Hickory 2015 - Realities, Challenges, Opportunities!!!

The following thesis that I am putting forth comes from a question posed by the Chairman of the Future Economy Council of Catawba County, Terry Bledsoe. Terry asked, "One of the purposes of this group was to identify weak signals here in the county, the region, and beyond that may have an impact on us or offer us an opportunity. What weak signals are you seeing?"

"Weak Signals" are advanced indicators of changes in trends and systems that are currently forming and will continue to gel until reaching tangible status in the future. The study and acknowledgment of these signals can be used for enabling anticipatory action.

The following is a critical thinking exercise and I wish that more people in this community would think along this manner. We need more of our citizens to think about the realities, challenges, and responsibilities that we face in this community over the next few years. What do you see forming and how would you address these issues?

Here is my View of some of the Weak Signal issues that we face over the next 3 to 5 Years:

An Established pattern of Energy Dependence

Let's think back to the Arab Oil Embargo of 1973. when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC (consisting of the Arab members of OPEC, plus Egypt, Syria and Tunisia) proclaimed an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war; it lasted until March 1974.

During that period of time, we saw a near tripling of the price of crude from 1973 to 1975 - (http://www.inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp)

(Year - Nominal - Inflation adjusted):
1972 - $3.60 - $20.78
1973 - $4.75 - $23.13
1974 - $9.35 - $41.27
1975 - $12.21 - $49.42
1976 - $13.10 - $50.19
1977 - $14.40 - $51.76
1978 - $14.95 - $49.99
1979 - $25.10 - $74.67
1980 - $37.42 - $99.11
1981 - $35.75 - $85.82

If one looks at a pattern of oil prices, then one would see stability during the 1950s and 1960s with oil hovering in a low inflation adjusted range around $20/barrel from 1948 to early 1973, then the inflation adjusted price doubles over the next two years and quadruples-plus over the seven year time period (to 1980-81).

From 1986 to 2002, with the exception of the Gulf war in 1990-91, we fell back to $20 to $30/barrel inflation adjusted Crude Oil. Then in 2003 oil began to rise again. Oil prices have essentially doubled from 2003 to 2011, with the brief spike to $146 in 2008. So if we carry this correlation out, then we could see a doubling of the current price over the next few years (from double to quadruple from 2003). This means that we would be dealing with a price per barrel in the $130 to $150 range, with possible blips to the upside in the $200 area.

Look at our vulnerabilities related to the importation of Crude Oil. In 1972 we were importing 2.2 million barrels of Oil per day and now we are importing over 9 million barrels per day. The latest Statistics show that we are consuming around 19 million barrels of oil per day total, which is only a 10% increase over what we were using in 1973 (17.3 million barrels/day) - U.S. Energy Information Administration.

Oil Imports per day:


Oil Consumed per day:


I do believe that the above proves that the U.S. has become highly efficient in its usage of Petroleum. We are only utilizing 10% more oil as compared to 28 years ago and our population has increased by nearly 50% from nearly 212 million in 1973 to 312 million in 2011, but we have definitely left ourselves more and more vulnerable by not producing more energy domestically.

It surely does seem that the pattern of inflationary energy costs are repeating themselves. If we overlay this correlation it means that oil trading today at $87 will cause gasoline at its current price ($3) to expand 1.5x and could blip to 2.5x that price. This means that over the next 3 to 5 year period we would have to deal with gas prices in the $4.50 to $7.50 range.

Now, if we carry this out and understand that Oil is an essential ingredient in everything we consume, then you can foresee what the mid-term future holds for the world and our area.

Translating this Reality to Tomorrow

First, I believe that the instability created by inflation is going to lead to hostilities and uprisings throughout the world as people become more and more anxious. The Federal Reserve creating a bubble throughout the speculative markets with the influx of dollars through the megabanks is contributing to much of the upward pressures we are seeing in all commodities as I have shown in various articles since this blog began 2 1/2 years ago. These inflationary processes have consequences. This is not Collegiate theory. Rising prices are something that will have a huge impact on the affordability and quality of our lives.

In our own area, we see a problem with the permanent unemployment structure and an aging population. The median household income for Catawba County was $40,536 as of the 2000 census. The American Community Survey shows that median household income, as of 2009, is $41,116. This means that over a nine-year period the county only saw a growth in income for households of 1.43%. Over that same time, the Consumer Price Index in the United States grew by 23%. This means that to keep up with the cost of living, the year 2000 household income of $40,536 should be $49,950.38. That $8,834 less in income means less money for people to live on, having to become more thrifty to make ends meet, and less to spend on, in, and for local businesses. This therefore has implications on the community from the top to the bottom of the socio-economic strata.

We were once one of the wealthiest areas in the State and now we are one of the poorest. That means that we are going to have to deal with this issue over the next 3 to 5 years, because it is going to be in our face.

