“You run one time, you got yourself a set of chains. You run twice, you got yourself two sets. You ain't gonna need no third set 'cause you're gonna get your mind right.  And I mean right.”

 Take a good look at Luke. Cool Hand Luke?

   -Captain

 

 

 

 

Yesterday, President Trump met with 24 CEOs from the largest manufacturing companies in the country to discuss a variety of issues that could spur an American Manufacturing Renaissance. The meeting included many executives that have made the trip before e.g. the CEOs of Ford and Lockheed Martin.  

Those CEOs that have had run-ins with President Trump seem to have gotten their minds right. Then there’s Andrew Liveris, the CEO of Dow Chemical, who made these observations:

President Trump may be the most pro-business president since the founding fathers.

President Trump is Reagan-esque.

Topics & Working Groups

• Deregulation
• Workforce Training
• Infrastructure
• Taxes & Trade

There is no question these meetings and discussions are critical. Is this an easy problem to fix, and is the nation focused on the wrong thing when it comes to jobs of the future?

Manufacturing Paradox

There is no doubt that manufacturing has been a disaster. And yet, some economists say we are too focused on the seven million lost jobs in that industry, instead of looking at the 33 million higher-paying new jobs in the service industry.

Things have changed. We don’t need as many workers to make the same things. Some of those things we used to make in America cannot be made to be profitable, no matter the tax or regulatory scheme.  With that being said, things that are being made in this nation do provide the kind of noble profession, many are longing for these days.

Output at all-times highs

This data can be misleading in a few ways, but the output at an all-time high belies the notion America doesn’t make stuff anymore.  Of course, the stuff we make has changed since 1997.  Computers and electronics, including computer chips, soared more than 50% while the rest of manufacturing is up only 8%.

Consider the swift implementation of robots, computers, and artificial intelligence; jobs that require the sweat and muscle of humans will fade to a machine that never gets tired.

This isn’t the chart that screams “crisis” or “disaster.”

 

 

GDP from Manufacturing at all time high

America is still competitive despite being surpassed by China in 2010.  Consider 2015’s manufacturing Gross Domestic Product (GDP) of $2.17 trillion.  It is equal to the next four countries:

• Japan
• Germany
• South Korea
• India

         $2.18 trillion

 

Trained Workforce

One topic that came up was jobs in the science, technology, engineering, and mathematics (STEM) field, that are said to be going begging, and why there are so many foreign workers in the tech sector. 

Last night, I had the pleasure of interviewing Emerson Electric (EMR) Chairman and CEO and National Association of Manufacturers (NAM) Chairman, David Farr. We discussed President Trump’s meeting; the obvious movement in manufacturing, the paradox mentioned above, and the challenge of finding workers.

Officially, there are more than half a million STEM jobs being unfulfilled from a lack of qualified workers.  Of course, the so-called skills gap isn’t confined to high technology as there is a dearth of carpenters and welders among other old-school occupations. However, the focus on the future means a focus on STEM, and Mr. Farr knows this better than anyone.

Of the 3.5 million manufacturing jobs to open in the next decade, 2 million could go unfilled due to the skills gap. 

Mr. Farr has established the “Love for STEM Students” program at Emerson, which is noble and smart.  

The government may have to play a role in STEM education, because of the urgency factor, but businesses should bear the brunt of such investments. 

In some ways to really attack this problem, America should be looking at a serious educational reform by tossing out weak curriculums and watered-down tests for rigorous plans that will make education pay off.   

                                                                                                                        

 

 

New Collar Jobs

IBM’s CEO has been promoting the idea of “new collar jobs,” where workers wouldn’t need advanced college degrees but specific training to be a part of the new economy.

This should be a priority for the nation.

