November 2019 Volume 1

INDUSTRY NEWS & CALENDAR

and demand is down, in any case, because of the mass slaughter of hogs in China as they attempt to control the spread of swine flu. This down year has meant much lower sales for farm equipment, and that has created revenue and profit constraints for dealers as well as manufacturers of the machinery. Mining. Though it has been affected by a general decline in the pace of manufacturing, mining has been holding its own for the past few years. Demand for oil has been steady, but prices have been lower than the producers would prefer. Output from shale oil has been falling as the easy deposits have been exploited and going after others will demand prices closer to $100 a barrel. Metals such as copper, nickel, bauxite and iron ore are affected by demand issues in everything from construction to aerospace to vehicles in general. The U.S. now is actively seeking to develop rare earth metals to break the stranglehold the Chinese have onmaterials such as lithium and cobalt. This will mean more development in the U.S. and more support from the U.S. government to develop the business in other nations. ECONOMY Dr. Christopher Kuehl of Armada Corporate Intelligence opened with a presentation titled, “Finding the Dark Cloud Behind the Silver Lining in the Economy.” U.S. GDP growth has accelerated while Europe has slowed. Trade tensions are still one of the biggest threats to the global economy. Five issues to think about, according to Dr. Kuehl: 1. Return of recession or inflation and likely Fed reaction. 2. Trade war impact 3. Labor shortage 4. Political stalemate 5. Consumer confidence and retail shifts (online vs. brick and-mortar stores) Dr. Kuehl shared inflation projections that show small federal interest rate hikes are still expected by some. The future looks a little dimmer—views of the U.S. economy five years out have hit their lowest levels since January 2018. He shared PMI declines, overall CMI, manufacturing CMI, service CMI and big improvements for state leading indexes in March 2019 vs. May 2018 and reported that the U.S. is right in the middle for growth. In closing, Dr. Kuehl emphasized that people are needed now to fill manufacturing jobs. 80 percent of manufacturers reported a moderate or serious shortage of qualified applicants. Manufacturing is the ninth largest economy in the world, contributing $2.18 trillion to the U.S. economy in 2016. 3.5 million manufacturing jobs need to be filled, with 2 million expected to stay unfilled due to a skills gap. ENERGY TheMaguire Energy Institute shared short- and long-termprospects and challenges facing the oil and gas industry, with a highlight that the future is natural gas. There are only three countries that produce

more oil thanTexas—Iraq, Saudi Arabia andRussia‚—with theU.S. being the largest supplier in recent months. Crude oil production reached a record high last year. U.S. natural gas production nearly doubled over a 12-year period from 2006-2018. Emerging powers in liquefied natural gas exports are Qatar, Australia, the U.S. and Russia. Short-term challenges facing the U.S. oil and gas industry are: 1. Falling U.S. oil and rig count. 2. Oil field services sector outlook remains tenuous. 3. Pipeline constraints. 4. Tariff war with China. 5. Possible global recession in 2020. Long-term challenges facing the global oil and gas industry are: 1. The world is investing less in “clean” energy. 2. Global demand for power. 3. Questions over the future of transportation being all electric (forecasts call for 8 percent of global car fleet being electric in 2040). 4. Fracking banned. The presentation closed with this reality check: Fossil fuels aren’t going away any time soon! The FIA Marketing Committee is planning the next Marketing Workshop for October 2020 in the Midwest. Stay tuned for details coming soon!

FIA MAGAZINE | NOVEMBER 2019 11