Commodity markets are fickle but this recent “down turn” looks to be somewhat prolonged. Here in Wyoming our economy relies on the production of fossil fuels and those industries, coal mining and oil and gas have provided regular payments into a permanent fund. The fund has grown since inception and pays for a lot of the state government, education etc. The state almost always has a budget surplus but this year is announcing cuts. Likewise, there have been a fair number of jobs lost as prices and demand have declined and production is curtailed. The “war” on coal coming out of Washington has produced more uncertainty about the future as well. Cheap natural gas is seen as replacing coal as the energy source of choice. The slowdown in China is one of the reasons given for the low commodity prices as supply has outstripped demand. This is a global commodity issue but it becomes personal when all the statistics mean that hard working and dedicated people are out of work. There is a face to this problem that I don’t think the corporations, politicians or the EPA actually see.
I just wanted to give a little advice from my perspective and history in working in the resource industry for 40 some years. To make this a credible discussion I have to reveal that I have been laid off 4 times during my working life. It is true one of those times was voluntary, but had I stayed I would have been laid off. Two of the times were due to plant closings and the final one came as a result of commodity prices. For most of my career the threat of being out of work was real and I constantly looked for jobs.
I have also had the task of laying off my friends and neighbors more than once as a manager.
There is no joy in that job.
What I have learned from corporate life is that big companies can only stop cash from leaving the business by getting rid of people. In maintenance, however, we usually replace that loss by hiring contractors at higher costs. Large companies also have a tendency to freeze wages, cut benefits, overtime, bonus payments etc. Don’t count yourself lucky to survive the first cuts as any jobs out there end up going to the first guys on the street.
If you are stuck in a mining town with a young family and the economy goes to hell in a hand basket, it is a terrible and sobering experience. Real estate takes a hit so even if you can find a job you can’t sell the house. I always said I never made money in real estate because miners buy during the boom and sell during the bust. The reality is that people are resilient and almost everyone survives and in my working life I always found a better opportunity and came out of those experiences stronger. Markets also recover as supply drops to meet demand and prices rise. In commodities there never seems to an equilibrium point and the cycle from boom to bust repeats itself.
The type of advice I can give is based on reality and experience and not from financial advisors on the internet. They would tell you to have six months’ salary in the bank. Really! Most of the working world lives paycheck to paycheck paying the mortgage and for the cars, groceries and college tuition that every family in America does. I was no different for many years.
My first layoff came 3 ½ years after the company I worked for went bankrupt. It was a new process and through mismanagement and poor design did not make a profit. I had put my young heart and soul into the place. Worked long hours for low pay, seldom got a full night’s sleep and never could seem to do enough to satisfy the demands of the business. I did not know it but getting laid off was the best thing that could have happened to me. Because I was at the right age and right pay and had some real experience employers were interested in me. I got interviewed by diverse industries all over the US and over the course of 3 month’s had numerous job offers. I held my nerve and used the time to find the right job for me.
The world is changing and technology is replacing many traditional jobs. Likewise offshoring has become the norm. Trust that commodities will still be in demand, however, as the rest of the world moves into the middle class. But don’t become complacent. Reinvent yourself. Many jobs that will exist in the future don’t exist today.
Good luck to all of you and if there is anything we can do for you at XRT don’t hesitate to ask.