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BEDFORD, Ohio — Factory owners have been adding jobs slowly but steadily since the beginning of the year, giving a lift to the fragile economic recovery. And because they laid off so many workers — more than two million since the end of 2007 — manufacturers now have a vast pool of people to choose from.

Yet some of these employers complain that they cannot fill their openings.

Plenty of people are applying for the jobs. The problem, the companies say, is a mismatch between the kind of skilled workers needed and the ranks of the unemployed.

Economists expect that Friday’s government employment report will show that manufacturers continued adding jobs last month, although the overall picture is likely to be bleak. With the government dismissing Census workers, more jobs might have been cut than added in June.

And concerns are growing that the recovery could be teetering, with some fresh signs of softer demand this week. A central index of consumer confidence dropped sharply in June, while auto sales declined from the previous month.

Pending home sales plunged by 30 percent in May from April as tax credits for home buyers expired. Fretting that global growth is slowing, investors have driven stock indexes in the United States down to their levels of last October, for losses as great as 8 percent for 2010.

As unlikely as it would seem against this backdrop, manufacturers who want to expand find that hiring is not always easy. During the recession, domestic manufacturers appear to have accelerated the long-term move toward greater automation, laying off more of their lowest-skilled workers and replacing them with cheaper labor abroad.

Now they are looking to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker.

Makers of innovative products like advanced medical devices and wind turbines are among those growing quickly and looking to hire, and they too need higher skills.

“That’s where you’re seeing the pain point,” said Baiju R. Shah, chief executive of BioEnterprise, a nonprofit group in Cleveland trying to turn the region into a center for medical innovation. “The people that are out of work just don’t match the types of jobs that are here, open and growing.”

The increasing emphasis on more advanced skills raises policy questions about how to help low-skilled job seekers who are being turned away at the factory door and increasingly becoming the long-term unemployed. This week, the Senate reconsidered but declined to extend unemployment benefits, after earlier extensions raised the maximum to 99 weeks.

The Obama administration has advocated further stimulus measures, which the Senate rejected, and has allocated more money for training. Still, officials say more robust job creation is the real solution.

But a number of manufacturers say that even if demand surges, they will never bring back many of the lower-skilled jobs, and that training is not yet delivering the skilled employees they need.

Here in this suburb of Cleveland, supervisors at Ben Venue Laboratories, a contract drug maker for pharmaceutical companies, have reviewed 3,600 job applications this year and found only 47 people to hire at $13 to $15 an hour, or about $31,000 a year.

The going rate for entry-level manufacturing workers in the area, according to Cleveland State University, is $10 to $12 an hour, but more skilled workers earn $15 to $20 an hour.

All candidates at Ben Venue must pass a basic skills test showing they can read and understand math at a ninth-grade level. A significant portion of recent applicants failed, and the company has been disappointed by the quality of graduates from local training programs. It is now struggling to fill 100 positions.

“You would think in tough economic times that you would have your pick of people,” said Thomas J. Murphy, chief executive of Ben Venue.

How many more people would be hired if manufacturers could find qualified candidates is hard to say. Since January, they have added 126,000 jobs, or about 6 percent of those slashed during the recession. The number may understate activity somewhat, as many factories have turned to temporary workers.

Christina D. Romer, chairwoman of the Council of Economic Advisers, said the skills shortages reported by employers stem largely from a long-term structural shift in manufacturing, which should not be confused with the recent downturn. “I do think that manufacturing can come back to what it was before the recession,” she said.

Automakers, for example, have been ramping up and mainly filling slots with people laid off a year or two ago.

Manufacturers who profess to being shorthanded say they have retooled the way they make products, calling for higher-skilled employees. “It’s not just what is being made,” said David Autor, an economist at the Massachusetts Institute of Technology, “but to the degree that you make it at all, you make it differently.”

In a survey last year of 779 industrial companies by the National Association of Manufacturers, the Manufacturing Institute and Deloitte, the accounting and consulting firm, 32 percent of companies reported “moderate to serious” skills shortages. Sixty-three percent of life science companies, and 45 percent of energy firms cited such shortages.

In the Cleveland area, historically a center of metalworking and rubber production, more than 40,000 manufacturing workers lost their jobs in the recession, a 21 percent decline, according to an analysis of employment data by Cleveland State University. Since the beginning of the year, the region has added 4,500 positions.

Employers say they are looking for aptitude as much as specific skills. “We are trying to find people with the right mindset and intelligence,” said Mr. Murphy.

Ben Venue has recruited about half its new factory hires from outside the pool of former manufacturing workers. Zachary Flyer, a 32-year-old Army veteran, had been laid off from a law firm filing room when he applied at the drug maker last summer.

He spent four months this year learning how to operate a 400-square-foot freeze dryer that helps preserve vials of medicine. Monitoring vacuum pressure and temperatures on a color-coded computer screen with flashing numbers, Mr. Flyer said last month that he preferred his new work to the law firm, where he had spent seven years.

“I like jobs that are more hands-on, as opposed to watching paperwork all day,” he said.

Local leaders worry that the skills shortage now will be exacerbated once baby boomers start retiring. In Ohio, officials project that about 30 percent of the state’s manufacturing workers will be eligible for retirement by 2016.

“The new worker of tomorrow is in about sixth grade,” said John Gajewski, executive director of the advanced manufacturing, engineering and apprenticeship program at Cuyahoga Community College in downtown Cleveland. “And they need training to move into manufacturing.”

At Astro Manufacturing and Design, a maker of parts and devices for the aerospace, medical and military industries, Rich Peterson, vice president for business development, recently gave a tour to a group of eighth graders.

He showed off surgical simulators and torpedo parts, saying he wanted them to see the “cool” things the company makes. By the end of the tour, more than a third of the students said they might consider working at a place like Astro, which is based in Eastlake and has five plants in the Cleveland area.

For now, the company urgently needs six machinists to run what are known as computer numerical control — or CNC — machines. An outside recruiter has reviewed 50 résumés in the last month and come up empty.

The jobs, which would pay $18 to $23 an hour, require considerable technical skill. On an afternoon last month, Christopher Debruycker, 34, was running such a machine, the size and shape of a camper van parked on the factory floor.

Mr. Debruycker, who has been an operator for 15 years, had programmed the machine to carve an intricate part for a flight simulator out of a block of aluminum, and he monitored its progress on a control pad with an array of buttons.

“We need 10 more people like him,” Mr. Peterson said.

David Maxwell contributed reporting.

Factory Jobs Return, but Employers Find Skills Shortage,
NYT,
1.7.2010,
https://www.nytimes.com/2010/07/02/
business/economy/02manufacturing.html

In Wisconsin,

Hopeful Signs for Factories

September 13, 2009

The New York Times

By PETER S. GOODMAN

MEQUON, Wis. — At the Rockwell Automation factory here, something encouraging happened recently that might be a portent of national economic recovery: managers reinstated a shift, hiring a dozen workers.

After months of layoffs, diminished production and anxiety about the depths of the Great Recession, the company — a bellwether because most of its customers are manufacturers themselves — saw enough new orders to justify adding people.

