Embrace AI: Adapt to Change and One Will Survive

There's a must-read over at the Beaulieu brothers' ITR Economics website.  Economist Lauren Saidel-Baker writes in a piece titled "Artificial Intelligence and Automation:  Three Reasons Not to Fear the Robots."

I've written on the topic too--"Fear of Machination is Old Fashioned Thinking."

Saidel-Baker hits home the point that there will be change, but that adapting to change is nothing new.  She makes the case for "embracing" artificial intelligence in manufacturing.

The bottom line is right here:  "The number of new jobs created by artificial intelligence may actually exceed the number of jobs eliminated."

Read the whole piece at ITREconomics.com.

Watching Employment and Workenomics

Continuing to take the Beaulieu brothers' coaching, I'm watching employment.  And Licking County's Workenomics is watching what the numbers mean to building a pool that helps Licking County maintain its status as Central Ohio's #1 manufacturing workforce.

It's hard not to notice unemployment, though. 

Today's rates from the Ohio LMI Division sees Licking County below 5% unemployment at 4.6%, the lowest rate since November 2006.  With 3,900 reported number of unemployed persons, it's at the lowest level since December 2006.

Low unemployment could be a double-edged sword from a business standpoint, but the growth in employment and labor force tend to make up for the lower rate.  The Beaulieu brothers are right--watch employment, not unemployment.

There are 600 more people in the labor force and 700 more people in the employment column since those low rates in 2006.

And there is room to grow.

Licking County's all-time peak in employment and labor force was in July 2013 (according to adjusted Ohio LMI numbers).  There were 87,300 people in the labor pool and 81,000 of them employed in July of last year.

With a 84,500 sized labor pool for April 2014, the record is still achievable.  With 80,600 employed according to the April 2014 numbers, the peak remains 400 people ahead.

Keep watching employment and stay tuned to Workenomics' efforts to grow the labor pool too.

My Economists on Reshoring: It's Real

"You can kick anybody's butt right here in the U.S." was the stand-out phrase directed at manufacturers during a recent Vistage podcast featuring economists Alan and Brian Beaulieu.  I call them my economists not only because I like what they have to say, but because they have a penchant for accuracy.  They have a great sense of humor uncommon to most economists too.

The message was that reshoring, or near-sourcing if you prefer that term, of production is "real."

This was one of four key trends the Beaulieu brothers cited in predicting steady growth through 2018.  A healthy energy segment, better/stronger productivity, and "growing the industrial economy for the World" were the other three U.S. trends.  Upbeat.

My Economists to Manufacturers: We're Back!

The chart from Friday's column is worth posting again.  Alan and Brian Beaulieu, I call them my economists, used this slide on a podcast intended for a Vistage audience of CEO's, including CEO's of manufacturers.  It helped them make a couple key points about manufacturing in the U.S.

For one, they recommended Joel Kotkin's book The Next Hundred Million.  They made it recommended reading and labeled Kotkin's parts on China and the U.S. as "realistic" while also optimistic views of the future.

They also added a quotable line saying, "You [U.S. manufacturing] can kick anybody's butt right here in the U.S." adding that reshoring is real and there's no need to offshore manufacturing anymore.

"We're back!" was added for more gusto.

My Economists on World GDP

Alan and Brian Beaulieu, the "Vistage economists," had a year-end podcast filled with tidbits designed to give a preview of 2014 based on data and facts from recent times.

This 2012 chart shows that the U.S. continues to hold the largest share of World GDP at 22%.  China follows at 11.5%.

It's noteworthy that the U.S. gained in 2012, indicating that China's continued growth did not come at the expense of the U.S.  That's news.

They added that Canada is losing manufacturing GDP to the U.S. and Mexico.  In both a demographic and economic way, they added, "Mexico is young and growing."

My Economists: Bottom Line First

I listened to a Vistage pocast with ITR Economic's Alan and Brian Beaulieu recently, and I'm going to share what "my economists" have to say in bite-size chunks.

