Wednesday, October 04, 2017 / Perth Australia / By Niekie Jooste
In this edition of "The WelderDestiny Compass":
In the USA, president Trump wants it. In China they are doing it. The rest of Asia wants to get in on the action too. Australia is in a property bubble due to it. What are we talking about? Infrastructure spending off-course.
Infrastructure spending is one of those things that it seems that everyone wants. It supplies jobs, gives big business fat profits and chases up property values, so who would not want it?
Whenever politicians want to get the economy growing, they often think of using infrastructure spending as the vehicle. Not only is it an easy sell to citizens, but it plays into the hands (and bank accounts) of business and landowners. The political class is mostly a participant in the landowner sector, and often a beneficiary of big business success. If you are interested to see how infrastructure spending results in increased land values, see edition 10 of The WelderDestiny Compass, where we discuss "economic rent"...
When the world economy is mired in a slow growth phase as it is now, infrastructure is a clear go-to answer to stimulate economic growth.
USA president Trump has indicated that he has plans to rejuvenate American infrastructure as part of his "making America great again" efforts.
China has unveiled their "new silk road" initiative a couple of years ago. They aim to spend a whole lot of money on international rail, road and port infrastructure. Not only in China, but all over Asia, the middle east and even Africa.
But obviously we need to ask ourselves whether this spending will actually increase economic activity, or just lead to further debt, like it has in Japan. Today we try to understand this question, and see how we in the welding industry may benefit.
If you would like to add your ideas to this week’s discussion, then please send me an e-mail with your ideas, (Send your e-mails to: firstname.lastname@example.org) or complete the comment form on the page below.
Now let's get stuck into this week’s topics...
Since the start of the industrial revolution, transport methods and infrastructure has served as a way to greatly improve efficiencies and therefore stimulate economic growth.
The invention of the steam engine and the railway network was the basis for a huge boom in both Europe and the USA. The invention of aircraft and especially the introduction of commercial air travel was again the basis for another boom due to the greatly increased efficiencies.
These advances were accelerated by further enhancements to the technology. In the late 1950's, jet airliners were introduced. Now we can travel around 900 km/h on longer range flights. In the 1960's, high speed rail was introduced. Suddenly trains could travel 200 to 350 km/h. Concorde, the supersonic commercial airliner was introduced in 1969 and could travel more than twice the speed of sound.
Now, modern aircraft may be somewhat more fuel efficient, and potentially more comfortable, but there has been no "step change" in commercial transport for decades. Even the supersonic Concorde was retired in 2003, so in a way we have actually gone backwards in terms of commercial transport technology.
We have managed to put men on the moon, but in terms of commercial transport we are little better off than 40 years ago. Progress has been slow in this space.
Introduction of these kinds of transport technologies and infrastructure in under-serviced parts of the world can certainly boost productivity there, but "more of the same" in areas that already have such infrastructure, will not add enough value to result in significant economic growth.
We need a step change!
Elon Musk has dusted off an old idea for rapid transport by introducing the "hyperloop". This is a re-think of an old way of rapidly moving a "capsule" through a tube by creating a partial vacuum in front of the capsule so that it does not have to overcome so much wind resistance and friction.
Typical rapid rail today goes around 350 km/hr, but it is projected that the hyperloop can do around 1200 km/hr. This is faster than the typical jet airliner that does around 900 km/hr. Obviously the average speed of such a system will be lower, because it will typically stop at "stations" every few hundred kilometres, but it will none-the-less cover vast distances in very short times.
The cost of constructing such a hyperloop line will be very high, therefore it can only be introduced on routes where there will be a high enough demand. There are many such routes all over the world.
Wherever they are introduced, people's lives will be totally altered. It will become feasible to stay, say, 200 km from your place of work and it will be an "easy" 20 minute commute in the morning and evening.
Such a radical step change in transport will result in winners and losers. The losers will typically be the airlines that service the high volume cross-country routes where the hyperloop systems will find their most economic use. The winners will be the landowners in areas that were previously too far from the main business centres to offer accommodation for workers.
The introduction of such rapid transport systems will result in a significant movement of economic rent from areas close to the business centres, to areas further away, that are within easy reach of the stations.
I for one am really keen to see such systems introduced. Along with the promise of remote access jobs due to broadband internet being delivered to remote areas, such transport systems can result in me being able to live and work from home in a nice beach cottage, and then getting to the "big smoke" rapidly for meetings.
Sounds like a win-win-win all round!
Looking at the prototype designs for the hyperloop systems, it is clear that a lot of the production will be done in factories by robotic systems. The welding industry should be heavily involved, but probably not human Welders so much!
The field erection and maintenance of these systems will however be another story. It will almost certainly be rather labour intensive and Welders should feature heavily.
Whether it is hyperloop, or just good old rail, bridge and port infrastructure, I believe that infrastructure development will be one of the next boom industries. This will be a good time for the welding industry, and a good time for Welders, so make sure to keep up the skills!
Yours in welding
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