Given the panicked retreat that has characterized life on the American factory floor for many months, any expansion registers as a hopeful sign for the economy. Last week, the Federal Reserve found signs of “modest improvement” in manufacturing. That reinforced the direction of a widely watched manufacturing index tracked by the Institute for Supply Management, which surged into positive territory last month for the first time in a year and a half.

Yet these indications, while welcome, promise no vigorous expansion: For now, factory overseers remain uncertain that a lasting resurgence is at hand, making them reluctant to hire workers aggressively and invest in new equipment.

“We’re starting to see stabilization,” said Keith D. Nosbusch, chairman and chief executive of Rockwell, which makes machinery used in manufacturing. “The deceleration is slowing, but we haven’t seen the bottom yet. We have yet to see a turnaround.”

The tentative signs of factory improvement largely reflect a replenishing of inventories after months of weak sales, rather than an increase in demand for goods. For manufacturing to return to strength and help power a broader economic recovery, consumers would have to start buying more products, experts say.

Still, the mere process of expanding inventories could be enough to sustain several months of increased production, say economists. That could eventually generate more factory jobs, giving workers money to spend at other businesses. And that might instill enough momentum for a broader economic expansion.

“After one of the most incredible cutbacks and slicing away ever, just replenishing inventories is sufficient to maintain increased output,” said Allen Sinai, chief global economist at Decision Economics. “It’s part of the process of recovery in the United States, which is imminent.”

On Wall Street and in academic circles, where economists pick through often contradictory indicators for evidence of revival, the situation inside American factories is of crucial interest. Though manufacturing has diminished as a share of the economy, it still employs 11.7 million people, and it tends to trace the ups and downs of broader business prospects, making it a useful indicator of overall economic vigor.

The recent manufacturing data has been seized on by many economists as a signal that the recession is, technically speaking, already over or nearing an end.

“Those are genuine signs that this economy has turned the corner and begun to recover,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.

However, for now, growth in manufacturing jobs is mostly just a hope. Though improved business prospects appear to have tempered layoffs, manufacturing lost 65,000 net jobs in August, according to the Labor Department, adding to more than 2 million jobs in the sector that have disappeared since the recession began.

“None of these factories are yet convinced that this is a sustainable recovery, so they’re very cautious about hiring,” said Mr. Baumohl.

Wisconsin is an ideal laboratory in which to assess manufacturing. No other state has a larger share of its jobs in manufacturing — more than 17 percent, according to the Labor Department. Today, that translates into a palpable lack of security.

At the original Miller brewery in downtown Milwaukee — now a tiny piece of a mammoth operation that produces more than 100 million cases of beer annually — roughly 25 of the 550 workers who labor for hourly wages typically leave the company in the course of a year. This year, the number is zero.

“It used to be you might leave here and go over there for a higher-paying job,” said Andrew K. Moschea, a brewing vice president for Miller Coors. “ ‘Over there’ isn’t there anymore, or it’s laying off.”

The Miller plant is a bright spot in the local economy. Though production of kegs of beer is down a little, reflecting business at restaurants and bars, lower-priced cans are up, making for expanded volume.

When Miller recently hired 30 part-time workers to round out its weekend shifts, paying more than $20 an hour, thousands applied, many from skilled trades that once paid twice as much.

Rockwell Automation’s machinery, computer software and know-how form the guts of assembly lines in a wide array of industries.

“The products they produce through the whole range are critical for doing manufacturing,” said John S. Heywood, an economist at the University of Wisconsin, Milwaukee.

In recent months, Rockwell has suffered along with much of American industry. As car sales plummeted, automakers canceled new orders for Rockwell’s machinery. As the price of oil plunged this year, energy companies scrapped expansion plans, eliminating demand for Rockwell’s machinery.

In recent years, Rockwell has established a presence in more than 80 countries, deriving roughly half its revenue overseas. But as the slowdown spread to Asia, Europe and Latin America, the comforts of being global evaporated.

As Rockwell’s customers grew fearful of losing access to credit, they eliminated plans for new factories, idled existing plants and put off replacing and servicing older gear. “It came quick,” Mr. Nosbusch said. “It was steep.”

Rockwell began large-scale layoffs in October 2008 — three percent of its 20,000-plus workers worldwide, including 300 in the United States. Scattered layoffs continued in the months after. The company also cut working hours, trimmed wages and eliminated its own contributions to employee retirement accounts.

Here in Mequon, about 20 miles north of Milwaukee, management trimmed its production work force from about 240 to 220. It scrapped a shift in its board shop, where workers in lab coats use sophisticated machinery to attach capacitors, transistors and other electronics to custom-sized circuit boards.

The circuit boards are the brains of Rockwell’s power-regulating machines. Production declined by one-fifth this year. But in recent weeks, as Rockwell has rebuilt its inventory, production has nudged up 5 percent, prompting the resurrection of the third shift.

Still, worry remains, making future hiring unlikely. Rockwell’s customers have resumed replacing older gear, but have not begun full-scale expansions, which would generate much more business.

Factory managers doubt whether American consumers — still reeling from lost jobs and savings — can snap back vigorously enough to restore manufacturing.

“I’ve got 22 years of experience and I’ve never seen anything like this,” said Mike Laszkiewicz, 48, vice president and general manager of Rockwell’s power control business. “This is a tough one. I’m a little uncertain which way this is going to go.”

In Wisconsin, Hopeful Signs for Factories,
NYT,
13.9.2009,
http://www.nytimes.com/2009/09/13/
business/economy/13manufacture.html

Obama’s Strategy

to Reverse Manufacturing’s Fall

July 21, 2009

The New York Times

By LOUIS UCHITELLE

If the Obama administration has a strategy for reviving manufacturing, Douglas Bartlett would like to know what it is.

Buffeted by foreign competition, Mr. Bartlett recently closed his printed circuit board factory, founded 57 years ago by his father, and laid off the remaining 87 workers. Last week, he auctioned off the machinery, and soon he will raze the factory itself in Cary, Ill.

“The property taxes are no longer affordable,” Mr. Bartlett said glumly, “so I am going to tear down the building and sit on the land, and hopefully sell it after the recession when land prices hopefully rise.”

Though manufacturing has long been in decline, the loss of factory jobs has been especially brutal of late, with nearly two million disappearing since the recession began in December 2007. Even a few chief executives, heading companies that have shifted plenty of production abroad, are beginning to express alarm.

“We must make a serious commitment to manufacturing and exports. This is a national imperative,” Jeffrey R. Immelt, chairman and chief executive of General Electric, said in a speech last month, while acknowledging that G.E. was enriched by its overseas operations too.

President Obama, agreeing in effect, has declared, “The fight for American manufacturing is the fight for America’s future.”

The United States ranks behind every industrial nation except France in the percentage of overall economic activity devoted to manufacturing — 13.9 percent, the World Bank reports, down 4 percentage points in a decade. The 19-month-old recession has contributed noticeably to this decline. Industrial production has fallen 17.3 percent, the sharpest drop during a recession since the 1930s.

So far, however, Mr. Obama’s administration has not come up with a formal plan to address the rapid decline. Instead, it has pursued ad hoc initiatives — bailing out General Motors and Chrysler, for example, and pushing green energy by supporting the manufacture of items like wind turbines and solar panels.