Lower taxes, fewer regulations, better roads, and infusing the nation with enthusiasm is critical;  we must have the workers that benefit from innovation, not fall victim to it

 

 

 

 

 

 

Today’s Session

The market looks to open under a fair amount of pressure, as a combination of rotation from big tech winners into losing stocks, for example, Restoration Hardware (RH) is coupled with general anxiety associated with such an impressive rally.  I am concerned about continued pressure on infrastructure-related names, as a result of scuttlebutt, and president Trump will have to push his ambitious plans to 2018 or farther out.

I don’t think infrastructure will be pushed out, but I think Trump stocks have come so far in such a short period of time that shorts and White House critics are going to make their move to trip them up.  Now that Steve Mnuchin has said stocks and the US dollar are proxies for President Trump, there will be an extra effort to derail.

Yet, a lot of good things are already in motion including manufacturing measured by the Empire State Fed and Philly Fed.  In addition, there is the Keystone XL and Dakota Access pipeline projects which have been greenlighted.  The result from the rebound in oil, and the notion America is fossil fuel friendly again, as seen in Mas Tec, Inc. (MTZ).

Coral Gables Florida, the 80 year old infrastructure company base in Florida, posted record annual revenue driven by the best fourth quarter in company history.

During the quarter revenues surged 31% overwhelming aided by its oil and gas segment.  Revenue for the segment climbed 62.5%, and cash flow was more than twice, making it the larger communications business.

 

MTZ	Revenue	EBITDA
Communication	$595.6 million +14.3%	$53.8 million
Oil & Gas	$570.1 million +62.5%	$109.5 million

 

And this oil and gas infrastructure party is going to continue according to Mas Tec CEO Jose Mas.

"We exceeded our fourth quarter expectations, driven primarily by improved productivity in our Oil & Gas segment. We also signed pipeline contracts approximating $1.7 billion during the quarter, ending the year, as expected, with record Oil & Gas segment backlog. We expect record results for our Oil & Gas segment in 2017 and continue to have clear visibility to continued opportunities in this segment for several years."  Jose Mas

Today is going to be a tough session, and that’s part of investing. I want to caution investors about buying names under nefarious attacks rather than selling them.  There are clearly businesses that are in trouble, and there is enough confusion over tax policy to pressure certain industries, but don’t bet against the broad strokes of the agenda that are not going through. 

 

Comments

In addition to STEM education emphasis, the school curriculum needs to bring back shop class to increase the trained skilled workers for the trades of welding, electrician, HVAC, plumbing, etc. Daria Schooler (DoctorObvious) on 2/24/2017 9:58:17 AM

The American people today are fighting two wars. One with terrorists and one with globalists. With Donald Trump in office, we have a chance to set both enemies back. William S. Brown on 2/24/2017 10:22:22 AM

What we have here.... is a failure to communicate (to the blind leftists) kev on 2/24/2017 10:41:52 AM

Another example of big impact of more politically important big business on government action rather than the economically more important small businesses. Please note that big banks gained a strategic advantage over community banks by Dodd-Frank regulations. Are we again in the midst of crony capitalism whereby government is manipulated by big business or big labor at the expense of "the little people" to paraphrase the Instapundit? William Vine on 2/24/2017 10:51:29 AM

Mr. Vine that is an interesting observation GunnyNam69 on 2/24/2017 1:03:49 PM

Impossible for American workers to get these jobs because Human Resource "agents" screen so badly. Unfair practices with HR. They tend to look for a certain job type and usually the average American male doesn't fit their narrative. Therefore he doesn't even have a chance to get past HR. EFS on 2/24/2017 3:31:55 PM

Hopefully, Trump reads Aviation Week. The February 20-March 5 2017 issue was the BEST ever. Pp 20-23 How the USA is losing momentum in hypersonic arms race as China, Russia catch up. [Allegedly the Navy has a Mach 7 kinetic artillery round that is steerable. Visualize an electric gatling gun firing 20 pound rounds.] Pages 30-31 ... A souped up F-18 Super Hornet Pages 32-33. U.S. flyable aircraft only 26% in some cases. I SURE HOPE TRUMP READS AVIATION WEEK. Al M. on 2/25/2017 5:33:49 AM

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