FRONT PAGE CONTRIBUTOR
The Long-Lead Time Planning For Mandated Failure
The Coal Industry and Defense Industries React To Policy Changes and Jettison Workforce
According to President Obama, we have tried his plan in America and it has worked! Don’t say that to employees in either the defense or the coal industry. President Obama’s plans are about to go to work on both on these industries and that apparently implies that a whole lot of jobs won’t be getting created or saved. Changing scale in capital intensive industries requires that the CEOs of these corporate entities plan things well in advance. You can look at the hiring activity in either industry and get a really solid indicator of where each of these industries believes the US economy is going.
A coal industry executive for PBS Coals gazed in Madame Zelda’s Mystical Crystal Ball. This is what he saw in the palantír.
“Additionally, the escalating costs and uncertainty generated by recently advanced EPA regulations and interpretations have created a challenging business climate for the entire coal industry.”
The recently advanced regulations refer to the MACT standard which imperils the ability of coal-fired power generation facilities to use coal as a fuel and still meet EPA standards for CO2 emissions per Megawatt generated. As I blogged before; the MACT standard biases power generation in favor of CH4 for the following reason :
“The proposed rule…will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced,” the Washington Post’s Juliet Eilperin writes. “The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.”
Where the rubber meets the road, the employees of coal mining and refining operations will meet with The Pink-Slip of Doom. The House Oversight and Reform Committee issued a prediction with respect to how these regulations would impact the coal industry.
House Oversight and Government Reform Committee staff issued a report last week faulting the EPA for over-regulating the industries under its control. “Over 40 EPA regulations cited by job creators as barriers to growth and expansion in the Committee’s February 2011 staff report remain a problem,” the staff report said. “EPA’s proposal to regulate coal combustion residuals (“coal ash”) usurps states’ previous role and exerts unprecedented federal control over the utility industry . . . Compliance costs range from $78-110 billion over the next 20 years while job loss estimates range from 39,000, under a low estimate, to 316,000, under a high estimate.”
Coal Industry executives are not the only ones forced to play Grinch in the run-up to Christmas 2012. Fox Business reports the details.
Under a 1988 law, the Worker Adjustment and Retraining Notification (WARN) Act, defense companies must notify workers 60 days in advance of plant closings and mass layoffs.
So if WARN Act notices go out in Late August/Early September, all five of my constant readers are smart enough hombres to perform the implicit math. Layoffs get “WARNed” in late summer, workers start going home in mid-to-late fall, lines go cold in early 2013. “Why, isn’t this just unfair hostility to the brilliant and fair-minded Obama Agenda!?” David Frum may “Conservatively” ask.
Why no, Jim Rico! It most certainly is not. Defense corporations are reacting to the budgetary implications contained in the sequestration agreement that was passed by Congress to avoid a government shutdown. This government shutdown nearly took place because the last three brilliant and fair-minded Obama budgets have been so badly out of balance that nobody in either house of congress is willing to vote in favor of them. This has been bipartisanship at its finest.
These budgetary implications include what The Fiscal Times dishonestly describes below as political machinations by the E-Vil Defense Industry.
The $500 billion of automatic long-term defense cuts set to take place early next year were mandated under a deficit reduction law negotiated last summer by President Obama and Republican and Democratic members of Congress. Whether as a political tactic or simply complying with a federal disclosure requirement, major defense contractors including Lockheed Martin, Northrop Grumman, Boeing and Pratt & Whitney are threatening to blitz the country this fall with notices of possible layoffs beginning in early January.
The Fiscal Times then worries about the potential political ramifications of this situation.
But the specter of the announcements of as many as 136,000 defense industry layoffs in Virginia, 18.400 in Colorado, nearly 42,000 in Florida, 40,000 in Pennsylvania, 27,600 in Wisconsin or 21,200 in Ohio might provide added grist for presumptive Republican nominee Mitt Romney in arguing that Obama’s economic policies have failed.
And in so arguing, Mitt Romney may well be tragically wrong. Barack Obama has tried his plan and perhaps the current layoffs show us how well that it has truly succeeded. We should thank our Glorious Leader in condign fashion at the voting booths this November. Mitt Romney, 2012. That is all.