American consumers have spoken.
A recent Harris Poll survey found that most people prefer to buy stuff that’s “Made in America.” Even if it costs a bit more. In fact, more than 70% of consumers said they intentionally look for American-made products. And half said they’re willing to pay 10-20% more.
Businesses are noticing.
And they’re moving their supply chains back to America in a trend called “reshoring.”
“Reshoring” means moving manufacturing back to the countries where the products are being sold.
For decades, American businesses have been sending jobs overseas where labor was cheaper. The loss of those jobs hollowed out the middle class and sent parts of the country known today as the “Rust Belt” into decline.
But now, a new wave of manufacturing is coming back to the U.S.
Here at the Intelligent Income Daily, we’re focused on finding the safest income investments on the market. And investing in companies that support major trends like reshoring is a great way to get reliable profits.
Today I want to share three reasons why companies are deciding to bring manufacturing back to America. I’ll also share several ways you can cash in on the trend.
Why Companies are Bringing Manufacturing Back to America
Companies are getting serious about bringing manufacturing back to America.
Before the pandemic, “reshoring” was mentioned on earnings calls an average of four times each quarter.
But now, companies are talking about reshoring more than 200 times each quarter. That’s a 50-fold or 5,000% increase in just three years.
And it’s not just talk. Over the past three years, private companies have announced $614 billion in investments toward manufacturing in America.
According to the non-profit group Reshoring Initiative, over 400,000 jobs will be created this year due to companies bringing manufacturing back to America.
In a survey conducted by Forbes, 76% of CEOs say they’ve started the process of reshoring some or all of their overseas facilities.
So why are businesses bringing jobs back home?
One major reason is that the pandemic showed how hard it is to rely on producing goods and shipping them halfway around the world.
After seeing their orders delayed for months, companies decided they needed to bring manufacturing closer to where their products were being sold in order to avoid major disruptions. It allows them to quickly respond to changes in demand.
Another reason is that new, high-tech manufacturing techniques are more efficient. Even though labor costs are higher in America, the technology advantage makes local manufacturing competitive with cheap overseas workers.
Finally, the government has been encouraging businesses to bring manufacturing back to ensure that America stays competitive in key industries like semiconductors and electric vehicles.
The CHIPS Act provided $39 billion in funding to set up new factories for producing advanced computer chips. And the Inflation Reduction Act gave up to $7,500 in tax credits per electric vehicle made in America.
These initiatives and habits show that reshoring is only going to ramp up in the coming years.
How to Play the Reshoring Trend
One way to play the reshoring trend is to invest in the Tema American Reshoring ETF (RSHO). This exchange-traded fund invests in companies that stand to benefit from manufacturing moving back to U.S.
Tema American Reshoring is a newly launched ETF so it doesn’t have a long track record. But its top 5 holdings have returned an average of 87% over the past three years. In that same time, the S&P 500 returned just 30%.
Many of the companies in this ETF are involved in constructing new factories and providing the high-tech machinery that will be used to produce goods. So demand for their services will be high as companies continue to invest in reshoring.
And if you’re looking for another investment option… a second way to play the reshoring trend is to invest in the mission critical infrastructure needed to support manufacturing for the long term.
This way, well after the boom in factory construction ends, this mission critical infrastructure will still be generating profits.
After all, here at Wide Moat Research one of our goals is to invest in companies that provide reliable growing income for decades to come.
That’s why we recommended a company to members of our Intelligent Income Investor service that collects a growing stream of income from companies that own the irreplaceable infrastructure that manufacturers need to get their products to customers.
It’s up 24% year to date and is not only vital to the reshoring trend but also the future of artificial intelligence (AI) and companies like Amazon. To learn more about this play, click here.
Regardless of how you choose to profit from it, the reshoring trend is in full swing and will be with us for years to come… at the very least.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily