Thursday, June 28, 2012

"Made in the U.S.A." makes comeback

In a recent article, Chris Bartel, head of Fidelty's Global Equity Research, interviewed members of Fidelity’s Equity Research Department and came away with good news for anyone who likes to see "Made in the U.S.A."

American manufacturing is moving to the forefront again for three reasons: an increase in our energy supply, an increase in wages overseas, and a weak U.S. dollar. Our energy supply has increased mainly because of hydraulic fracturing in North Dakota, Pennsylvania, and Texas. Because of the lower price for domestic energy, new foreign investment to build chemical manufacturing plants is flowing into the U.S. Chemicals are the building blocks of things people like (such as anything with plastic in it). 

But this also has begun to create jobs in engineering and construction firms, trucking, railroads, machinery and equipment manufacturing, fertilizer manufacturing, and agriculture (especially corn). And there is the multiplier effect. For every new hire in manufacturing there are three more new hires across the supply chain. Economists also note the "Boomtown Effect" taking place in Pennsylvania and North Dakota where fast food restaurants are now paying their people $25 an hour to start. Will that last forever? No. What does? But if I were single and looking for work, maybe even just out of college, I would check it out.

As the wage gap closes more foreign companies will find the United States more attractive because of the rule of law, transparency, and our investment environment compared to the rest of the world. The U.S.A. is still a fine place to do business.

What should we do now to keep it going? For one thing, let's make the tax credit for research and development permanent. For another thing, let's bring home U.S.-based corporation money currently trapped overseas due to our double-taxation on it. Give these companies an incentive to spend it on U.S. manufacturing.

Read the full article:

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