“We want to make sure that we grow a manufacturing base for renewable energy,” said Matthew Rogers, a senior adviser in the Energy Department, explaining that this is being accomplished in part by “accelerating loan guarantees from zero” in the Bush years.

Xunming Deng, a physicist and the chairman of the Xunlight Corporation, sees himself as a beneficiary of what he describes as the Obama administration’s more flexible loan guarantees. His factory in Toledo, Ohio, with 100 employees, is in the early stages of making solar panels, and Dr. Deng is already planning to quadruple the plant’s size. He has applied to the Energy Department for a $120 million loan guarantee. If he gets it, he will not have to pay the hefty fees charged for loan guarantees before Mr. Obama took office.

“Getting rid of that fee makes the loan guarantee very attractive and very helpful,” Dr. Deng said. “We can’t grow as fast without it.”

Beyond energy, the administration’s approach gradually outlines the elements of a manufacturing policy — what Lawrence H. Summers, director of the National Economic Council, described as “a number of things to support manufacturing.”

The auto bailout, for all its improvisations, served notice that the administration would probably rescue any giant manufacturer it deemed too big (or too iconic) to fail, and would help the suppliers of failing giants transition to other industries.

The Buy America clause in the stimulus package pointedly favors the purchase of American-made goods for infrastructure projects. The Commerce Department is adding $100 million, more than double the current outlay, to a program that helps American manufacturers operate more effectively. And trade agreements negotiated by the Bush administration — agreements that would make the United States more open to imported manufactured goods — have been allowed to languish in Congress.

“The administration’s policy is evolving in the right direction,” said Representative Sander M. Levin, Democrat of Michigan, who is particularly concerned about auto imports. “I think they have essentially shed the political chains that prevented government from having a role in manufacturing. They are working their way toward what makes sense.”

Not everyone agrees.

“Bush and Obama,” Mr. Bartlett said scornfully, “one is as bad as the other in terms of manufacturing policy.”

He acknowledged that the recession was the immediate reason for the demise of his family’s business. But what really did it in, he said in an interview, was the competition from less expensive Chinese circuit boards — less expensive, he argued, because the Chinese undervalue their currency and this administration, like the ones before it, lets them get away with it.

“Our orders went from $8 million at an annual rate to $4 million, which was not enough to make money,” he said.

Mr. Bartlett, who is co-chairman of an organization called the Fair Currency Coalition, said that Chinese competitors charged only $1 for each printed circuit board sold in this country, while he charged $1.40. Like many economists and government officials, he says he believes the Chinese currency is artificially undervalued. As a countermeasure, he said the Obama administration should impose a 40 percent tariff on imported Chinese goods.

“I can compete against Chinese entrepreneurs, and Chinese labor cost is not that big a factor,” he said, “but I cannot compete against the Chinese government’s manufacturing policies.”

Manufacturing has long been viewed as an essential pillar of a powerful economy. It generates millions of well-paid jobs for those with only a high school education, a huge segment of the population. No other sector contributes more to the nation’s overall productivity, economists say. And as manufacturing weakens, the country becomes ever more dependent on imports of merchandise, computers, machinery and the like — running up a trade deficit that in time could undermine the dollar and the nation’s capacity to sustain so many imports.

One tactic for strengthening the manufacturing sector, in the administration’s view, would be a shift in tax policy. The research and development tax credit, which is now subject to renewal by Congress, would be made permanent, encouraging much more R.& D. among manufacturers, a senior Commerce Department official argued. And foreign taxes paid on profits earned overseas would not be deductible in this country until the profits were repatriated, a restriction that might discourage locating factories abroad.

The goal is to arrest manufacturing’s dizzying decline. It “was the pillar on which we built the middle class,” said Thea Lee, policy director for the A.F.L.-C.I.O., “and it is hard to see how you rebuild the middle class without reviving manufacturing.”

Obama’s Strategy to Reverse Manufacturing’s Fall,
NYT, 21.7.2009,
http://www.nytimes.com/2009/07/21/
business/economy/21manufacture.html

Factory Orders

Rise for Second Time in 3 Months

June 3, 2009
Filed at 12:14 p.m. ET
The New York Times
By THE ASSOCIATED PRESS

WASHINGTON (AP) -- Orders to U.S. factories rose 0.7 percent in April, the second increase in three months and further evidence that manufacturers may be recovering.

Still, the Commerce Department's report Wednesday was below analysts' expectations of a 0.9 percent increase. The department also sharply marked down the March figure to a 1.9 percent drop, compared with the 0.9 percent decline previously reported.

Shipments fell 0.2 percent, the ninth consecutive drop, though at a much slower pace than the 1.8 percent fall in March.

Manufacturers have been hit hard by the recession, the longest since World War II, which has cut back both domestic shipments and exports. The auto sector is also reeling as both General Motors Corp. and Chrysler LLC have filed for bankruptcy in the past month. Their restructuring plans call for sharply reducing U.S. production, which also puts thousands of their supplier companies at risk.

But other recent news has been better. Americans bought more cars in May than in any other month this year, according to data released Tuesday, as deep discounts by GM and Chrysler pushed sales above expectations.

The improvement was reflected in Wednesday's numbers, as orders for motor vehicle parts and assemblies rose 2.2 percent in April. A 5.8 percent jump in transportation equipment, which includes motor vehicles, drove the overall increase in factory orders.

GM's sales in May dropped 29 percent from the previous year, a smaller drop than earlier this year. Ford Motor Co.'s sales fell 24 percent from last May, but were up 20 percent from April, the company said Tuesday. Chrysler's sales fell 47 percent, about the same as before it filed for bankruptcy protection. Overall, industry sales fell 34 percent from a year ago.

Orders for big-ticket durable goods, such as industrial machinery and appliances, rose 1.7 percent, down slightly from the government's initial estimate last week of a 1.9 percent rise.

Orders for non-defense capital goods excluding aircraft, a measure that is seen as a proxy for business investment, fell 2.4 percent in April, a sign that businesses are still cutting back on spending amid the weak economy.

U.S. gross domestic product, the broadest measure of the economy's output, fell at a 5.7 percent annual rate in the first quarter of this year, the government said last week. Most economists expect the pace of decline to slow to roughly 2 to 3 percent in the April-June period.

In April, orders for machinery increased 0.6 percent, while electrical equipment and appliance orders rose 0.9 percent. Consumer goods, such as food, chemicals and paper products, dipped 0.1 percent.

Separately, the Institute for Supply Management said Monday that manufacturing activity in May contracted at the slowest pace in eight months. The trade group's index of manufacturing activity was 42.8, up from 40.1 in April. A reading below 50 still indicates activity contracted, but the figure surpassed economists' forecasts.

And an important measure of new orders placed with U.S. factories rose to 51.1 in May. It was the first time this barometer had grown since November 2007, the month before the recession began.

