Chris’ note: Globalization is breaking down. And hundreds of thousands of manufacturing jobs that were shipped overseas are coming back to America.
It’s part of the America Reborn theme we began exploring in yesterday’s dispatch. In short, we’re on the cusp of an economic renaissance few investors see coming.
Today, you’ll hear from friend of Legacy Research Brad Thomas. He’s one of the country’s most widely read income investing experts. His mission is to help folks build wealth through safe, reliable income streams.
And as he reveals below, you can use this market megatrend to do just that…
American businesses are excited about a hot new trend.
And it’s not artificial intelligence…
A Bank of America study of earnings call transcripts revealed that companies mentioned “artificial intelligence” 85% more than they did last year.
But another term was up 128% from the year before – “reshoring.”
Reshoring is a reverse of globalization – the moving of manufacturing back to the countries where the products are sold.
For decades, American businesses have been sending jobs overseas where labor was cheaper. China and other Asian countries were major beneficiaries.
Back home, the loss of those jobs hollowed out the middle class and sent parts of the country – most notably the so-called Rust Belt states spanning from New York into the Midwest – into decline.
But now, a new wave of manufacturing is coming back to the U.S.
Today, I’ll share three reasons companies are bringing manufacturing back home. Then, I’ll show you one way you can cash in on the trend.
Jobs Are Coming Back to America
The Reshoring Initiative is a non-profit that supports U.S. companies bringing jobs home.
It estimates that reshoring will create more than 400,000 jobs for Americans.
Jobs have been returning to U.S. soil over the past decade. But as you can see in this chart, the trend took off in 2021 during the pandemic.
In a survey by Swiss investment bank UBS, 70% of business leaders said they plan to move parts of the supply chain closer to home.
Why?
One reason is to address the pain points that surfaced during the pandemic. Business leaders highlighted how hard it is to rely on making goods and shipping them halfway across the world.
After seeing their orders delayed for months, they decided they needed to bring manufacturing closer to where they were selling their products. This allowed them to quickly respond to changes in demand and avoid disruption.
Another reason is American shoppers have shown a willingness to pay for higher-quality products. Manufacturing at home is more expensive due to higher labor costs.
Finally, the government has been encouraging businesses to re-shore to make sure America stays competitive in key industries such as semiconductors and electric vehicles (“EVs”).
And it’s putting its full backing behind this.
The bipartisan CHIPS and Science Act will dole out $39 billion to set up new factories for making advanced computer chips. And the Inflation Reduction Act gives up $7,500 in tax credits to companies for each EV they make in the U.S.
So, reshoring is only going to ramp up in the coming months.
How to Profit From the Reshoring Trend
As an American, I’m delighted to see manufacturing jobs come back to these shores.
And with all this money up for grabs, I want to make sure your portfolio reaps the benefits of this manufacturing boom.
One way to cash in on the increase in manufacturing activity is by investing in transportation companies.
Factories use a lot of raw materials. Companies must then ship the finished products to where they’re sold.
That means increased demand for railroads, trucking, and freight airlines.
One simple way to get broad exposure to this trend is through the iShares Transportation Average ETF (IYT).
Over the past three years, this exchange-traded fund (“ETF”) has beaten the S&P 500 by 12%. That matches up with the increase in jobs from reshoring.
And there’s a more specific way to play this trend.
My team and I have published an in-depth report for members of our flagship Intelligent Income Investor advisory. It’s called “Reliable Income From America’s Transportation King.”
We recommend a company playing a key role in the re-industrialization of America. It owns billions of dollars of critical infrastructure. And it’s been growing its dividend at a double-digit rate for 16 years.
We project this company will make you 15% annualized returns over the coming years.
To get access to this report, and our top reshoring recommendations, sign up for Intelligent Income Investor here. If you’re already a paid-up subscriber, you can go directly to the report at this link.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily