Weather, stock markets, even love – everything in life seems to move in cycles.
There is one constant. Every Brooks Brother tie is made in one place – in super expensive Manhattan.
Why? Because Brooks Brothers wants to keep an eye on every detail and respond quickly to changing market conditions and orders quickly. What they don’t want are supply lines stretching across the globe. As overseas labor and logistical costs soar, this thinking is spreading to mainstream manufacturing.
I hail from Milwaukee, the core of America’s industrial backbone. My father and his two brothers all graduated from Marquette University with degrees in engineering and spent their careers working for industrial companies like GM, Honeywell, and Allis-Chalmers. A childhood memory is industrial blueprints spread all over the kitchen table every night.
My only direct contribution to American industry has been pitching industrial stocks to institutional investors in Tokyo, Hong Kong and Sydney during the mid-1980s. Given the growing perception that American manufacturing was on a path to oblivion – it was a bit like pounding your head against a wall.
The perception of a manufacturing base in decline is largely tied to manufacturing jobs that have dropped sharply from 19.6 million in 1979 to 11.8 million today.
The truth is far more positive and encouraging. U.S. manufacturing workers are standout performers with productivity rates five times that of Chinese workers.
American manufacturing output is roughly equal to that produced by China and equal to the entire economy of India! The value of American manufactured exports over the latest 12-month period is $1.074 trillion according to the New York Times.
America is the largest exporter of advanced manufactured products in the world. The United States is particularly strong in machinery, chemicals and transportation equipment, which together make up nearly half of the exports.
And lately, manufacturing has been a bright spot in a rather sluggish U.S. economy.
The U.S. Labor Department reported that manufacturing companies have added jobs in two consecutive years. Until last year, there had not been a single year when manufacturing employment rose since 1997.
Another favorable trend is that companies are beginning to move some offshore manufacturing back home. This is driven by higher labor costs in countries like China plus the desire to protect intellectual property and bring production closer to end markets.
Here are some snapshots supporting this mini boom in U.S. manufacturing:
- Apple plans to spend $100 million on new domestic (U.S.) production capabilities
- Starbucks announced that $172 million investment in a Georgia
- Kitchen Aid is moving some production from China to Ohio
- Masterlock is shifting manufacturing from China to Milwaukee
- NCR moving offshore production to Georgia
- Otis Elevator cutting production in Mexico and increasing output in South Carolina
- Siemens moving production from Canada to North Carolina
- Rolls Royce building aircraft engine component plant in Indiana
- Starbucks making coffee mugs in Ohio instead of China
- Caterpillar building Georgia plant and cutting production in Japan
- Toyota moving production of Highlander hybrid from Japan to Indiana
No wonder that in a recent PricewaterhouseCoopers quarterly survey of manufacturing executives, almost 63% were optimistic about growth prospects in the next 12 months.
Get a piece of America’s manufacturing micro boom that is great for both your portfolio and the country.
Opportunity awaits,
Carl Delfeld.
Note from Midas Legacy Editor: We’re honored to have Carl Delfeld on our expert panel. Carl is founder of several financial organizations around the world, and he has advised the US senate and the US Treasury among many other large names. He is also the author of three investment books. Carl’s stock recommendation service, The Value Bounce, is the result of all his experience and research as he cherry-picks trades that allow you to have your cake and east it.