Factory Orders Rise for Second Time in 3 Months, NYT, 4.6.2009,
http://www.nytimes.com/aponline/2009/06/03/business/AP-US-Factory-Orders.html

UK's reliance on gas continues to grow,

as domestic fuel reserves diminish

December 24, 2008
From The Times
Robin Pagnamenta,
Energy and Environment Editor

Britain's dependence on natural gas as a source of energy is growing, even as supplies from the North Sea are running out, figures suggest.

They indicate that the UK is relying increasingly on gas as its primary source of fuel for electricity generation, even though the country is being forced to import more and more as domestic reserves grow scarce.

The use of gas to generate power in the UK soared by 21 per cent in the third quarter of this year, compared with the same period last year, to 44 terrawatt hours, according to Energy Trends, a quarterly report on UK energy use published by the Department of Energy and Climate Change.

Meanwhile, output from Britain's ageing fleet of nuclear power stations, which have been beset by maintenance problems this year, fell by 30 per cent during the same period, to 11 terrawatt hours.

The figures emerged as leaders of some of the world's leading gas-exporting countries met in Moscow yesterday for talks about the formation of the Gas Exporting Countries Forum, an Opec-style cartel.

The meeting has alarmed gas-consuming countries, raising fears that the group, which includes Russia, Iran, Venezuela and Libya, would try to massage prices higher by setting production quotas.

Vladimir Putin, the Russian Prime Minister, who is embroiled in a dispute with Ukraine over gas supplies, told delegates at the meeting: “The time of cheap energy resources, cheap gas, is surely coming to an end. Costs of exploration, gas production and transportation are going up. It means the industry's development costs will skyrocket.”

The figures contained in the British Government's latest study reflect the huge challenges facing the country in weaning itself off gas and other fossil fuels.

The report showed that household use of gas in the UK fell by about 6 per cent during the third quarter of the year, mainly as a result of record price rises that prompted consumers to adopt a more frugal approach to energy use. However, the commercial use of gas for power generation is surging, as it displaces other fuels, such as coal and nuclear power.

Overall, UK gas demand in the third quarter was 5.3 per cent higher than during the third quarter of last year.

Although the Government wants energy harnessed from renewable sources, such as wind and waves, to play a much bigger role in electricity production in the long term, it still accounts for only 5 per cent of electricity supplies.

Meanwhile, many coal-fired plants are operating under restricted hours because of tough new European emissions standards, and Britain's nuclear industry, which produces little carbon dioxide, has also struggled with a string of technical problems at key plants this year. Commercial reactors at Hartlepool, Dungeness, in Kent, and Heysham, in Lancashire, were all out of service for repairs this year.

With the depletion of gas from the UK continental shelf, Britain is becoming dependent on imports, either by pipelines from Norway or elsewhere on the Continent or as liquefied natural gas from places farther afield, such as Algeria and Qatar.

Andrew Horstead, of Utilyx, the energy consultancy, said: “Having an energy system that is so reliant on gas at a time when our own supplies are running out is a concern.”

Gas bill

By 2015, the UK is expected to import up to 80 per cent of its gas supplies compared with about 40 per cent now.

The UK was a net exporter of gas as recently as 2004.

UK petrol consumption has fallen by 6 per cent over the past year.

Source: Department of Energy and Climate Change

    UK's reliance on gas continues to grow,
    as domestic fuel reserves diminish,
    Ts, 24.12.2008,
    http://business.timesonline.co.uk/tol/business/
    industry_sectors/natural_resources/article5391435.ece

Manufacturing output falls again

Tuesday, 9 December 2008
The Independent
By Russell Lynch, PA

Manufacturing's biggest slump in almost 30 years deepened today after a worse-than-expected 1.4 per cent fall in output during October.

October's dire performance represents the eighth successive month of decline in the worst run since 1980, according to the Office for National Statistics (ONS).

This leaves annual output 4.9 per cent down after September's figures were also revised lower.

Overall industrial production, which also includes the mining and utility sectors, fell 1.7 per cent between September and October, at the peak of the crisis in the banking sector.

Paul Dales, of Capital Economics, said "activity all but fell off a cliff" at the start of the final quarter of 2008.

This follows a 0.5 per cent drop in output between July and September - the first in 16 years - as the ailing UK economy lurches into recession.

"The recession is clearly deepening and the downside risks to our forecast that GDP will fall by 1.5 per cent next year are growing," said Mr Dales.

Declines across the manufacturing sector were widespread, with transport equipment the worst hit. Output from firms making vehicle bodies and parts was almost 15 per cent below the previous year in the three months to October.

Car sales have slumped amid worries over "big ticket" spending and yesterday Birmingham-based Wagon became the latest victim, calling in administrators to its UK business and putting 500 jobs at risk.

Meanwhile, output from brick and cement makers was nearly 22 per cent lower in the three months to October - reflecting the current slump in the housing market.

Bank of England rate-setters have slashed interest rates from 5 per cent to 2 per cent in the past two months in a bid to revive the struggling UK economy and experts suggested more cuts to come following today's figures, taking rates to an all-time low.

"We expect interest rates to fall to a low of 0.5 per cent in the second quarter of 2009 and then stay there for the rest of the year," IHS Global Insight economist Howard Archer said.

    Manufacturing output falls again, I, 9.12.2008,
    http://www.independent.co.uk/news/business/news/
    manufacturing-output-falls-again-1058577.html

In Factory Sit-In,

an Anger Spread Wide

December 8, 2008
The New York Times
By MONICA DAVEY

CHICAGO — The scene inside a long, low-slung factory on this city’s North Side this weekend offered a glimpse at how the nation’s loss of more than 600,000 manufacturing jobs in a year of recession is boiling over.

Workers laid off Friday from Republic Windows and Doors, who for years assembled vinyl windows and sliding doors here, said they would not leave, even after company officials announced that the factory was closing.

Some of the plant’s 250 workers stayed all night, all weekend, in what they were calling an occupation of the factory. Their sharpest criticisms were aimed at their former bosses, who they said gave them only three days’ notice of the closing, and the company’s creditors. But their anger stretched broadly to the government’s costly corporate bailout plans, which, they argued, had forgotten about regular workers.

“They want the poor person to stay down,” said Silvia Mazon, 47, a mother of two who worked as an assembler here for 13 years and said she had never before been the sort to march in protests or make a fuss. “We’re here, and we’re not going anywhere until we get what’s fair and what’s ours. They thought they would get rid of us easily, but if we have to be here for Christmas, it doesn’t matter.”

The workers, members of Local 1110 of the United Electrical, Radio and Machine Workers of America, said they were owed vacation and severance pay and were not given the 60 days of notice generally required by federal law when companies make layoffs. Lisa Madigan, the attorney general of Illinois, said her office was investigating, and representatives from her office interviewed workers at the plant on Sunday.

At a news conference Sunday, President-elect Barack Obama said the company should follow through on its commitments to its workers.

“The workers who are asking for the benefits and payments that they have earned,” Mr. Obama said, “I think they’re absolutely right and understand that what’s happening to them is reflective of what’s happening across this economy.”

Company officials, who were no longer at the factory, did not return telephone or e-mail messages. A meeting between the owners and workers is scheduled for Monday. The company, which was founded in 1965 and once employed more than 700 people, had struggled in recent months as home construction dipped, workers said.

