The US Had Better Get Buildin’

The US Had Better Get Buildin’
Theodora Lee Joseph, CFA

over 1 year ago1 min

Manufacturers with overseas production have faced a nightmare of high import tariffs, skyrocketing shipping costs, supply bottlenecks, and raw material shortages in the last few years. This has been the catalyst – particularly among US manufacturers – behind the trend of “nearshoring” (also known as onshoring or reshoring), in which companies bring production back home, closer to demand.

Firms are talking about nearshoring this year even more than they did in the first six months of the pandemic. You can see that in the chart above, which records the increasing number of times the words “onshoring”, “reshoring”, or “nearshoring” were mentioned in US corporate presentations. Those companies are also putting money where their mouths are: the construction of new manufacturing facilities in the country has soared 116% over the past year, dwarfing the 10% gain on every other building project combined.

This is obviously good news for local construction and building firms, but these cyclical industries will still be hard hit in a recession. So a better way to play the theme might be to invest in automation via the iShares Automation & Robotics UCITS ETF (RBTX, expense ratio: 0.4%) or anything from here. After all, these new facilities will need to include more investments in automation than in the past – especially with the US labor market as tight as it is.

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