“America First” is a topic that has been at the heart of the upcoming presidential election. It’s a narrative that former president Donald Trump has pushed since before he was first elected into the White House.
After the COVID-19 pandemic caused major supply-chain disruptions – which led to inflationary prices and the inability to produce certain goods – the concept of reshoring became appealing. Reshoring (also commonly referred to as onshoring) is the act of bringing the production and manufacturing of goods back to a company’s home country.
As you can see in the chart below, reshoring efforts began increasing about a decade ago. But they accelerated during the pandemic and haven’t slowed since.
Last week’s preliminary second-quarter Gross Domestic Product (GDP) results back up the above chart – as well as notion that “America First” has become a major investment trend.
Nonresidential investment in manufacturing structures increased to the highest percentage of GDP on record. It now makes up 0.854% of the total, which suggests that more of the country’s GDP is being spent on building factories here in the U.S. than it has over the past century.
This is a product of reshoring.
We can also view this trend through the money being spent on the construction of new manufacturing facilities. The chart below shows a surge in recent years as the reshoring trend has boomed.
The trend is clear. So, what does that mean for you and, more importantly, your portfolio?
Well, the new facilities being built will likely be cutting edge as some of the money subsidizing this construction is from the CHIPs and Science Act of 2022, which supports an increase in U.S. semiconductor manufacturing. In fact, when I think of reshoring I picture manufacturing facilities that look like clean rooms in a biotech firm – not your traditional dirty manufacturing plant.
That means we can expect a large number of higher paying, next-generation manufacturing jobs to be created. Reshoring should also lower the potential supply-chain issues that would arise from events that close borders or raise tariffs.
From an investing standpoint, this trend will create layers of opportunities in everything from the engineering and construction industries to building materials, robotics, and artificial intelligence.
And it shouldn’t surprise regular readers that I already have several on my watch list…
Symbotic (SYM) is a robotics automation company that helps facilitate a better workflow in distribution centers. It has a contract with Walmart (WMT) – which owns about 13% of the smaller robotics firm.
AECOM (ACM) is one of the world leaders in design, construction, and engineering management services. It works in a variety of industries and has a presence in more than 150 countries.
What Reshoring Means for Your PortfolioThese are just some of the companies I’m following right now, and I anticipate including at least one in my newest newsletter service that will launch in early August. I’m incredibly excited about this project and can’t wait to give you more details soon.
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