Still, as they milled around the factory’s entrance this weekend, some workers said they doubted that the company was really in financial straits, and they suggested that it would reopen elsewhere with cheaper costs and lower pay. Others said managers had kept their struggles secret, at one point before Thanksgiving removing heavy equipment in the middle of the night but claiming, when asked about it, that all was well.

Workers also pointedly blamed Bank of America, a lender to Republic Windows, saying the bank had prevented the company from paying them what they were owed, particularly for vacation time accrued.

“Here the banks like Bank of America get a bailout, but workers cannot be paid?” said Leah Fried, an organizer with the union workers. “The taxpayers would like to see that bailout go toward saving jobs, not saving C.E.O.’s.”

In a statement issued Saturday, Bank of America officials said they could not comment on an individual client’s situation because of confidentiality obligations. Still, a spokeswoman also said, “Neither Bank of America nor any other third party lender to the company has the right to control whether the company complies with applicable laws or honors its commitments to its employees.”

Inside the factory, the “occupation” was relatively quiet. The Chicago police said that they were monitoring the situation but that they had had no reports of a criminal matter to investigate.

About 30 workers sat in folding chairs on the factory floor. (Reporters and supporters were not allowed to enter, but the workers could be observed through an open door.) They came in shifts around the clock. They tidied things. They shoveled snow. They met with visiting leaders, including Representatives Luis V. Gutierrez and Jan Schakowsky, both Democrats from Illinois, and the Rev. Jesse Jackson.

Throughout the weekend, people came by with donations of food, water and other supplies.

The workers said they were determined to keep their action — reminiscent, union leaders said, of autoworkers’ efforts in Michigan in the 1930s — peaceful and to preserve the factory.

“The fact is that workers really feel like they have nothing to lose at this point,” Ms. Fried said. “It shows something about our economic times, and it says something about how people feel about the bailout.”

Until last Tuesday, many workers here said, they had no sense that there was any problem. Shortly before 1 p.m. that day, workers were told in a meeting that the plant would close Friday, they said. Some people wept, others expressed fury.

Many employees said they had worked in the factory for decades. Lalo Muñoz, who was among those sleeping over in the building, said he arrived 34 years ago. The workers — about 80 percent of them Hispanic, with the rest black or of other ethnic and national backgrounds — made $14 an hour on average and received health care and retirement benefits, Ms. Fried said.

“This never happens — to take a company from the inside,” Ms. Mazon said. “But I’m fighting for my family, and we’re not going anywhere.”

In Factory Sit-In, an Anger Spread Wide, NYT, 8.12.2008,
http://www.nytimes.com/2008/12/08/us/08chicago.html

Tech Industry,

Long Insulated,

Feels a Slump

November 15, 2008
The New York Times
By ASHLEE VANCE

The technology industry, which resisted the economy’s growing weakness over the last year as customers kept buying laptops and iPhones, has finally succumbed to the slowdown.

In the span of just a few weeks, orders for both business and consumer tech products have collapsed, and technology companies have begun laying off workers. The plunge is so severe that some executives are comparing it with the dot-com bust in 2000, when hundreds of companies disappeared and Silicon Valley lost nearly a fifth of its jobs.

October “was like turning a switch,” said Robert Barbera, chief economist at the Investment Technology Group, a research and trading firm. “Everything pretty much shut down.”

After industry leaders like Intel and Nokia warned of slowing sales this week, investors aggressively sold technology stocks. On Friday, the Nasdaq composite index, which is full of technology names, fell 5 percent. Advanced Micro Devices and eBay both dropped more than 10 percent.

Tech companies directly account for about 4 percent of the nation’s employment. And globally, companies and governments spend about $1.75 trillion on technology a year, according to Forrester Research. But the industry’s importance to the world economy is larger than its size might suggest. Technology has fueled many of the productivity gains of the last two decades. And about half of the capital spending by corporations goes toward technology products, according to Moody’s Economy.com.

As struggling businesses cut back on spending of all kinds, a slowdown in tech proved inevitable.

During the dot-com crash, technology companies were victims of Internet hype that they helped create. Once the enthusiasm faded, so did the boom-era sales on software and infrastructure equipment.

However, consumer enthusiasm for products like video games, wireless phones and high-definition televisions helped the industry recover.

This time around, the tech sector finds itself at the mercy of a double-barreled slump in both corporate and consumer spending caused by the housing decline and the economic crisis on Wall Street. Technology companies are also feeling the effect of frozen credit markets as business and government customers struggle to finance computer and software purchases that can run to millions of dollars.

“We have never seen anything like this in history,” said William T. Coleman III, a Silicon Valley veteran who founded the software maker BEA Systems and is now chief executive at a start-up called Cassatt.

Best Buy, the leading electronics retailer, declared this week that “rapid, seismic changes in consumer behavior” had fostered the worst conditions in its 42-year history, and its main rival, Circuit City Stores, filed for bankruptcy protection. Nokia, the world’s largest maker of cellphones, predicted Friday that global sales of handsets would fall in 2009, which would be only the second decline ever.

Technology giants like Intel, which makes chips for personal computers and servers, and Cisco Systems, which makes network equipment, warned that revenue was plummeting at rates last seen in 2001.

Dozens of start-ups, like the messaging service Twitter and the electric carmaker Tesla Motors, have been cutting staff members as they prepare for a slow economy.

And on Friday, Sun Microsystems, a leading maker of computers used by financial services companies, announced that it would lay off as many as 6,000 employees, or 18 percent of its work force.

The turnaround has been as sudden as it is severe. Until late September, a number of large technology companies maintained an optimistic stance, despite the obvious distress in the global economy.

Cisco was the first large technology company to reveal its sales data from October, noting a 9 percent fall in sales compared with the same month last year. On Nov. 5, Cisco, which is based in San Jose, cautioned that because of a “completely different environment,” revenue in its current quarter could plummet as much as 10 percent — a major reversal from the 7 percent growth that Wall Street had been expecting.

Intel, the world’s largest chip maker, followed this week, warning that sales in the fourth quarter could fall as much as 19 percent compared with the same period last year.

Even Google, an advertising juggernaut that many analysts said they believed would weather a downturn better than other companies, is now feeling the impact.

About eight weeks ago, the company’s chief executive, Eric E. Schmidt, told reporters, “My guess is that the drama is in New York and not here.” A month later, Google surprised Wall Street when it reported strong financial results for the quarter that ended Sept. 30, sending its shares up 10 percent.

But Google’s stock has dropped 16 percent since, as the same analysts who were upbeat about its results have since cut their revenue and profit forecasts. This week, its shares dipped below $300 for the first time in three years, well below their $742 peak. And the company, known for its torrid hiring and free-spending on employee perks, has begun the most serious belt-tightening in its 10-year history.

“We don’t know as managers how long the crisis goes,” Mr. Schmidt said last week.

For all the gloom, the tech industry is still far healthier than Wall Street. Unlike the banks, many technology companies are flush with cash. Cisco has close to $27 billion; Google, $14 billion; and Apple, $24 billion. It is likely that some of these funds will go toward acquiring struggling competitors. “The guys that aren’t as strong will be good pickings,” Mr. Coleman said.

