March 9, 1977
Improving weather conditions brought a return to more normal economic conditions in the Southeast. Restoration of natural gas supplies to most industries returned most employees to their jobs. A survey of manufacturers and distributors found only minor disruptions of sources of supplies and raw materials. In addition, only a few firms report alterations in their investment plans as a result of the natural gas shortage. The effects of severe weather lingered in some parts of the District economy, particularly in agriculture. Port activity seems to be increasing in the Southeast.
In the aftermath of the natural gas shortage, supplies were restored in late February to 3,300 small- and medium-sized industrial users who had been without gas supplies since January 19. About 500 large industrial plants with interruptible service remained without gas. As a result, U. S. Steel in Birmingham began recalling 1,250 employees, about one-third of its work force. In late February, only about 7,000 persons remained unemployed in Georgia as a result of the shortage, compared to a 55,000 maximum at the peak of the crisis.
A special survey of southeastern manufacturing and distributive industries conducted by the Federal Reserve Bank of Atlanta finds that few firms have experienced serious shortages as a result of weather and gas-related production cuts. In most cases, delivery delays for supplies and raw materials have been temporary or have been alleviated by locating alternate sources. Some modest delays in textile deliveries are noted. One manufacturer of ammonia for whom natural gas is a feedstock experienced curtailed production and has reduced allocations to customers. Few firms indicated any intention to liberalize inventory policies. Manufacturers were also asked whether they intend to invest in equipment to provide alternate fuel capacity and if such investments would curtail previously scheduled investments. Very few firms indicate that investment in alternate fuel systems is planned. In Louisiana, this reflects the reliability of natural gas purchased at higher prices in the intrastate market. A few firms responded that they are planning to convert to coal. In Mississippi, most large firms already have alternate supplies. Many smaller firms indicate that their plan, in the event of a cutoff of natural gas, is simply to shut down. There is little indication of postponement of other plans for capital investment as a result of investment in alternative fuel systems, except for the largest fuel consuming plants. The necessity to invest in pollution-reducing equipment is regarded as a greater deterrent to investments in expanded productive capacity.
The effects of harsh winter weather could also be seen in reports from Mississippi and Louisiana of falling shrimp production due to weather conditions which inhibited the growth and movement of fish in the region's estuaries. In addition, fire damages have greatly increased in Georgia's forests. The weather severity has killed most of the vegetation in pastures and timberland, leaving vegetation in an unusually flammable condition and contributing to the severity of fire losses.
The livestock industry is another area of the District economy still feeling the aftereffects of the weather. Reports from throughout the District stress the increased cost of cattle raising. Winter pastures have developed very slowly as a result of weather conditions, necessitating high costs of purchased feed and increased labor costs associated with feeding. Weight gains have been subnormal. The outlook in some areas is now improving, as pastures develop and permit transferring cattle to pastures from purchased feed. Poultry producers are also feeling the pinch of higher heating costs, lower gains in weight, and a reduced percentage of eggs hatched. However, these declines may aid producers in stabilizing their prices.
A Florida report indicates that reduction of the anticipated bumper crop of citrus fruit will benefit producers whose crops are still salable and unsold. Considerable pressure on prices had been feared before the freeze. Oranges, which froze and split open, are providing lower juice yields due to evaporation losses. Damage to trees is said to be light, so an average crop is foreseen for next year.
Many cotton growers in Mississippi plan to reduce cotton plantings, while only a small number intend to increase production, according to soundings taken in recent agricultural meetings. However, the relationship between cotton and soybean future prices as planting season approaches remains a crucial determinant of actual planting decisions. There is little current interest in forward contracting for the 1977 crop as a result of farmers' belief that insufficient planting will force the price upward.
Activity at ports in the Southeast is growing. Tonnage of cargo in New Orleans has declined slightly in comparison to year-ago levels. But Pascagoula, Mississippi, reports a new tonnage record set for the fifth consecutive year, primarily because of increased handling of petroleum and grain products. In Jacksonville, port tonnage is also rising. The Port of Tampa is undertaking an ambitious expansion program, beginning with widening and deepening the main channel into Tampa Bay to accommodate larger ships. This enlargement is expected to lead to large increases in phosphate shipments. Plans for the next five years call for constructing a roll-on/roll-off berth to allow easier loading of ships by trucking the cargo directly onto them. Specialized facilities for ship repair and handling of dry and liquid bulk cargoes are also envisioned. Within ten years, expanded general cargo wharves and a bulk petroleum dock are to be added.