RDA Happenings April 2017

“The future aint what it used to be” – Yogi Berra.

At a recent Industrial Asset Management Council (IAMC) meeting, the speaker was Peter Zeihan, a geo-capital strategist specializing in demographics, global energy, and security. By utilizing geography and demographics, he gives an understanding and predicts what the future global political trends have on markets, and economic trends.

Two of his books are, “The Accidental Super Power: The Next Generation of American Preeminence, and the Coming Global Disorder”; and “The Absent Super Power: The Shale Revolution and a World Without America” are quite interesting reading.

Several of the take a way’s from this presentation were that the United States will have enough oil and natural gas supplies from the U.S. and Canada to be total independent of other global oil and natural gas suppliers.

The breakeven cost of U.S. Shale Oil in 2012 was $90 a barrel and in January 2017 the breakeven cost was $37 a barrel. The only lower cost per barrel oil is from Saudi Arabia, but if you add transportation costs, would be higher.

The U.S. Demographic age groups, in the 25 to 29, 30 to 34, and 35 to 39 age ranges are much better off than Japan, North Korea, and Russia, because these three countries have an aging population not a growing population.

The U.S. is the largest global consumer economy, whereas other nations will be lagging behind. Lower energy, with lower oil and natural gas costs, will in turn lower the U.S. production cost for high energy consumption industries. With the abundance of supply, and low cost of natural gas, chemicals now made from petroleum will now be made with natural gas at a much lower cost. Three compelling reasons the U.S. economy will grow.

The U.S. financial markets and banks are much more stable and have less non-performing loans. U.S. financial centers continue to attract more global money.

There is a high potential for more Foreign Direct Investment (FDI) coming to the United States in the coming years. With the potential for corporate tax cuts and lowering the tax liability on those global corporations whose profits are overseas, there is tremendous potential for U.S. growth.

This past month in conjunction with the Kansas Department of Commerce, and Hostess Brands, there were two Made in Kansas events. An event with Hostess Brands was held at the state capital, and then a celebration was held at Flint Hills Technical College.

Hostess Brands Emporia facility has over 600 employees today. They continue to reinvest in the Emporia facility with state of the art technology utilizing more robotic applications for packaging, and finishing products. They also mentioned that an expansion of the receiving area would occur in the fall of 2017.