Powered by technology, Silicon Valley has stood out as a bright spot for jobs in the United States, with employment growing at about 2 percent a year while national employment slowed. Through 2007, the region continued to add 20,000 jobs, although that positive trend has started to change.

“With this now having become a worldwide event, it’s clear that the job losses will come,” said Stephen Levy, director of the Center for Continuing Study of the California Economy.

Given the unpredictability of the current economy, the industry’s past experience will only go so far, said Chris Cornell, an economist with Economy.com. “It would be a tragic mistake for C.E.O.’s who did a great job fighting the last recession to think the same tactics will work this time,” he said.

Miguel Helft contributed reporting.

Tech Industry, Long Insulated, Feels a Slump, NYT, 15.11.2008,
http://www.nytimes.com/2008/11/15/technology/15tech.html

Manufacturing index

at lowest level in 26 years

3 November 2008

USA Today

NEW YORK (AP) — A measure of U.S. manufacturing activity plummeted to its lowest level in 26 years in October as the credit crisis and Hurricane Ike disrupted businesses from plastics companies to lumberyards.

The reading of 38.9 reported Monday by the Institute for Supply Management was the worst reading since September 1982. Any reading below 50 signals contraction, and a reading below 40 is exceptionally weak.

"Pretty grim. It means we're in a recession, it's as simple as that ... a pretty solid manufacturing recession," said Robert Macintosh, chief economist at Eaton Vance in Boston, adding:

"... The question is how long or deep is it going to be? Where is this group of economists that is charged with declaring a recession? Why haven't they said anything?"

Economists had expected a reading of 41.5, according to the median of forecasts in a Reuters poll.

The report was uniformly weak, and employment in the sector was dismal. The ISM's gauge of employment fell to its lowest since March 1991 and suffered its biggest one-month drop in 20 years.

The data foreshadowed a grim outlook, with the index of new orders hitting its lowest since 1980.

The index had been hovering near what economists call "the boom-bust" line for most of the year until its sharp fall in September brought it to the lowest level since the aftermath of the Sept. 11, 2001 attacks.

"It appears that manufacturing is experiencing significant demand destruction as a result of recent events," Norbert J. Ore, chairman of ISM's manufacturing business survey committee, said in a statement accompanying the report.

Another report said that construction spending fell a smaller-than-expected amount in September as a rebound in non-residential activity helped offset further weakness in home building.

The Commerce Department said construction spending dropped 0.3% in September, less than the 0.8% decline many economists had been expecting. Spending had been up by 0.3% in August after a huge 2.4% plunge in July.

The weakness in September was led by a 1.3% drop in housing construction, which has fallen every month but two over the past 30 months. Spending on government projects fell 1.3%, the biggest setback since January.

Contributing: Reuters

Manufacturing index at lowest level in 26 years,
UT, 3.11.2008,
http://www.usatoday.com/money/economy/2008-11-03-
ism-construction_N.htm - broken link

Manufacturing Slowed in September

October 2, 2008
The New York Times
By THE ASSOCIATED PRESS

A measure of American manufacturing activity contracted more than expected in September as new orders slowed sharply.

The reading of 43.5 from the Institute for Supply Management was down from 49.9 in August. It also was worse than economists’ prediction of 49.5, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR.

A reading above 50 signals growth.

“The headline I.S.M. has plunged into recession territory,” Ian Shepherdson, chief United States economist at High Frequency Economics, said Wednesday.

The index has been hovering on what economists call “the boom-bust” line for most of the year, but this is the first time it has dropped significantly. One component of the reading, the purchasing managers’ index, fell to its lowest level since October 2001, immediately after the Sept. 11 attacks.

The survey of purchasing managers found that new orders fell to 38.8 in September from a reading of 48.3 in August. Employment, deliveries, inventories and manufacturers’ order backlogs also fell.

Industries reporting contraction include apparel, furniture, machinery, transportation equipment and electrical appliances. High prices for commodities, along with tight credit conditions, have begun to squeeze companies.

In another economic report released Wednesday, the Commerce Department said that construction activity was unchanged in August even though spending for residential projects posted the first increase in 17 months, a rare bit of good news in the midst of the worst housing downturn in decades.

The report said that construction activity was flat in August, a better-than-expected outcome than the 0.5 percent fall that economists expected.

The big surprise was a 0.3 percent rise in residential activity, the first increase in housing activity since March 2007.

It was only the second monthly rise for housing in the last 29 months, a prolonged period of distress when the industry has been battered by slumping sales, falling prices and soaring mortgage defaults.

The performance in August for overall construction was better than the decline analysts expected. However, the government revised July activity to show a much bigger drop of 1.4 percent, in contrast to the 0.6 percent decline initially reported.

The 0.3 percent increase in housing left spending in this area at a seasonally adjusted annual rate of $343.6 billion. The gain was offset by a 0.8 percent drop in spending on nonresidential projects, which fell to $415.95 billion.

Spending on government projects rose 0.8 percent to a record $312.5 billion at a seasonally adjusted annual rate, with both state and local governments and federal projects at record highs.

Manufacturing Slowed in September, NYT, 2.10.2008,
http://www.nytimes.com/2008/10/02/business/economy/02econ.html

A Quest for Energy

in the Globe’s Remote Places

October 9, 2007
The New York Times
By JAD MOUAWAD

HAMMERFEST, Norway — For a quarter-century, energy executives were tantalized by vast quantities of natural gas in one of the world’s least hospitable places — 90 miles off Norway’s northern coast, beneath the Arctic Ocean.

Bitter winds and frequent snowstorms lash the region. The sun disappears for two months a year. No oil company knew how to operate in such a harsh environment.

But Norway has finally solved the problem. The other day, on an island just offshore, a giant yellow flame illuminated the sky here. It was just a temporary flare for excess gas, but it signaled a new era in energy production.

Across the bay from this small fishing town, where reindeer wander the streets, one of the world’s most advanced natural gas plants is coming to life.

Within weeks, gas will start crossing the ocean in specially designed ships, feeding into the pipeline network for the American East Coast. Before Christmas, furnaces in Brooklyn and stoves in Washington will be burning the gas. It will be the first commercial energy production from waters north of the Arctic Circle.

As global demand soars and prices rise, energy companies are going to the ends of the earth to find new supplies.

In Kazakhstan, petroleum engineers are braving wild temperature swings in the shallow waters of the Caspian Sea to tap the biggest oil discovery of the last 30 years. They are drilling wells six miles deep in the Gulf of Mexico. And on the island of Sakhalin, off far eastern Russia, they have drilled horizontal wells through miles of rock to produce oil from a stretch of ocean notable for giant icebergs.

But as the industry extends its reach, the quest is becoming more arduous. The cost of producing new oil and gas is rising fast, and companies are troubled by worsening delays. Drilling rigs are scarce. Engineers, geologists and petroleum specialists are in critically short supply.

And the politics of oil and gas are getting trickier, with producing countries demanding a bigger share of the revenue and growing angry about project delays that postpone their payments.

Industry executives say their ability to keep up with global demand is badly strained.

