Baron’s a few weeks ago ran a piece on the resurgence of manufacturing moving back to the United States. In our opinion, one of the main catalysts is that low-cost labor in emerging economies is being replaced by robots in the US. The other big catalyst that has aided this “onshoring” of manufacturing is the huge shift in the energy picture.
The following is an exerpt from an article by The Schwab Center for Financial Research that expands on this positive energy change:
Also contributing to the onshoring trend, and having, in our opinion, an even more profound potential impact on US growth over the next couple of decades, is the complete shift in the energy picture over the past several years. The United States is now flush with domestic energy to the point that some analysts are predicting energy independence for both North America and the United States in the next decade. According to our friends at ISI Research, we are now importing 41% less oil than at the peak, with imports at a 25-year low; while domestic production has increased 32% in the past year. Reliable and sustainable energy sources are vital to a growing economy, boding well for the future, but perhaps more importantly, this again illustrates what creative minds in America can achieve when market forces are left to work.
Source: FactSet, Institute for Supply Management. As of Feb. 8, 2013.