The bottom line first.  The Vistage economists at ITR had been predicting a second half 2014 slow down that they even labeled a recession, albeit a mini one.  There was no reference to that in this late December presentation. 

They did predict some sector downturns in the latter half, but no use of the "R" word was ever detected with regard to 2014.

I took away a ton of material on China, Europe (particularly Germany), the Fed, demographics, and reshoring.  All are useful things to watch out for in 2014.

Here's the quick takes on their forecasts and analysis:

• China growth is not coming at the expense of the U.S.

• Natural gas costs in the U.S. are 1/4 of what they are in Germany, but Germany is starting to do some things about it.

• The Fed may be more inclined to allow some inflation in the future.  We could learn more on that soon.

• Joel Kotkin's demographics and his book The Next Hundred Million got a mention too.  I was glad to link my demographer with my economists.

• Near-sourcing and reshoring are real.  That's almost a verbatim quote.

Stay tuned.

Tempered Manufacturing News

Before I could blog about the good news that 27,000 new manufacturing jobs had been created in the U.S. for November 2013, I got tempered news from "my" economist.

Alan Beaulieu factually reports that the real number is 3,000 manufacturing jobs lost.  See "A Balanced Look at the Manufacturing Employment Numbers" for the explanation.

It's not all bad though.  He does continue to validate that there are good things to expect in manufacturing.  His post says, "Manufacturing is making a comeback, and the prospects for more re-shoring are good (we will cover those in another blog)."

But then he did reiterate his and his twin brother Brian's prediction that there will be a slight downturn in 2014.

Lessons From Germany

Triggered by rising energy costs in comparison to the U.S., German companies are looking at U.S. manufacturing facility investments in increasing numbers. 

This tidbit comes from Vistage economists Alan and Brian Beaulieu.  See Alan's latest at "Germany on the Go."  Alan's piece says, "According to a Wall St. Journal survey, 15% planned on increasing spending in Germany; 54% said they were looking to emerging markets or the U.S."

That's good news, but Alan takes it further with lessons for the U.S. on why we don't need to be messing with energy policy that, left to its own, could boost the U.S. economy.

Another Recession? Not Quite

"We are projecting that the US economy will sag next year followed by years of opportunity."

Alan Beaulieu stopped just short of calling it another recession, but he did appear to reiterate an earlier prediction he made of a downturn in 2014.  I recall the Beaulieu brothers predicting a downturn like the one we had in the early 1990's occurring in 2014. 

 

See his latest blog posting for this prediction.

A Word From My Economist

If I had an economist on my staff and money were no object, it would be one of the twins at ITR Economics, Alan or Brian Beaulieu.  I've heard both brothers speak at Vistage meetings, caught a couple webinars, and listened in to their radio show.  I also get an RSS feed of their blog.

The blog entry from Alan yesterday was his forecast on manufacturing.  Short and sweet.

While admitting that China has surpassed the U.S. in GDP for manufacturing, Alan forecasts a continuing resurgence in U.S. manufacturing nonetheless.

He notes that manufacturing is at 11.9% of GDP, up from just 11% four years ago.

He's telling his clients to invest in manufacturing.

Good stuff.

Upbeat Economists' Forecast on Industrial Production

The title doesn't catch ya, but the content, hopefully, will.

I captured this slide yesterday from a Vistage Webinar with the ITR Economics twins Alan Beaulieu and Brian Beaulieu.  It maps industrial production with a look at the twelve-month leading averages.

The U.S. fares well. 

It was part of the reason the Beaulieu brothers forecast 2013 to be a good year and reversed their October 2011 prediction of a mid-year recession.

That's upbeat!

It shows that there are some signs of growth in Europe, which is good for U.S. exports.  It shows that Australia, Brazil, and India, thought to be among U.S. strong competitors for industrial production, are not as strong as recent years would predict.

That's noteworthy too.

Winning Demographics

Winning demographics.

On his PowerPoint handout, Brian Beaulieu left the space blank below the title "Winning Demographics."