“We’re facing bigger risks and bigger difficulties when we go into new frontier regions,” said Odd A. Mosbergvik, a senior manager at the dominant Norwegian energy company, StatoilHydro. “But this is why the oil industry is for big boys. It’s a big gamble.”

The industry’s new reach is shifting the economics of energy extraction. According to a recent study, discovery and development costs, a key indicator for the industry, tripled from 1999 to 2006, to nearly $15 a barrel.

Last year alone, companies spent $200 billion developing new energy projects worldwide, according to the study by the consulting firms John S. Herold Inc. and Harrison Lovegrove — an amount larger than the economies of 147 countries.

These higher costs mean that the industry needs higher energy prices to finance new projects. They are also constraining its ability to expand quickly.

“There are no easy barrels left,” said J. Robinson West, chairman of PFC Energy, an industry consulting firm in Washington. “The only barrels are going to be the tough barrels.”

There is plenty of oil and gas still in the ground, energy executives say. But global consumption is rising so fast that they must keep looking for new sources. Despite worldwide concern over global warming and the role of fossil fuels in causing it, United States government specialists project that global oil and gas demand will increase by some 50 percent in the next 25 years.

At the same time, the big discoveries of the last three decades, like those in the North Sea and on the North Slope of Alaska, are drying up. This is leading oil companies to remote places like Hammerfest.

The United States will need to import about a fifth of the natural gas it uses by 2030, mostly in a liquefied form shipped across the seas in tankers. Such imports are expected to swell more than sixfold from 2005 to 2030, according to the Energy Information Administration. And consumption is rising fast in the economically booming Asian countries.

Producing oil and gas in polar regions is not entirely new, of course. Russian engineers have been doing it in Siberia for decades, with mixed results, and Alaska’s North Slope was long the most important United States oil field.

But those fields are on land. The Norwegian field is the first Arctic project to tap oil and gas reserves far offshore, in water more than 1,000 feet deep, where traditional exploration methods would be too costly.

The gas field, 340 miles north of the Arctic Circle beneath a stretch of ocean more commonly known as the Barents Sea, is called Snow White — Snohvit in Norwegian, where energy projects are named after mythical characters. Though the field was discovered in 1981, oil executives long considered Snohvit out of reach, because of the Barents Sea’s shifting ice packs, brutal waves and extreme cold.

“This is considered an unfriendly place, even by Norwegian standards,” Mr. Mosbergvik said.

Another big problem the engineers faced here was that Snohvit is situated hundreds of miles from Norway’s traditional pipeline network.

Over the years, Statoil considered many ways to get at the gas, including huge offshore platforms armored against the waves, but discarded them as too costly. Building a vast undersea pipeline that would take the gas south along the country’s stretched coastline was also out of the question.

Statoil engineers eventually came up with an ingenious solution. They installed production equipment directly on the seafloor, with no rigs breaking the surface. The wellheads are linked by 90 miles of pipe to a small island just off Hammerfest. Anti-freeze is injected into the pipes to prevent the natural gas from clogging on its way to shore.

On the island, Melkoya, Statoil built a processing facility to separate the brew of natural gas, oil, water and carbon dioxide that flows out of the field. The natural gas is cooled to a temperature of 260 degrees below zero, shrinking its volume to one-six hundredth and turning it into a liquid that can be shipped in tankers.

Construction of the liquefaction plant over the last several years involved 22,000 workers, one of the largest industrial projects in Europe, and cost nearly $10 billion, up from $6 billion when the project was begun in 2002.

“We did not have the experience to operate in an environment like this,” Mr. Mosbergvik acknowledged.

The field is so large that it could eventually supply nearly 10 percent of the demand for natural gas demand in eastern states of the United States. Dominion, an energy company, has expanded a gas import terminal at Cove Point, Md., to accommodate the Arctic gas, according to Donald R. Raikes, its vice president for marketing and customer services.

By the end of October, Statoil’s gas will begin flowing through a network of pipes to a stretch of the country from Maryland to Massachusetts, the largest consumer market in the United States, with some 16 million residential customers and 5 million industrial clients.

With the plant nearly ready, Statoil maintains that the Barents Sea could turn into a major oil and gas region in coming decades. Indeed, the world’s fast-rising use of fossil fuels, by contributing to global warming, could eventually make the Arctic more accessible for oil and gas production.

In Hammerfest,residents have welcomed Statoil’s project, hoping it will offset declines in fishing. Modern buildings are rising to house the influx of gas workers. New taxes from the gas plant are helping finance a cultural center.

Statoil hopes to double its capacity on Melkoya by 2015. That will require finding new gas fields in the Barents Sea.

Hans M. Gjennestad, strategy manager at Statoil for the Barents region, said, “We believe this resource potential may contribute significantly to the long-term security of supplies of Europe and the United States.”

A Quest for Energy in the Globe’s Remote Places,
NYT,
9.10.2007
https://www.nytimes.com/2007/10/09/
business/worldbusiness/09polar.html

Demand for Durable Goods Plummets

September 26, 2007
By THE ASSOCIATED PRESS
Filed at 10:49 a.m. ET
The New York Times

WASHINGTON (AP) -- Demand for big-ticket manufactured goods plunged in August by the largest amount in seven months, with widespread weakness signaling a slowdown in the nation's industrial sector.

The Commerce Department reported Wednesday that orders for durable goods, everything from commercial jetliners to home appliances, fell by 4.9 percent in August, the biggest decline since a 6.1 percent fall in January.

It was far larger than the 3.5 percent drop that economists had been expecting and resulted from across-the-board decreases in a number of categories. The concern is that the steep downturn in housing and turbulence in financial markets could start to affect the economy more broadly, raising the risks of a full-blown recession.

The Federal Reserve last week cut a key interest rate by a bigger-than-expected half-point, hoping to avert a slump. Analysts believe further rate cuts are likely at the Fed's final two meetings of the year in October and December.

In a favorable development for the economy, the United Auto Workers and General Motors Corp., agreed early Wednesday to a tentative contract that ends a two-day national strike. A lengthy strike against the nation's largest automaker could have had ripple effects that would have dragged business growth down even further.

Many analysts believe the overall economy, after racing ahead at a 4 percent annual rate in the spring, slowed in the summer to growth in the gross domestic product of around 2.5 percent. They also believe this growth rate will slow to around 2 percent in the final three months of the year. Some put the chance of a recession as high as 50-50.

The 4.9 percent fall in orders for durable goods, items expected to last three or more years, followed a big gain of 6.1 percent in July. That increase reflected in part a jump in orders for autos as dealers tried to stockpile inventory in advance of a threatened strike.

For August, orders for transportation equipment fell 11.2 percent, the biggest setback since January. The weakness was led by a 41 percent drop in demand for commercial aircraft. Boeing Co. reported fewer orders in August after a big surge in July.

Orders for motor vehicles and parts dropped 6.2 percent after having surged by 10.5 percent in July. Offsetting the weakness somewhat was a 43.2 percent surge in demand for military aircraft.

Excluding the volatile transportation category, orders would have still been down by 1.8 percent after a 3.4 percent rise in orders outside of transportation in July.

Orders fell in a large number of categories including primary metals such as steel, machinery and communications equipment. Demand was up for computers and electrical equipment.

