Is There a US Manufacturing Renaissance?
By Deane M. Dray, CFA – Global Industrials Sector Leader, Citi January 24, 2013 11:00 AM
Citi Global Perspectives & Solutions (Citi GPS) is Citi's latest thought leadership initiative through which we are delivering insights and viewpoints on compelling issues and structural thematic trends in the global economy. In the most recent opinion article: "Is There a US Manufacturing Renaissance?", I discuss how there has been a notable influx of high-profile capital goods companies investing in US manufacturing facilities in the past several years. While the media has trumpeted this trend as a resurgence of US manufacturing, our analysis indicates that the motivations behind these investment decisions are broad-ranging and more often company-specific. Check out an excerpt from the full report below:
What are the drivers of the resurgence in US manufacturing?
We believe there are multiple dimensions and factors supporting the reports of a so-called US manufacturing renaissance. These include: Capital goods investment - In just the past two years, there has been a jump in the number of new manufacturing facilities/ expansions by global industrial companies in the US. The announcement of nearly 30 new or expanded manufacturing facilities being made mostly in traditionally weaker union regions in the southern US illustrates the theme of a global flow of capital into the US sector. These new facilities have not only increased the activities of multinational companies within the US, but have also added thousands of manufacturing jobs in the country. The decline in the US dollar versus the Chinese yuan is likely to increase the attractiveness of the US as a competitive location for export manufacturing, and strength in the Japanese yen is also pushing the decision for Japanese companies to actively shift their facilities away from the Chinese market.