His presentation filled in the blank.  The U.S., India, Indonesia, Australia, Chile, and Brazil were among the nations listed as those possessing winning demographics.  GDP and population growth are correlated.

China was on the underside of the PowerPoint slide. 

Though Beaulieu never said it, it's clear the implications:  It's time for the Chinese, like their German and Japanese counterparts three decades ago when their demographics began to slide too, to look at investing outside of their country to sustain their economy.

Beaulieu gave the Chinese five to six years before the "Negative Demographics" start to catch up with their economy.

Tidbits From the Beaulieu Brothers

It was Brian this time.  I got to hear from Alan Beaulieu at a Vistage All-City meeting talk about the economy two years ago, coming away with a slue of to do items and armed with a greater knowledge of our economy.  This time his younger brother, Brian (younger by eight minutes) put on the talk for 100+/- CEOs in Central Ohio.  It was another productive day by my standards.

Here's a few of my takeaways from the day:

• "Left to its own devices, this economy will grow."  Brian didn't have to say much more than that to get my attention.  He predicted 2012 to be a growth year, giving it a "B" grade among growth year grades at one questioners' request.
• Regrettably, I wish he had stopped there.  Brian also predicted another Recession in mid 2013 through 2014, one much like experienced in the early 1990's.  Since these brothers predicted the most recent recession, its best to heed their predictions.
• The message:  We have 18 months to prepare for the next one.  18 months.
• Brian pointed to leading indicators, exports growth, employment increases, and bank lending rises among eight listed signs of recovery.

• Demographics matter.  Though I never heard Joel Kotkin mentioned in name, the demographic correlations to help predict the future were omnipresent. 
• Beaulieu's ITR firm considers demographics a "mega trend" with a direct correlation between population growth and GDP growth. 
• It's why he's bullish on the U.S., India, and Brazil among "winning demographics" and less so on China, Japan, Europe, and Russia for their "negative demographics."

• A bit about Ohio was charted out for the Ohio CEOs.  Regrettably, our unemployment and other economic trends tend to mirror the nation.  However, construction industry employment is trending up as our building permits.
• He showed a trend line on the Ohio Housing Price Index showing we've hit the 30-year low and are on the rise, adding "the pain is behind us." 
• His analysis is that the low in commercial construction activity has happened in Ohio already too.
• His chart on median home sale prices in the Columbus market didn't show a housing price bubble. "Sane and boring" was Brian's label for our housing market. Yes, he's funny too.

• Manufacturing news was upbeat.  ITR's trend analysis is showing that near-shoring and re-shoring are real.  Beaulieu suggested everyone in manufacturing "needs to get a great training program going."
• The leveling of comparative labor costs and devaluing of the dollar are working in favor of export-minded producers in the U.S.

• Economic development in Licking County got some tidbits too.  Marketing campaigns have a purpose in 2012.  Finally.  It's good we are getting more ready, as a county, to move ahead in this area.
• News on the defense industry was not as upbeat with the strong warning:  "Wind down or minimize this part of your business."  Here's hoping maintenance and repair in the defense industry is a hedge.
• The industries that are "largely unaffected" by economic downturns also make for good target industries for Licking County, including energy, "green" industry, and food (including pet food and alcohol).
• Talking briefly about the Utica shale gas boom, Beaulieu's comments speak to the challenge in Ohio will be keeping the capital here that is earned here from leases and royalties.  His question in answer to a question was a bit of a wake-up call:  "What keeps these people from taking the money and moving to Florida?"  Yikes.

One final conclusion.  With time for a one-on-one question afterward, I asked Beaulieu about the oft-repeated prediction that China will surpass the U.S. in GDP in coming years.  He said, "It's not going to happen" and suggested most economists have backed off of those predictions now.

More good news.

Watching Employment in 2010

With 76,700 employed for December, Licking County closes the book on 2010 with another month showing employment gains.

All in all, I'd say Alan Beaulieu was right, watching employment was the way to track recovery in 2010. Thanks, Alan.