When one couples this income/employment issue with the aging population problem and what I have explained with the cost of living (fuel issue and inflation), it paints a bleak picture, but from this black hole is where our opportunities will arise and that is the reason we need to be honest about these issues, so that we can understand them, and take advantage of them. If you walk out onto I-40 with blinders on and ear plugs in does not mean that by not acknowledging the traffic that you're not going to get run over!

Economic Development Goals for the next 3 to 5 years (2015)

We spoke of some of this last year in our State of Hickory Address for 2010. As far as economic development, I think that we need to follow Steve Ivester's advice and create our own Regional Economic Development entity. This can be created by the State Legislature; combining some of Advantage West and the Charlotte Regional Partnership areas and placing Hickory as the hub of said region. Charlotte has issues, because of the scramble left from the consolidation of the banking industry towards Wall Street and New York interests.

Things aren't going to change around here through a political process. It's about the mindset. Look at how Charlotte and Duke Power are focused on new energy. They're retaining their financial capacity and facilitating micro-lending to help entrepreneurs. They have expanded their culinary scene substantially over the years. Restaurant and Hospitality is a real industry that is thriving throughout the Charlotte area. Charlotte has a new biomass center and they have recently opened a Superfund cleanup site. UNC-Charlotte has laid biotech plans that are interconnected with the biotech center in Kannapolis. Concord's retail center and race track are attached to Charlotte at the hip.

Charlotte has sown seeds that will continue to blossom in the upcoming years and Hickory has too. We're moving towards having more eldercare facilities, doctors, medical industry, cheap housing, fast food, cheap groceries, cheap retail, and cheap labor. The sad thing is that when Charlotte talks about being a hub of economic growth, it stops right at Catawba County. If you don't believe me, ask people that have seen Charlotte's transportation plans looking to future growth.

Hickory and Catawba County need to look out for our own interests. Changing the status quo does not necessarily equate to instability, but maintaining the status quo at all costs will cause us to fall further and further behind and we can already see that we have economic instability and it can get worse, a lot worse.

So I think we need to reestablish our roots of independence. I am not saying that we need to become an island. We still need to network and make connections. What I am saying is that the reason why the original inhabitants came here to start with was to make a new life for themselves. They wanted to get away from the eastern North Carolina established interests and the Germans came here to get away from Old Europe and it's monarchical and noble classes and their entrenched interests. We need to make provisions to be able to sustain this community on its own, if all hell breaks loose, while looking to existing challenges and the opportunities that will develop around those challenges.

Looking at the challenges we face related to Fuel and commodity prices, I think that we must get into the energy game. I honestly don't think we can do this by piggy backing on Charlotte. The Eco-Complex is a wonderful thing and to it I say bravo. We need to expand that concept to other areas of the region with the eco-complex being the hub.

I think that we need to expand the farmer's markets and have them be regional and introduce one huge farmer's market site to go along with smaller satellite sites and make it easier for people to have access and participate in these marketplaces. I think that Urban and suburban gardening, community and victory gardens are going to become an essential part of our lives. This food is fresher and healthier in many ways than what we find in the grocery stores. How do we facilitate, expedite, and build a foundation off of this type of natural development and structure that will develop from necessity? I think that should be a near future discussion that we can all take advantage of and spread the word about and ingrain in our local culture.

Conclusions and Solutions headed towards 2015

I think that the rising fuel prices are going to have a lot of implications. The above are results of that, but just think about filling your tank up and it costing $60 to $100 for a mid-size car or $150 to $250 for an SUV. This will change your lifestyle!

This will mean that you have to create alternatives to deal with the sprawl that we have in the area. This is the reason why it will be necessary to have gardens. This means that a lot of our local restaurants are going to go out of business and others will have to rethink their business model in order to survive, because their profit margins are already slim. Throw in the fact that their customers won't have as much money and won't be able to get there as frequently and prices are set to go up a lot due to the energy costs that play a role in their wholesale costs as well as the services they deliver and you see what I am getting at.

I really do appreciate the initiative that Danny Hearn and Garrett Hinshaw have taken in getting these innovation project contests off the ground. I think that we will see fruit born from this and it will feed off of itself. It is my hope that this will lead to the creation of a permanent facility and structure that will allow creators and innovators to explore unknown opportunities that can bear fruit. My idea is that this Center would allow access to knowledge centers, in which these people can do research in an attached or detached manner -- whatever the circumstances call for. By doing this, the person would have an area in which to be alone when they need to concentrate and have other Human energy resources of inspiration near them when they need that kind of motivation or help.

I would like to see one of these old manufacturing buildings around here utilized for that. I think that is what Donald Duncan is getting around to with the Conover Station Concept. We need more of that. How do we make that happen? How do we convince some of the people who own these buildings to allow this to happen? How do we show them that this can bear fruit and pay dividends for the community and they can get the credit for this and participate in it? What do they have to lose? I mean the building is going to eventually fall down anyway, if it isn't maintained, and let's be frank, most of these buildings aren't being maintained.

Maybe I am a little out there, but I don't only think that the identification and acknowledgment of weak signals is important. I think it is more important to take action, managing, massaging, and being flexible in dealing with these weak signals and the opportunities that they present.