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Title: The Market's New Motto—'Made in the U.S.A.'
Source:
WSJ
URL Source: http://online.wsj.com/article/SB100 ... tml?KEYWORDS=GREGORY+ZUCKERMAN
Published: Apr 30, 2012
Author: By GREGORY ZUCKERMAN
Post Date: 2012-04-30 12:36:21 by Brian S
Keywords: None
Views: 1816
Comments: 2
Who says America doesn't make anything anymore? Amid continuing debt problems in Europe, worries about China and middling growth in the U.S., many investors are overlooking a resurgence in the U.S. manufacturing sector. U.S. manufacturers are more competitive with global rivals than at any time in recent memory. Energy costs and other expenses are falling, manufacturers say. And U.S. workers' pay has become more competitive with foreign wages. It all means investors should spend more time focusing on shares of chemical companies, auto and steelmakers, and other manufacturers, analysts say. Rockwell Automation ROK -1.45% (ROK) and Dow Chemical DOW -2.22% (DOW) are among those that could benefit as manufacturing grows, analysts say, though making a broad bet on exchange-traded funds targeting the sector may be the best way to benefit from this trend. Enlarge Image 29LEDEchrt 29LEDEchrt Maria Corte Maidagan "The U.S. economy is in the early stages of a long-term manufacturing renaissance," analysts at Bank of America recently wrote in a report titled "An Industrial Revolution." The market's current buoyancy has been helped by upbeat quarterly results from big manufacturers including United Technologies UTX -0.61% (UTX), Parker Hannifin PH -1.90% (PH), Illinois Tool Works ITW -1.58% (ITW) and Eaton ETN -1.77% (ETN). The improving prospects for the manufacturing sector—which is so large it would be the world's ninth-largest economy if it were a country—are becoming a hot topic. Betting on America's manufacturing resurgence comes with risks, especially in the short term. In recent weeks, there have been signs that the overall manufacturing sector is cooling a bit. Factory output slipped in March after rising a month earlier, for example, and surveys of activity show manufacturing in certain regions slowed in April. But as the sector improves over the next few years, investors willing to make a long-term bet could profit. "Manufacturers are increasingly likely to bring at least some production back to the U.S. while established players reinvest for further productive capacity and productivity improvements over the coming years," according to the Bank of America report. Part of the reason manufacturers are becoming more competitive: Foreign workers are seeing rising pay, even as U.S. labor costs barely rise. Chinese factor workers have seen annual pay increases of more than 10% in the last two years. Recent weakness in the U.S. dollar also is helping U.S. exports. Rising domestic energy production is helping as well; petroleum and coal products represent 10% of U.S. manufacturing production, up from 3% in 2000, Bank of America says. That's all why more American companies are moving manufacturing plants back to the U.S.—a shift some call "reshoring"—while some foreign companies are expanding here. French tire maker Michelin, for example, recently announced it would build a new global factory in South Carolina. Energy-dependent chemical companies are benefiting from falling natural-gas prices—down more than 60% in the past year, thanks to surging U.S. shale-gas production. Dow Chemical will build a multibillion-dollar plant in Freeport, Texas, to convert natural gas into the building blocks of plastic. Royal Dutch Shell RDSA.LN +0.23% (RDSA) is building a plant near Pittsburgh. John Inch, an analyst at Merrill Lynch, is a fan of Rockwell, the leading North American provider of factory automation products. He argues the company will benefit as investment in U.S. manufacturing grows and many companies implement automation of their factories. Rockwell shares rebounded from disappointing earnings last week, and Mr. Inch says "the company could realize years of robust demand." Boeing BA -1.53% (BA) also should be helped by the trend of more demand for U.S. products abroad. Some say investors should shift from foreign markets back to the U.S. Consumer classes in many foreign countries are growing, as rapidly developing foreign economies finish their investment phase and labor's share of national income rises, opening up new markets for U.S. manufacturers. "A common investing theme during the previous decade was to purchase equities of emerging-market companies benefiting from selling products into…developed market economies," says Brent Schutte, market strategist at Harris Private Bank. "Now…an expanding middle class in places like Brazil, India and China desire" U.S. goods and services. Mr. Schutte recommends that investors focus on U.S. stocks. He also says iShares Dow Jones U.S. Industrial Sector Index Fund IYJ -0.97% (IYJ), an ETF, is a good way to play the manufacturing rebound. It includes 3M MMM -0.32% (MMM) and United Technologies.
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#1. To: Brian S (#0)
what propaganda... dropping energy costs making USA more competitive my ass, anyone see their gas and electric going down?
Don't forget, we've got the highest corporate taxes in the world, now. Oh, and as of January 2013, our personal taxes will take a nice big jump. Don't you feel all better, now???
Sig of LoonyMing: Anyone claiming to be an expert is selling something. I brandish my ignorance like a crucifix at vampires. Aaron Bady Translation: WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH LoonyMing, you are one sick bitch.
#2. To: thoughtomator (#1)
The economy is wonderful!
Re-elect Obama, he'll pay your rent!
A chicken in every pot!
-- Baghdad Bri-bri --
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