a boom that won’t end anytime soon, said Bello. There is at least 100 years worth of gas locked in shale, and hydraulic fracturing, or “fracking,” is the process that unlocks it from the shale. There are many political and environmental issues connected with fracking, but economics will win out in the end. Fracking shakes the ground and may register on the seismic scale as an earthquake. Additionally, there can be ground water contamination if the fracking is not done carefully. However, technology is improving all the time. There is a long term prognosis for gas, and the prices will remain low, as there is a large amount of it and it’s cheap. American ingenuity will figure out how to use natural gas for things such as car fuel. Producers are trying to create demand and encourage investment. Ultimately, however, lower gas prices will not generally lower pricing for aerosol components. SPRAY The 2013 NAA Board are: Bottom row from left: John Lynch, Summit Packaging; Kim Miller, Honeywell; and Steve Cook, Tech Spray (Past President). Middle row from left: Craig Autry, Ball Aerosol; Harry Zechman, Stoner (VP); and Steve Engler, ATI. Top Row from left: Brad Dahlgren, Crown; Don Rowson, Industrial Hydrocarbons; Bart Bastian, Spray Products (Secretary/Treasurer); George Buckland, DS Containers (President); and Joe Bowen, Aeropres. Not pictured: Ryun Bibro, IKI Manufacturing; Mark Lopatka, Precision; Doug Raymond, Raymond Regulatory Resources; and George Sehringer, Diversified CPC. Fry Ellsmore
Spray May 2013
To see the actual publication please follow the link above