Monday, February 9, 2009

America's Last Dominant Industry Starts to Leave

America has begun the initial steps to final outsourcing of it's last dominant industry. As before, a recession is the key to making the move. Even as we speak, the oil/gas and oil/gas services industries, always a US dominated industry, has begun mass layoffs. From Schlumberger to Baker to Halliburton and dozens of smaller firms, tens of thousands of jobs are either already gone on being shoved into the guillotine.

America has always been the dominant player in the oil/gas services field as it had led the way, back in the late 1800s, in oil and later gas exploration and exploitation. Oil services companies do everything that it takes to deliver the product to their clients, the major private and national oil companies. This includes everything from locating deposits, up to 10km under the ground, to drilling to them, to developing the wells and managing production, to transferring the product to refineries and storage facilities. As such, these companies employ an immense amount of technology and industry.

As oil/gas exploration moved to the far corners of the world, it made more sense to move at least some of the manufacturing closer to the international customers. However, the business units, engineering departments and quality personnel were almost all exclusively employed in America. This will be no more.

As with other formerly dominant industries, such as light manufacturing, IT, textiles, etc, a recession was used as the knife to finally do in the workers. IT is a prime example. While outsourcing was a force that was picking up steam throughout the 1990s, it was not until 2003, the year after the tech bubble bust of 2002 (and a short recession) that IT outsourcing finally took off. The companies involved, used the bust to lay off hundreds of thousands of tech workers around the US and Britain, sighting low profits or debt. The public as a whole accepted this, as part of the economic landscape and protest were few, especially with a prospect of the situation turning around. However, shortly after the turn around in the economy, it became very clear that there would be no turn around in the IT employment industry. Not only were companies outsourcing everything they could, under the cover of the recession, they had shipped in tens of thousands of work visaed workers who were paid on the cheap.

A similar process had already begun in the oil/gas services and oil/gas industries and has now begun it's initial acceleration into a full removal of the American worker from those positions. Regardless of the layoffs, work still has to be done, so new hires will be done in cheaper countries, where much of the manufacturing is already located. Once a subsection of a team or a new office is set up, it will become much easier to rationalize the movement of whole departments.

Worst of all, this is not a process that takes long to complete. In truth, the IT landscaped went through its total metamorphoses in less than 3 years and the recession, and thus excuse, were tiny compared to this one. America/British IT went from begging locals to work, due to the high demand for employees to having 700+ resumes on a single job opening with in a mere 24 hours. The situation has never changed.

So what is in store for America's energy industry future? For the owners, higher profits, when demand goes back up. For the workers? The same hell of unemployment that the rest of the US/UK now enjoys.

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