Demand for Durable Goods Plummets, NYT, 26.9.2007,
http://www.nytimes.com/aponline/business/AP-Economy.html

Ministers act to stop

lights going out in 2015

· Threat of energy crisis sees nuclear go-ahead

· Coal-fired stations coming to the end of their lives

Wednesday May 2, 2007
Guardian
Larry Elliott and Mark Milner

Fears that Britain could be plunged into an energy crisis by 2015 will result in the green light being given by Christmas for a new generation of nuclear power stations, senior Whitehall sources are indicating.

With more than a fifth of the UK's electricity generating capacity due to be closed down in the next eight years, ministers are planning to fast-track Labour's energy strategy with the publication of two white papers this month.

Sources said that the government would mount a full public consultation process over the coming months, after which a final decision will be taken. But ministers have been persuaded of the need to act quickly. "We are concerned that unless we act soon, the lights could go out in 2015 in the event of a really hot or really cold spell", said one Whitehall insider.

One of the white papers will argue that Britain needs a balanced energy portfolio, including nuclear, to meet its needs over the coming decade. The other is designed to speed up the planning system, allowing new power stations to be given the go-ahead within two to three years.

The government's energy blueprint will include plans for an expansion of renewable forms of electricity generation, but ministers believe there will still be a potential shortfall by the middle of the next decade. They are concerned that victory for the Scottish Nationalists in tomorrow's elections could sound the death knell for more windfarms in Scotland.

Consultation on energy policy, ordered by the courts after a judicial review earlier this year, will be relaunched at the same time as the white paper is published and the government hopes to be in a position to unveil its plans before the end of the year.

Britain is facing the risk of an "energy gap" over the coming years as ageing nuclear plant is closed down and a number of coal-fired power stations are due to stop generating by the end of 2015 at the latest because they do not meet the European commission's emission regulations. Two nuclear stations were closed at the end of last year and another six nuclear plants are currently scheduled to close between now and 2015.

At present Britain's generating capacity is around 20% higher than peak demand, which enables the system to maintain full supplies even if a number of power stations unexpectedly drop off the grid. Industry estimates suggest more than 20 gigawatts of generating capacity will be retired over the next 15 years and it will cost about £20bn to replace. Generating companies have tabled plans for around 20 megawatts of new capacity but while some have passed the planning stage others are barely beyond the drawing board.

According to the source the government is worried the comfort zone - the excess of supply over peak demand - will be eroded between now and 2015 and that, despite efforts to conserve energy, there is a real risk of power shortages.

Generating companies accept the need for new capacity, but are facing a number of uncertainties over what kind of capacity should be built. A number of clean coal projects are on the stocks but the big questions are the extent of the political commitment to nuclear power and what will happen to the price of carbon under carbon dioxide emission trading schemes.

Companies will be reluctant to commit to nuclear if they believe a policy of new build would be overturned by a subsequent government, while the price of carbon will be a key influence on the economics of the industry. A high price will encourage renewables and nuclear but a lower price would suggest gas and coal would remain top of the agenda.

The government has set a target that 20% of Britain's electricity will come from renewables by 2020 but the source said that was challenging and would become even more difficult if Labour were defeated in the Scottish elections.

The government is also concerned about the decline in output from the North Sea which is occurring more rapidly than earlier forecasts had predicted.

Ministers act to stop lights going out in 2015, G, 2.5.2007,
http://business.guardian.co.uk/story/0,,2070133,00.html

On This Day - June 13, 1957

From The Times Archive

A year after the first nuclear power station
opened in Britain,
and at a time when the country
was conducting atomic bomb tests
on Christmas Island in the Pacific,
scientists were beginning to question
if the risks from nuclear power were acceptable

“VERY small amounts at the present time but amounts that we need to watch” was the phrase applied to radiation dangers by Dr. F. G. Spear in an address yesterday to the Royal Society of Health in London. Dr Spear is deputy director of the Strangeways Research Laboratory, Cambridge, and served on one of the panels contributing to the Medical Research Council study, published last year, of radiation hazards.

He commented that the amounts of radioactive matter scattered into the atmosphere by bomb tests and later incorporated in plants or ingested by animals or fish used as human food, though detectable, had so far no biological significance. Dust near the site of an explosion might be highly charged with radioactive material and sufficient in quantity to be a serious hazard.

On civil uses of radiation he observed that nearly everyone took sides, very often without the slightest knowledge. As a rule beneficial effects had been discovered before harmful effects, which tended in the early, optimistic days to be explained away. The present uneasiness was partly the result of a genetic hazard of undetermined dimensions, and partly the fact that any element could be made radioactive by the “machinations of modern physicists”.

From The Times Archives >
On This Day - June 13, 1957,
The Times, 13.6.2005,
http://www.newsint-archive.co.uk/pages/main.asp

Thursday April 17, 1873

The happy and wealthy road

to Wigan Pier

From the Guardian archive

If there be one who proposes to visit Wigan - on the same purpose as the provincial runs up to London, or the Cockney over to Paris, or the legislator across to New York, or the New Yorker all over Europe, to notice what alteration in its condition has been made by circumstances of abnormal and enormous prosperity - let him select the mining metropolis of West Lancashire on its market days.

Then will a sight present itself which perchance may convince him that when the sage wrote there was nothing new under the sun he had not contemplated the probability of a stranger being in Wigan on Monday, Friday, or Saturday.

Wigan market has an individuality all its own. A long street winds up and down through the heart of the town. Shops and houses range themselves irregularly on either side.

Above all things the Wigan collier is independent. His motto might be taken from the Deeside miller's song - "I care for nobody, and nobody cares for me".

In the bar are a dozen youths - the "young persons" of the Mines Regulation Act. Half of them are smoking cigars. They are well-dressed young persons with clean linen, smart neckties, gorgeous "belchers" round their throats, and brightly polished boots. The high wages are certainly producing a better style of dress. Five years ago the young man who was "smart" in his appearance would be set down as a "swell" , the most objectionable form of Philistinism.

A dense cloud of smoke rises from the pipes of the smokers. Talk is running solely upon "dawgs", "pigyuns" and "wrastling ", the odds on the Chester Cup and the Derby. This is the collier's Tattersall's, where a large portion of his surplus earnings finds itself wings fleeter than his pigeons with which to fly away.

There was no lack of money. Sovereigns were often changed. Only in one house did I hear any reference to the wages question - that was the intention to demand another 10 per cent.

These ladies who are the fortunate wives of colliers, have they not enough of what Dick Swiveller calls "the ready?" Oh, the pleasant feeling excited by jingling coins in one's own pocket! Her husband is earning his £3 a week, and two sons are bringing in an equal sum. The butcher weighs and prices the massive mutton joint, and without haggling she pays.

A stall or two away is a fishmonger. Forthwith a large piece of [salmon] is added to her provision for Sunday.

· This is one in a series of reports on colliers at home

From the Guardian archive >
The happy and wealthy road to Wigan Pier,
G,
Thursday April 17, 1873,
Republished 17.4.2006,
https://www.theguardian.com/news/1873/apr/17/
mainsection.fromthearchive