Cramer's 'Mad Money' Recap: Don't Count Manufacturing Out

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NEW YORK ( TheStreet) -- In a special show taped on location at a Timken Steel ( TKR) factory in Canton, Ohio, Jim Cramer reminded his "Mad Money" viewers that American manufacturing is alive and well and should be a part of every investor's portfolio.

Cramer said when many people think about technology, they think about stocks like Google ( GOOG). But, in fact, technology is all around us and is playing a big part in turning American manufacturing into the low-cost leaders for many different goods, thanks, in part, to low-cost energy made possible by American natural gas. There's something comforting about steel and iron that just cannot be attained from a Web site, Cramer said.

That notion couldn't have been more true today, he noted, as Google announced a surprising earnings shortfall and did so via an accidental release of those earnings that caused the stock to be halted for three hours. Investors were fooled not one but twice by technology, said Cramer, which is why a show that's focusing on American might and muscle seems all the more relevant.

Executive Decision

In the "Executive Decision" segment, Cramer sat down with James Griffith, president and CEO of Timken Steel ( TKR), the company that was kind enough to host "Mad Money" and provide Cramer with a firsthand account of American technology and manufacturing in action.

Griffith said he views Timken as a technology company, not a steel company. He said for nearly a hundred years the company just made bearings. But about a decade ago, it shifted from a product strategy to a market strategy, a move that resulted in an explosion of new products that now include bearings in NASA's latest Mars rover to the entire transmission assembly for Apache attack helicopters.

Griffith said Timken also builds the bearings that help the landing gear wheels on jet airplanes hit the ground and spin up from zero to 150 mph in a split second. In those cases, he added, failure is not an option.

When asked about China's reputation as a low-cost leader in manufacturing, Griffith said Timken sees China as an opportunity and has invested in that country, a move that allows it to now export $700 million worth of products annually. He said those exports have created 3,500 jobs in the U.S. as a result.

Griffith closed by saying that Timken, among other Ohio manufacturers, have become globally competitive in their markets, which has helps grow Ohio's economy.

Utica Shale Revolution

For his second "Executive Decision" segment, Cramer went on location with Aubrey McClendon, president and CEO of Chesapeake Energy ( CHK), an oil and natural gas producer at the heart of Ohio's Utica Shale revolution.

McClendon said that four years ago, the world didn't even know the Utica Shale formation existed. Even then he was explaining to leaders in Washington that American natural gas could transform our nation.

He said natural gas can not only lower the price of American energy, but also improve our environment and dramatically change our foreign policy landscape. He also pointed out that oil imports are already at five years lows, and he expects that trend to continue.

As for Utica's significance to Ohio, McClendon said that sitting directly between Pittsburgh and Cleveland is the area where American manufacturing began, and now the natural gas revolution is once again bringing hope and high-paying jobs to a region often deemed "the rust belt." He said whether you're a PhD or just enjoy working with your hands, Chesapeake has high-paying opportunities for you.

Turning to Chesapeake's transition from an exclusive natural gas producer to one with an oil and gas mix, McClendon admitted it's been a difficult year for his company. He said Chesapeake was a top 30 oil producer just two years ago and now sits at number 12, but ultimately he plans for the company to break into the top five within another two to three years. Many investors don't think the company can do it with gas prices so low, he said, which is why nearly 14% of Chesapeake shares are currently sold short.

McClendon described Chesapeake as now transitioning from the "capture" phase to the "harvest" phase, as it now has all the right assets in the right places and can deliver for shareholders. He said Chesapeake also made many changes in its corporate governance to address investor concerns.

Cramer addressed what it would mean for America if our continent was energy-independent. He said making that move would give our country "a clean sheet of paper" on which to rewrite our foreign policy, our environmental policies and our economic well being. The Department of Defense, he noted, is the largest user of oil in our country, but is only just now beginning to consider converting from oil to natural gas.

Cramer then got a firsthand look at Chesapeake's drilling rig, which costs nearly $20 million and was drilling a new well 8,000 feet down and one mile horizontally in order to unlock another sliver of the Utica gas below. McClendon said that Chesapeake has spent over $2 billion to acquire drilling rights on 1.3 million acres of Utica and nearly all of that money has gone into land owners' pockets and into the local economies.

Finally, when asked about the negative press surrounding hydraulic fracturing, McClendon said Chesapeake has been "fracking" since 1949 and has never had an environmental issue. He reminded viewers that America is the number one producer of natural gas in the world and does it better than anyone else.

In the Pipeline

In his next "Executive Decision" segment, Cramer sat down with Greg Ebel, president and CEO of Spectra Energy ( SE), a pipeline operator that currently ships 12% to 15% of all the natural gas produced in the Utica shale region. Shares of Spectra currently yield 3.7%.

Ebel said that as a pipeline company, Spectra buys a lot of pipe, and the best pipes in the world are those that are American-made. On Spectra's new pipeline from Utica all the way into New York City, Ebel said that last 15 miles of that pipeline will cost nearly $1.2 billion to build, but will save New Yorkers $400 million a year in energy savings by having more affordable natural gas more readily available to them.

One of his company's biggest hurdles, noted Ebel, is regulatory issues. He said that it can take up to four years to get the needed approvals to build a pipeline, despite the industry having a great track record for safety. But even with those hurdles, Ebel is hoping to see up to 50,000 homes a year convert to natural gas from oil as the price differential between oil and gas grows.

In closing, Ebel said Spectra remains committed to its dividend and also to creating great American jobs. He said while the average American works makes $45,000 a year, the average pipeline construction works makes $65,000.

Putting it All Together

Finally, Cramer spoke with Nick Akins, president and CEO of American Electric Power ( AEP), the utility that takes natural gas drilled by Chesapeake and shipped via Spectra and converts it into clean electricity for users like Timken, who make all those best-in-class products that get sold all over the world.

Akins said industrial power users like Timken are the backbone of AEP's service area. He said that without them, his company's commercial and residential base would also shrink. When asked about the importance of natural gas, Akins noted that 10 years ago this area of Ohio didn't even have natural gas, but now AEP is set to see its gas purchases increase by 150% this year alone.

Turning to the political landscape, Akins said what's most important for AEP and for all of American manufacturing is a tax and regulatory policy that supports business and balances the needs of regulators, shareholders and consumers. He said our government needs to support growth and current policies are making that tepid at best.

-- Written by Scott Rutt in Washington, D.C.

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