Here's what the employment stats read for 2010:

Employment has remained above 76,000 people for eight months.

For the year, data shows 2,800 more people are in the employment column than were in that column in January.

Nine of the past 11 months have seen rises in employment.

Watching Employment (As It Goes Up)

The state published it's monthly unemployment rates today. Good news. The unemployment rate is down in Licking County.  It's still a dismal number, but its down.

However, I'm doing what economist Alan Beaulieu told me to do. I'm watching employment instead.

After all, if the unemployment rate went down but the number of people employed didn't go up, what is there to celebrate?

Good news prevails.   Employment rose.
 

Licking County employment hit the year's high at 77,100 people employed.  That's 3,200 more people working than were reported in January.

Still a ways to go to recovery, but there's reason to celebrate that employment has gained seven out of eight months in 2010.

More From the Beaulieu Brothers

Brian Beaulieu in an August 1, 2010 YouTube video predicts the recovery continues.  I heard the same from his brother Alan in October 2009.  These guys have an unmatched track record on predictions.

"Left alone, this economy grows," he concludes.

I think there's a double meaning in what he says. We need to resist negativity and fear that brings about its own "double dip." I think he also means we need to say no more stimulus packages.

You decide. This is worth every second of your next three minutes.

Watching Employment in the Jell-O Economy

Based on advice in a speech by national economist Alan Beaulieu last Fall, I've been watching employment instead of the more conventional approach of watching unemployment. 

My interpretation of Beaulieu's lesson was that, predictably, employment will show signs of economic recovery sooner than unemployment will.  Employment gains are positive signs of recovery.  Employment could gain even when the unemployment rate doesn't.

Today, the State of Ohio published unemployment rates for the month of July.  Amongst all the numbers were employment levels.

It's a fact.  Licking County is now on par with the high point of employment for the year at a 76,500 employment level. 

It's a fact that 2,600 more people employed this July than were employed in Licking County in January.

Here are Licking County employment numbers by month for 2010 as reported by the Ohio LMI Division:

What are we to read into this?  Choose your poison.

Choose to see the positive.  Five out of six months have seen increases in employment. The one month that didn't increase, June, could be explained by loss of U.S. Census jobs.  There are reasons to be upbeat about the economy on its way to a continued recovery.

Choose to see otherwise.  Only April and May have seen statistically significant employment gains and the trend line is flat-lining.  The economy is potentially heading for a double dip.

See the problem? 

In this "Jell-O" economy, its hard to get your hands on what the real economic situation truly is.

Watching Employment, Not Unemployment

Economist Alan Beaulieu spoke to a Columbus meeting of CEO's in October last year, and I distinctly recall his advice:  "Pay attention to employment, not unemployment."  He was predicting a modest recovery in 2010 and his advice was that while unemployment might be slow to recover, there are more positive signs to watch.

Ohio's latest release of unemployment rates for March 2010 showed 11.1% unemployment.  Hidden in the release, though, was a slight increase (4,900 people) in employment.

Though the county-by-county numbers will lag for some unknown reason, the last available county-by-county numbers showed a similar trend for Licking County.  February 2010 unemployment stalled at 11.1% percent.  The employment numbers, though, saw a 400-person increase.

Taking Beaulieu's advice, we'll consider the growth in employment the potential start of a positive trend.

And the anecdotal evidence of recovery is mounting too.

I attended a recent meeting of manufacturers where one prominent area manufacturer noted it had greatly expanded its employment.  This was a company that had seen layoffs in 2008 into early 2009.  And, most notably, the company was actually having trouble finding workers in a certain specialty skill set.

The latter was something that our local Workenomics Director set out to help solve and, I'm confident, the company and he will find the solution.

The other anecdotal tidbit is the growing number of job postings at http://ohiomeansjobs.com/. 

A recent search of jobs available within 10 miles of Heath found 642 postings.  Over 1,200 engineering jobs were being advertised within 50 miles of Newark.

Times are still tough, but, choosing to be positive, I'm watching employment.